70% YTD returns! Axis Capital sees 30% more upside in this renewable power stock; do you own? Target price
A renewable power stock has jumped over 70% year-to-date (YTD), yet Axis Capital, a wholly owned subsidiary of Axis Bank, believes the stock has the potential to rise further from the current levels. The stock we are discussing is ACME Solar Holdings. ACME Solar Holdings is an integrated renewable energy company with a diversified contracted portfolio, spanning solar, wind, storage, FDRE and hybrid solutions.
ACME Solar Holdings share price trend
As per the BSE data, the stock has jumped 72% year-to-date, while on a shorter timeframe of six months, it has climbed 43%. It hit a 52-week high of ₹476.40 on 22 September after hitting a 52-week low of ₹195.65 on 27 January.
The stock declined 2.6% in intraday trade on Thursday, 15 October. On a monthly scale, it is down 7% so far in October after a 9% jump in September and an 11% rise in August.
What Axis Capital says about ACME Solar Holdings?
In a 15 October report, Axis Capital initiated coverage on the stock with a buy recommendation, pegging the target price of ₹550, implying a 31% upside potential, citing the company's transition into a renewable energy (RE) project developer.
"Acme Solar Holdings is transitioning from a plain vanilla solar IPP (independent power producer) to a complex RE project developer and a leading BESS (battery energy storage system) adopter," Axis noted.
The financial firm said Acme aims to commission its first complex project by December 2026. Axis expects Acme's full portfolio to be operational by FY30, with a one-year delay due to industry-wide transmission constraints.
"We expect the working capital days to remain steady at current levels and expect the OCF to EBITDA over FY27-30E to average at 1 time. Acme would generate ₹11,300 crore of OCF net of interest, which – along with the opening cash balance of nearly ₹6,100 crore and QIP proceeds of ₹2,800 crore – would be sufficient to meet the equity requirement for the planned capex. As projects are commissioned, leverage is expected to improve from 7.2 times net debt to EBITDA in FY26 to 5.9 times net debt to EBITDA in FY30E," said Axis.
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