ACME Solar Holdings Limited IPO Review | Another Rising Star? ⭐

ACME Solar Holdings, a prominent player in the renewable energy sector, has recently launched its Initial Public Offering (IPO) to raise a substantial Rs 2,900 crore. This IPO has garnered significant attention from investors due to the company's strong growth potential and robust project pipeline.

The company has established itself as a major player in the Indian renewable energy landscape, particularly in solar and wind power. Let's find out about the company’s business.

Core Business -

1. Development and Construction: Focuses on developing, constructing, owning, and operating large-scale renewable energy projects.

2. In-House Expertise: Leverages its in-house engineering, procurement, and construction (EPC) division, as well as its operations and maintenance (O&M) team, to ensure efficient project execution and long-term performance.

3. Power Generation and Sales: Generates clean electricity from its solar and wind power plants and sells it to various customers, including government entities and private businesses.

Let’s try and analyze the Industry

Solar energy has been the primary driver of renewable energy growth in India, accounting for nearly 44% of the total renewable energy capacity as of August 2024.


Robust Growth: The solar power sector has seen significant growth over the past five years, with a CAGR of 24.8%.

Strong Performance: Despite these challenges, the sector has continued to perform strongly. Significant capacity additions were witnessed in Fiscal 2022, 2023, and 2024, with a promising start to Fiscal 2025.

Rooftop Solar: Rooftop solar projects have also contributed to the overall growth, with substantial capacity additions in recent years.

India ranks fourth globally in installed wind power capacity, boasting approximately 47 GW as of July 31, 2024. This substantial capacity contributes nearly 10.5% to India's total installed utility power generation capacity. Wind power installations are primarily concentrated in the southern, western, and northwestern regions of the country. Notably, India's wind power capacity has exhibited a steady growth rate of approximately 7% CAGR over the past 7-8 years.


Let's take a look at the Financial Record of the company:


Revenue Growth Rate is negative 5.84% over the last 3 fiscals.

EBITDA Growth Rate is also negative 6.29% over the last 3 fiscals.

In 2024, the company reported a profit of ₹ 697.78 crore due to an increase in exceptional items, which amounted to ₹ 748.69 crore. This increase was primarily driven by a significant gain on the sale of assets/investments, totaling ₹ 721.23 crore, resulting from the divestment of 369 MW of projects.


Moving onto some of the Key Risks that the company faces:

1.  Continuous Losses : The company incurred a loss of ₹ 31.74 million in Fiscal 2023. There is no guarantee of future profitability, which may negatively impact the company's business and financial performance.


2. Dependence on Imports : The company may face increased costs for procuring renewable energy equipment due to potential import restrictions.


3. Highly Competitive Project Auctions : The company's future growth is dependent on its ability to secure renewable energy power projects through competitive auctions and successfully execute its ongoing and contracted projects. Failure to do so could negatively impact the company's business and financial performance.


Let’s also take a look at the Pending Litigations against the company:


Here, the important figure is the litigation against the company and its subsidiaries which amounts to Rs. 369.84 crore which is almost 53% of company’s 2024 PAT which could be a sign of worry.

Objects of the Issue : While the OFS portion of the issue remains at the discretion of the promoters, the company says that the Fresh Issue will be utilized for the following purposes:

1. Investment in Subsidiaries for repayment/prepayment, in full or in part, of certain outstanding borrowings availed by Subsidiaries; and

2. General corporate purposes.

IPO details -