ACME Solar Remains Top Pick In Power Sector: Motilal Oswal Sees 34% Upside
ACME Solar Holdings Ltd. has been a standout performer in the power and renewables space, with its share price rising by 45% in the last six months. This impressive growth has outpaced its peers, including NTPC Green and JSW Energy, which have seen minimal gains of 0.2% each during the same period.
Strong Project Execution and Power Purchase Agreements
Motilal Oswal has reiterated its faith in ACME Solar, citing the company’s ability to execute projects on time and within budget as a key factor in its success. The brokerage firm has also highlighted the importance of power purchase agreements (PPAs) in driving earnings growth for the company. With a slowdown in power demand in FY26YTD, investors have shifted their focus to companies with strong earnings growth backed by PPAs and project execution capabilities.
Capacity Expansion Plans
Motilal Oswal has projected ACME Solar’s installed capacity to rise from 2.5GW at the end of FY25 to 5.5GW by the end of FY28. This significant expansion in capacity is expected to drive growth for the company, making it an attractive bet for investors. The company’s ability to scale up its operations while maintaining its project execution capabilities will be crucial in achieving its growth targets.
Valuations and Peer Comparison
ACME Solar trades at an EV/Ebitda of 15.5x for FY27, which is higher than its peers NTPC Green (13.3x) and JSW Energy (12.6x). However, Motilal Oswal believes that the company’s strong growth prospects and project execution capabilities justify its premium valuations. The brokerage firm has set a target price for the stock, implying a potential upside of 34% from current levels.
Investment Rationale
ACME Solar’s strong project execution capabilities, power purchase agreements, and capacity expansion plans make it an attractive investment bet in the power and renewables space. The company’s ability to deliver earnings growth and its premium valuations make it a top pick for Motilal Oswal. Investors looking to invest in the power and renewables space may consider ACME Solar as a potential investment opportunity.
Indian Power Sector Overview
The Indian power sector has been witnessing a significant transformation in recent years, driven by the government’s focus on renewable energy and reducing carbon emissions. The sector has seen a surge in investment, with several companies announcing plans to expand their renewable energy capacity. The growth in the power sector is expected to continue, driven by the government’s targets to increase the share of renewable energy in the country’s energy mix.
Renewable Energy Landscape in India
India has set ambitious targets to increase its renewable energy capacity, with a focus on solar and wind energy. The country aims to achieve 40% of its installed power capacity from non-fossil fuels by 2030. The renewable energy sector has seen significant growth in recent years, with several companies investing in solar and wind energy projects. The growth in the renewable energy sector is expected to continue, driven by the government’s policies and initiatives to promote clean energy.
Conclusion
ACME Solar remains Motilal Oswal’s top pick in the power and renewables space, driven by its strong project execution capabilities, power purchase agreements, and capacity expansion plans. The company’s premium valuations are justified by its growth prospects, making it an attractive investment bet for investors. As the Indian power sector continues to grow, driven by the government’s focus on renewable energy, ACME Solar is well-positioned to benefit from this trend.
For investors looking to invest in the power and renewables space, investing in renewable energy can be a lucrative opportunity. It is essential to conduct thorough research and analysis before making any investment decisions. Investors can also consider staying updated with the latest stock market news and trends to make informed investment decisions.
