Introduction
As The ACME Solar IPO approaches its launch from November 6 to November 8, 2024, many investors are wondering: is the ACME Solar IPO good or bad? Right now, the grey market premium (GMP) is showing some signs of interest, currently sitting at ₹10, which hints at a cautious optimism among traders.
ACME Solar Holdings, a key player in India’s renewable energy sector, is launching its IPO with the goal of raising approximately ₹2,900 crore. This offering includes both a fresh issue and an offer for sale, with funds primarily aimed at reducing debt and fueling corporate growth. But with the renewable energy market rapidly evolving, is ACME Solar’s IPO worth a closer look?
| Table of Content |
|---|
| ACME Solar Holdings IPO GMP Price |
| ACME Solar IPO Financials |
| Key Risks To Consider |
| Analyst Ratings |
| Top FAQs on ACME Solar IPO |
ACME Solar Holdings IPO GMP Price
In recent days, ACME Solar’s GMP has been fluctuating, initially starting at around ₹15-₹20 and recently dropping to roughly ₹10. While a strong GMP can hint at high demand, this lower range suggests that investors are taking a cautious approach. This lukewarm premium points to some uncertainty in the market, possibly influenced by broader economic conditions rather than solely by ACME’s performance.
ACME Solar IPO GMP Trend
| Date | GMP (₹) |
|---|---|
| October 30, 2024 | ₹0 |
| October 31, 2024 | ₹0 |
| November 1, 2024 | ₹5 |
| November 2, 2024 | ₹5 |
| November 3, 2024 | ₹30 |
| November 4, 2024 | ₹28 |
| November 5, 2024 | ₹30 |
| November 6, 2024 | ₹10 |
GMP Interpretation
The current GMP gives us a temperature check of how the IPO is perceived in the market right now. A lower GMP means market interest is there but isn’t overwhelmingly high. This might be due to a combination of ACME’s high debt and the broader economic environment. A steady but mild GMP often signals that the IPO could be solid for long-term gains but might not deliver strong short-term returns.
ACME Solar IPO Subscription status- Day 1
Yet Not Updated.
ACME Solar IPO Financials(Past Three Years)
ACME’s financials present a mixed but overall improving picture. Here’s how they stack up over the last three years:
- Revenue Growth: From ₹1,295 crore in FY23 to ₹1,919 crore in FY24, ACME has shown positive growth in sales, suggesting its ability to harness India’s push toward renewables effectively.
- Profit Turnaround: After a slight loss in FY23, ACME posted a significant profit of ₹689 crore in FY24, marking a big rebound. This turnaround is encouraging, especially for long-term investors who value consistency in profit-making.
- Debt Levels: A critical factor here is ACME’s high debt, standing at about ₹8,200 crore. While the IPO proceeds will help reduce some of this, the debt could still pose a challenge to profitability in the future.
Financial Performance Overview
| Year | Revenue (₹ crore) | Net Profit (₹ crore) |
|---|---|---|
| FY 2022 | 1,487.9 | 62 |
| FY 2023 | 1,294.9 | -3.17 |
| FY 2024 | 1,919.25 | 689 |
Key Risks to Consider
As with any investment, understanding potential risks is crucial. Here are the main concerns that help you to decide ACME solar ipo good or bad
- Heavy Reliance on Long-Term Contracts: Much of ACME’s income comes from long-term Power Purchase Agreements (PPAs) with specific regions, meaning any change in state policies or demand could impact revenue.
- Geographic Concentration: ACME’s main operations are centered in a few states, increasing vulnerability to local regulatory changes.
- Supply Chain Dependence: ACME Solar sources many components from its promoter, ACME Cleantech, which could lead to supply issues if conditions or agreements change.
Analyst Ratings
Analysts have mixed views on ACME Solar’s upcoming IPO, focusing mainly on its valuation and recent financial performance. Here’s a breakdown:
Prospective Investors’ Viewpoints
Analyst Dilip Davda and Swastika Investmart suggest a “May Apply” stance, noting ACME Solar’s impressive revenue growth and a notable profit spike in FY2024. However, Davda cautions that these profits are largely boosted by one-time gains and other exceptional items, making the valuation look steeper when viewed under regular operating conditions
Concerns with Valuation
ACME Solar’s valuation has drawn a cautious response due to its high price-to-earnings (P/E) ratio, especially when compared to industry peers like Adani Green Energy and ReNew Energy. With limited predictable earnings and some financial metrics propped up by unique, non-recurring income, ICICI Securities and JM Financial opted not to rate the IPO. This approach reflects their concern about the company’s long-term earnings outlook given the fluctuations in recent profits and potential future impacts from amortization expenses.
Investor Takeaways
For well-informed investors with a longer horizon, ACME Solar’s IPO could be an opportunity to invest in the green energy sector, though they should carefully weigh the IPO’s high valuation and ACME’s debt level. If you’re considering investing, it may be worth exploring more in-depth reviews on platforms like ICICI Direct and Chittorgarh for comprehensive analysis and peer comparisons in the renewable energy landscape
Bottom Line: ACME Solar IPO Good Or Bad?
If you’re considering investing, think about your goals. ACME Solar holds solid growth potential in a fast-growing industry, making it appealing for long-term investors who believe in the shift to renewable energy. For those looking for short-term gains, however, the moderate GMP and high debt levels might make it less enticing.
Financial Disclaimer: The information provided herein is for educational/informational purposes only and should not be construed as financial advice. Investing in stocks, including IPOs, involves risks, and past performance is not indicative of future results. Always conduct your own research and consult with a financial advisor before making investment decisions.
Top FAQs on ACME Solar IPO
1. What’s the price range for ACME Solar’s IPO?
The price band is set between ₹275 and ₹289 per share.
2. How will ACME use the funds from this IPO?
Primarily to repay part of its debt and for general corporate purposes.
3. What’s ACME’s recent financial performance?
ACME’s revenue and profits improved in FY24, with revenue hitting ₹1,919 crore and a profit turnaround to ₹698 crore.
4. What are the biggest risks for investors?
Key risks include reliance on a few long-term contracts, geographic concentration, and heavy debt levels.
5. Should I invest based on GMP alone?
While GMP offers insight, it’s just one factor. Look at the company’s fundamentals, growth potential, and fit with your investment horizon.