ACME Solar jumps 7% as HSBC starts Buy, Rs 350 TP

Stock reaction: ACME Solar outperforms a weak tape

Shares of ACME Solar Holdings climbed sharply on Monday after HSBC initiated coverage on the renewable energy producer with a ‘Buy’ rating. Early reports pegged the move at around 4% to about Rs 278, while later in the session the stock traded over 6% higher at Rs 285.30 on the National Stock Exchange at 1210 IST. Trading activity also picked up, with about 6 million shares changing hands by 1210 IST, compared with over 257,000 shares traded by the same time on Friday. The broader market mood was cautious in parts of Asia, with risk-off cues also visible alongside a sharp rise in crude oil prices.

HSBC initiation: why the brokerage turned positive

In its initiation note, HSBC said ACME Solar is positioned to benefit from strong capacity additions, a robust project pipeline, and improved visibility into cash flows as execution accelerates across key markets. The brokerage added that policy support for clean energy and an acceleration in solar capacity auctions could be supportive for developers that can execute and bid competitively. HSBC argued that concerns around execution and tariffs are “overdone”, pointing to recent bid discipline and a greater focus on returns rather than growth at any cost. It also flagged declining financing costs, better capital discipline, and more competitive bidding as key levers that could lift returns over the medium term.

Target price and implied upside: Rs 350 in focus

HSBC set a target price of Rs 350 for ACME Solar. Depending on the reference price cited in different reports, the implied upside was described at about 23% to about 30%. The brokerage’s core point was that the current valuation does not fully capture ACME Solar’s growth runway and balance sheet improvements. HSBC also expects earnings growth to accelerate as new projects get commissioned and receivables cycles gradually normalise.

Portfolio and pipeline: what HSBC highlighted

HSBC said ACME Solar has an 8.1 GW portfolio, with 4.8 GW set aside for firm and dispatchable renewable energy (FDRE) projects. It noted that around 3 GW of ACME Solar’s contracted supply may be operational in two years, and that the contracted projects span solar, wind, and battery storage capacities. HSBC also said the company has already signed 25-year power purchase agreements (PPAs), and has 1.8 GW of projects that are yet to be converted into such agreements. It highlighted the role of long-term PPAs and a diversified counterparty mix in supporting multi-year earnings visibility.

Strategy shift: moving beyond pure-play solar

HSBC noted ACME Solar’s push to diversify from solar capacity into wind and battery storage. The company is employing a strategy to generate merchant revenue from battery energy storage systems, the brokerage said. Another report cited ACME having 1.1 GWh of battery energy storage system (BESS) capacity, aimed at earning additional merchant revenue before being integrated into more complex FDRE initiatives. HSBC also positioned early adoption of BESS and FDRE projects as a potential advantage as the grid leans more on dispatchable clean power.

Sector backdrop: India power demand and capacity buildout

HSBC described India’s demand for power as structurally strong, estimating demand could grow at a 7% compounded annual growth rate over the next decade. It also cited India’s Central Electricity Authority expectation that installed power capacity could rise at an 8% CAGR between 2025-26 and FY36. The brokerage added that renewable energy, which it described as cheaper than thermal power, is expected to drive the capacity addition. HSBC also cited that in FY27, India’s energy requirements are likely to grow 12.9% year-on-year to 1,929 billion units.

Financial and operating indicators mentioned in broker notes

Separately, one broker note cited ACME Solar’s working capital improving to 23 days from 93 days in FY24, attributing the change to lower receivables. Another earnings snapshot in the provided material said ACME posted 2QFY26 revenue of INR 4.7 billion (INR 470 crore) and EBITDA of about INR 4.0 billion (INR 400 crore), with adjusted PAT of INR 1.1 billion (INR 110 crore). For Q1 FY26, another update cited EBITDA of INR 4.6 billion (INR 460 crore) and adjusted PAT of INR 1.5 billion (INR 150 crore). A separate market update on the June quarter reported consolidated net profit of INR 1.31 billion (INR 131 crore) and consolidated revenue of INR 5.11 billion (INR 511 crore).

Risks HSBC flagged: transmission, costs and borrowing

HSBC listed the availability of transmission infrastructure, rising equipment procurement costs, and borrowing as major risks. It said transmission line expansion could be delayed due to execution challenges. HSBC also flagged leverage as a downside risk in one of the notes, pointing to project financing structures that can be heavy on debt.

Key facts at a glance

What investors will track next

Near-term attention is likely to remain on commissioning progress, PPA conversions for awarded projects, and signs of receivables normalisation. HSBC’s thesis leans on execution momentum, capital discipline, and the ability to participate in auctions without compressing returns. Updates on transmission readiness for project evacuation and the pace of BESS and FDRE deployments will also matter, given the brokerage’s emphasis on dispatchable renewables. The next set of company updates on capex ramp-up, which HSBC expects in FY27 and FY28, will be closely watched for evidence that earnings visibility is translating into delivered capacity.