The initial public offering of ACME Solar Holdings Ltd, one of the top renewable energy players in India, was launched on November 13. However, much to expectations from the investors the companies shares were listed at a substantial discount on both BSE and NSE. ACME Solar was looking to collect ₹2900 crores selling its equity shares valued between ₹275 and ₹289 per share with a share target of ₹8000 crore target, however, its listing performance suggests a dull beginning. This article discusses performance of ACME Solar in terms of its IPO about the company, the market and predictions for the company’s future.
ACME Solar’s IPO Brief
The IPO of ACME Solar commenced on 6th November and closed on the 8th November, with the shares priced between ₹275 to ₹289 worth. To invest in this IPO, a minimum of 51 shares were to be applied for and in addition any subsequent bids were to be multiples of 51. This issue structure consists of fresh share issuance up to ₹2395 Crores and an Offer for Sale OFS by ACME Cleantech Solutions up to ₹505 Crores. Of the total sale proceeds, the bulk is to be used for repayment of debt, about ₹1795 Crore will be used for repayment of secured loans, and the balance for other corporate purposes.
IPO Subscription and Investor Sentiment
The IPO had enough attention even though the listing seemed difficult as it was oversubscribed by 2.75 times. QIBs were the first to subscribe in the largest multiple at 3.54 of the quota allocated to them. There were also retail investors who had a subscription of 3.10 times the amount allocated to them while the employee quota was subscribed to 1.59 times. Non-institutional investors (NIIs) however did not show the same passion and only subscribed 0.97 times of what was required.
Grey Market Premium (GMP) Signals Investor Caution
In the grey market, ACME Sola share traded below face value of shares with a premium and a negative of 4 rupees per share, therefore as a result the listing was predated with caution. With it being the custodians for the market’s optimism, the initial GMP started off at 30 rupees. Nevertheless this premium dropped quite drastically and it created fear for the volatility that the stock would experience upon opening. When the company MSE launched the ACME solar a share, it was marked at Rs 251 on the NSE, which was a Rs 289 upper cut-off value at a discount of 13.15 % and marked trading at the BSE at Rs 259, at a discount of 10 %. This discount does not turn out to be a favorable sign for the company in terms of the stock valuation as the company is set for good growth in the renewable energy market.
Market Experts Weigh In on ACME Solar’s Performance
According to Ms Shivani NYATI, the head of Wealth at Swastika Investmart, investors should be careful going forward due to the expected volatility in ACME Solar’s share price. Ms Nyati stated that even though the potential of ACME SPV in the long run does look bright, there are some external factors in the short run, which may tend to affect the performance in this regard. In the same manner, Manish Chowdhury who is the head of Research at Stoxbox, noted moderate level of interest on the part of investors and recommended that the investors of this firm should retain their shares with a median to long term view.
ACME Solar’s Business Model and Market Position
The company which started in 2015, has now grown to be one of the biggest renewable energy producers in India with majoring in the generation of wind and solar power. The firm’s approach for developing, constructing, owning, and operating large-scale energy projects relies on an in-house engineering, procurement, construction and operational management. In June 2024, ACME solar had 1320 MW of projects operational and 1650 MW of projects under development out of which, 1500 MW was for solar and 150 MW was for wind. As a matter of fact, out of the 28 operational projects, 18 of them are found in Andhra Pradesh, Rajasthan and Telangana, amounting to 85% of the total capacity.
Revenue and Financial Development
Fiscally, it appears that ACME Solar recorded a somewhat sober growth of 2% in FY24 as its revenues increased to ₹1,319 crore up from ₹1,294.90 crore of the previous financial year. FY24 marked a reorder on the financial sheets of ACME solar after they had recorded a net loss in FY23, as the company netted ₹680.23 crores. This change is kinds of expected when you have commendable power and electricity generating portfolios in the balance sheet. ACME solar earns a lot by selling electricity to both the central and state governments, thus increasing the chances of their future earnings and growth .
Broker Recommendations and Investor Outlook
Expectations have been made by a number of brokerages mandating ACME Solar’s future self sufficiency in harnessing renewable energy. However, if the advisors of JM Financial, ICICI Securities, Nuvama Wealth Management, Kotak Mahindra Capital Company and Motilal Oswal Investment Advisors are anything to go by then investing in the Initial public offering has attractive returns in the long run. The renewable energy market seems to be a positive one as power consumption keeps rising, and with ACME solar in the picture, there is a lot to look forward for.
Existing Hurdles and Opportunities for ACME Solar
Despite what may appear as a troubling Initial Public Offering of sorts for ACME Solar, the concentration on renewable energy and debt management may with time enhance the value of equity. Analysts believe that the business strategies of ACME Solar will depend significantly on macroeconomic variables, energy policy changes and the general attitude of investors towards green energy.
ACME Solar seems likely to take advantage of the increasing demand for renewable energy in the country as it aims to expand its footprint in renewable energy. The focus on large solar and wind projects are in line with the government’s plans to increase the share of renewable energy by 2030. Victoria Loss is an investor who seems to believe in the long-term growth of the organization as it targets both operations and finance in complete tandem with each other.
Closing considerations: Am I supposed to make an investment in ACME Solar?
ACME Solar is a green energy company that is worth the risk for those able to bet on the company for a considerable time. Although the company’s IPO did not bode well, its future plans on expansion along with the expansion footprint already in place appeals long-term returns. With the emergence of renewable energy and resources, the focus and strategies set out by ACME Solar strongly resonate with the emerging technology investors.
It is advised that investors take into consideration the risk that market fluctuations and outside factors bring, especially in the early stages. However, those who seek to stand up and benefit from the green energy revolution, ACME Solar is prone to guarantee gradual growth.