Acme Solar Shares Surge Up to 6% Following HSBC's Initiation of Coverage with Buy Rating

Acme Solar Shares Surge 7.63 Percent on Strong Growth Prospects

Acme Solar shares rose nearly 6 percent on Monday, defying the broader market weakness, after HSBC initiated coverage on the renewable energy company with a "buy" rating.

The stock settled higher after hitting an intraday high of Rs 289.15 per share on the NSE, up 7.63 percent. The gain comes after four consecutive sessions of decline. This significant increase reflects the market's positive sentiment towards the company's growth prospects.

HSBC initiated coverage with a target price of Rs 350, and said it expects EBITDA to grow at a compound annual growth rate (CAGR) of 72 percent over FY26–FY28. This growth forecast is based on the company's expanding operations and increasing demand for renewable energy.

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Acme Solar Holdings is a fast-growing renewable energy independent power producer with fully integrated operations across engineering, procurement and construction, as well as operations and maintenance. The company currently operates around 3 GW of generation capacity. Its projects are expected to increase overall capacity by about 2.7 times over the next two to three years. It also has an additional 1.8 GW of awarded projects awaiting conversion into power purchase agreements.

HSBC noted that the company is transitioning from a pure-play solar provider to firm and dispatchable renewable energy projects, which combine solar, wind and battery storage. This shift is expected to provide a stable and predictable revenue stream for the company.

The brokerage highlighted the company's strong earnings visibility, with 84 percent of the contracted portfolio tied to 25-year fixed tariff power purchase agreements backed by central government agencies. It also added that the company is well placed to benefit from early adoption of battery energy storage systems and firm and dispatchable renewable energy projects.

Working capital improved to 23 days from 93 days in FY24, driven by a decline in receivables, strengthening confidence in its balance sheet, the brokerage said. HSBC highlighted key risks including high leverage due to an 80:20 debt-equity financing structure, potential rise in equipment and borrowing costs, delays in commissioning of projects, and lower-than-expected generation.

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HSBC also initiated coverage on Clean Max with a "buy" rating. Shares of the company settled 3.28 percent higher at Rs 890 per share on the NSE.