ACME Solar Holdings IPO Day 2: GMP, Subscription Status, Key Dates, and Expert Review—Should You Subscribe?

Overview of the ACME Solar Holdings IPO

ACME Solar Holdings Ltd, a prominent name in renewable energy, launched its initial public offering (IPO) on November 6, 2024. The company aims to raise ₹2,900 crore through this public issue, which includes a fresh issue of ₹2,395 crore and an Offer for Sale (OFS) worth ₹505 crore by ACME Cleantech Solutions Private Ltd. The IPO subscription window is set to close on November 8, 2024.

ACME Solar Holdings IPO Price and Allocation

The price range for the IPO is fixed between ₹275 and ₹289 per share. Notably, 75% of the issue is reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and 10% for retail investors. An additional equity portion valued at ₹10 crore is reserved for employees.

Subscription Status After Day 1

On the first day of bidding, ACME Solar Holdings' IPO was subscribed 0.39 times. The retail portion witnessed robust participation, being subscribed 1.19 times, while the NII segment was subscribed 0.32 times. The QIB portion, however, trailed behind with a 0.15 times subscription.

Grey Market Premium (GMP)

The current grey market premium (GMP) for ACME Solar Holdings stands at ₹10, signaling a slight willingness among investors to pay above the IPO price. Considering the upper end of the price band (₹289), this indicates a projected listing price of approximately ₹299 per share—3.46% higher than the issue price. Notably, the GMP has fluctuated between ₹0 and ₹30 over the past two weeks, highlighting cautious optimism among investors.

Financial Performance and Outlook

ACME Solar Holdings reported a significant turnaround in FY24, achieving a profit of ₹698.23 crore compared to a loss in FY23. Revenue from operations saw a modest rise of 1.88%, reaching ₹1,319.25 crore from the previous ₹1,294.90 crore. The company's strong project pipeline, including its expansion in Andhra Pradesh, Rajasthan, and Telangana, reflects strategic positioning in India's renewable energy market.

Peer Comparison

ACME Solar's key competitors include Adani Green Energy Ltd (with a P/E of 291.7x) and ReNew Energy Global PLC (with a P/E of 48.8x), providing context for assessing the valuation and growth prospects of ACME Solar Holdings.

Brokerage Recommendations

• Canara Bank Securities Ltd notes that while ACME Solar Holdings has shown fluctuating profitability due to project sales and capital demands, its strategic focus on hybrid and flexible distributed renewable energy (FDRE) solutions positions it well for long-term growth.

• Swastika Investmart Ltd highlights the company's broad renewable energy portfolio and recent profitability surge but cautions about its high debt-to-equity ratio. This IPO is recommended for long-term investors who are prepared for potential market volatility.

Should You Subscribe?

Investors looking for exposure to the renewable energy sector may find ACME Solar Holdings' IPO appealing due to its growth potential and strategic positioning. However, potential subscribers should consider the company's debt levels and past profitability swings. Expert consensus leans toward subscribing for long-term gains, given the supportive policy environment and growing renewable energy demand.

Disclaimer: The information provided is based on expert analysis and market trends. Investors should seek advice from certified financial advisors before making any investment decisions.