ACME Solar Holdings Aims for Bright Future, but IPO Pricing Faces Scrutiny
The initial public offer (IPO) of ACME Solar Holdings, a leading player in the renewable energy sector, is set to close on Friday, November 8, after a three-day bidding process. Despite attracting bids for 66.7% of the shares on offer, the pricing of the Rs 2,900-crore IPO has raised concerns among investors and analysts.
Priced at Rs 275-289 per share, the issue has been priced with a 25.06 price-to-earnings ratio, which is a multiple of its expected FY24 earnings. This ratio is below that of its peer, Adani Green Energy, which is expected to trade at a FY25 price-to-earnings ratio of 113. ACME Solar Holdings' enterprise value is also nearly 23 times its earnings before interest, taxes, depreciation, and amortization (EBITDA), further highlighting the scrutiny on the company's pricing.
Despite these concerns, Bajaj Broking recommends subscribing to the issue for the long term due to ACME Solar Holdings' promising plans in the renewable energy sector. The company aims to utilize the proceeds from the fresh issue to clear or reduce certain borrowings and for general corporate purposes. While the company's debt-to-equity ratio of 3.89 as of June 30, 2024, may seem high, its future prospects in the clean energy space could potentially offset this risk. As the company continues to navigate the competitive landscape, investors should keep a close eye on ACME Solar Holdings' financial performance and management's ability to execute its growth plans.
The outcome of the IPO will be closely watched by the investment community, particularly as it seeks to gauge investor appetite for renewable energy companies in India. With the clean energy sector expected to grow significantly in the coming years, ACME Solar Holdings' attempt to tap into this growing market is an interesting development. Whether the company can overcome the pricing concerns and achieve its growth objectives remains to be seen, but one thing is certain - the IPO's closure on Friday marks an important milestone for ACME Solar Holdings' journey into the public markets.
