Axis Capital
Target: ₹550
CMP: ₹407.85
is transitioning from a plain vanilla solar IPP (3GW operational) to a complex RE project developer (about 95 per cent of its 5.4GW pipeline) and a leading BESS adopter (est. ~17GWh).
Acme aims to commission its first complex project by Dec-2026. We expect the full portfolio to be operational by FY30E (1-year delay due to industry-wide transmission constraints).
This should drive run-rate EBITDA (ex. other income) of ₹8,900 crore (38 per cent FY26-31E CAGR).
With about ₹52,000 crore of capex, equity is fully funded using internal accruals, cash at hand and QIP proceeds. Net debt to EBITDA to improve to 5.9x by FY30E (F26:7.2x) and OCF post interest of ₹3,000 crore.
Based on our comparative analysis framework, we apply a discount to Acme vs the larger peers given its higher dependence on single resource (solar), penalties risk in seasonally weaker years, risk of increase in BESS augmentation capex, higher run rate leverage and smaller OCF to fund future growth.
We value Acme Solar at 11x FY30E run-rate EV/EBITDA and discount back to Sep-27 TP of ₹550/share. We initiate with buy.
Risks and concerns: Transmission connectivity delays; Increase in curtailment; increase in cost of funding; increasing competitive intensity resulting in lower tariff discovery in bidding; inflationary pressures leading to increased capex per MW; and Standalone BESS projects of Acme are bit at highly competitive prices, which could face risk to IRR with increase in BESS prices.