ACME Solar Holdings IPO opens on November 6: Check price band, business model, financials & more

ACME Solar Holdings Limited's initial public offering (IPO) will open for subscription on Wednesday, November 6. The solar energy company plans to raise ₹2,900 crore through the IPO.

Ahead of the opening of the subscription window, here are five key things to know about ACME Solar Holdings IPO:

ACME Solar Holdings IPO offer size, price band and lot size

ACME Solar Holdings IPO is worth ₹2,900 crore and consists of a fresh issuance of 8.29 crore shares, aimed at raising ₹2,395 crore, and an offer-for-sale (OFS) of 1.75 crore shares, amounting to ₹505 crore.

ACME Solar Holdings IPO price band has been set at ₹275 to ₹289 per share. Retail investors can apply for the issue by placing bids for a minimum lot size of 51 shares, aggregating to an investment of ₹14,739 at the upper end of the price band.

The minimum lot size for Small Non-Institutional Investors (sNII) is 14 lots or 714 shares, which amounts to an investment of ₹2,06,346. The lot size for Big Non-Institutional Investors (bNIIs) is 68 lots or 3,468 shares, which translates to an investment of ₹10,02,252.

As much as 75% of the net offer size has been set aside for the Qualified Institutional Buyers category. The company has reserved 10% of the net issue for retail individual investors and 15% for the Non-Institutional Investor (NII) category.

ACME Solar Holdings business model

ACME Solar Holdings is a renewable energy company with a portfolio of solar, wind, hybrid, and firm and dispatchable renewable energy (FDRE) projects. The company claims in its RHP that it's one of the largest renewable energy independent power producers (IPP) in India and among the top 10 renewable energy players in India in terms of operational capacity as of June 30, 2024.

According to the RHP, the company has diversified and expanded its portfolio to become an integrated renewable energy company in India. The company’s in-house engineering, procurement, and construction (EPC) division develops, builds, owns, operates, and maintains utility-scale renewable energy projects. The company also generates revenue through the sale of electricity to various off-takers, such as central and state government-backed entities.

The ACME Group has a track record of developing, executing and commissioning a total of 2,719 MW of solar power projects since inception. As of 30 June 2024, it has an aggregate operational project capacity of 1,340 MW solar power projects.

It also has 1,500 MW of solar power projects and 150 MW of wind power projects in its contracted project capacity, 600 MW of solar power projects, 450 MW hybrid power projects and 680 MW of FDRE power projects in its awarded project capacity.

ACME Solar Holdings financials and key competitors

The company’s revenue has remained volatile. It reported revenue of ₹1,487 crore in FY22, which declined by over 12% to ₹1,294 crore in FY23. In FY24, revenue rebounded to ₹1,319 crore. Meanwhile, ACME Solar Holdings reported a net profit of ₹82.3 crore in FY24 compared to a loss of ₹3.17 crore in FY23.

In its RHP, the company said it faces competition from local and international developers and operators of renewable energy projects. It added that it also competes with traditional energy companies, such as utilities generating power from conventional fossil fuels. Some of the company's key competitors include ReNew Power, Adani Green Energy, JSW Neo, NTPC Green Energy, Tata Power, RE Ltd, Avaada Energy, and Greenko.

ACME Solar Holdings IPO key strengths:

• The company claims that it is well-positioned to capitalise on strong industry tailwinds in its Independent Power Producer (IPP) business.
• The renewable energy company takes an integrated approach to developing renewable power projects through its in-house project development, Engineering Procurement Construction (EPF), and Operations and maintenance (O&M) teams.
• Long-term stable cash flows based on contracts with central and state government entities with a weighted average residual period of 19 years for its operational projects as of FY24.
• Access to diversified funding sources by investing equity of ~25% of the total project cost, obtaining debt financing, refinancing some of its debt, and strategically divesting some of its projects.

ACME Solar Holdings IPO risks and threats:

• The company mentioned in its RHP that it might not be able to grow its portfolio of renewable energy power projects as it relies on highly competitive renewable energy power project auctions.
• ACME Solar Holdings depends on Power Purchase Agreements (PPA) to sell power and generate revenue from operations. However, the terms of the company’s PPAs may expose it to certain risks that may affect its future results of its operations.
• The company does not have experience in commissioning projects in the domain of wind, hybrid, FDRE power and closed loop pump storage projects. Due to lack of experience, the company may encounter delays and unexpected costs which are likely to affect its business.
• Restrictions on renewable energy equipment imports may increase procurement costs, as imports from China account for 66% of total purchase expenses

ACME Solar Holdings IPO dates

ACME Solar Holdings IPO subscription is open for three days from November 6 to November 8. The IPO share allotment status is scheduled to be finalised on Monday, November 11. Subsequent to the allotment of shares, refunds will be initiated for unsuccessful bidders on Tuesday, November 12, while the successful bidders will also receive shares of ACME Solar Holdings in their Demat accounts the same day.

Shares of ACME Solar Holdings will be listed on the NSE and BSE. The tentative listing date for ACME Solar Holdings shares is Wednesday, November 13.