ACME Solar IPO Day 3: GMP, subscription status, review & other key details. Apply or not?

The IPO of ACME Solar Holdings, which opened for bidding on November 6, continued to receive a lukewarm response from investors on its final day, November 8, with the issue being subscribed only 0.78 times as of 11:40 a.m. today, according to the latest exchange data.

However, the retail portion of the IPO was oversubscribed 2.40 times, while the Non-Institutional Buyers (NIB) segment was subscribed 0.64 times, and the Qualified Institutional Buyers (QIB) segment at 0.31 times.

The price band for the offer is set at ₹275-289 per equity share, with a face value of ₹2 each. The company’s shares are trading at a nil premium in the grey market on the final day, suggesting that the shares may list on the exchanges at the IPO price.

The IPO is a book-built issue of ₹2,900 crore, which is a combination of a fresh issue of 8.29 crore shares aggregating to ₹2,395 crore and an offer for sale (OFS) of 1.75 crore shares aggregating to ₹505 crore.

Nuvama Wealth Management Limited, ICICI Securities Limited, JM Financial Limited, Kotak Mahindra Capital Company Limited, and Motilal Oswal Investment Advisors Limited are the book-running lead managers of ACME Solar Holdings IPO, while Kfin Technologies Limited is the registrar for the issue.

The allotment for the ACME Solar Holdings IPO is anticipated to be finalised on Monday, November 11, 2024. The IPO is scheduled to list on both NSE and BSE platforms, with the tentative listing date set for Wednesday, November 13, 2024.

The company proposes to utilise the net proceeds towards funding for the repayment/prepayment, in full or in part, of certain outstanding borrowings availed by the subsidiaries and general corporate purposes.

Should you apply for ACME Solar IPO?

Many domestic brokerage firms have given a ‘Subscribe’ rating to ACME Solar Holdings IPO, citing the company’s strong position in the industry and its diversified portfolio. Bajaj Capital recommends subscribing with a long-term perspective, while BP Equities (BP Wealth) has also assigned a ‘Subscribe’ rating, highlighting the IPO’s attractive valuation relative to peers.

“The current issue is priced at a P/E ratio of 23.03x on the upper price band based on FY24 earnings, which is relatively lower than its peers. Therefore, we recommend a subscribe rating with a medium- to long-term investment perspective for this issue,” said BP Equities.

Marwadi Shares and Finance also rated the IPO as ‘Subscribe,’ emphasising that ACME Solar Holdings, as a prominent player in the renewable energy sector, is well-positioned to capitalise on industry tailwinds in the independent power producer (IPP) space. The brokerage noted that the IPO is attractively valued compared to its peers.

“Considering the TTM-June 24 EPS of ₹10.19 on a post-issue basis, the company is set to list at a P/E of approximately 28x with a market cap of ₹17,486 crore, whereas its peer, Adani Green Energy Limited, is trading at a P/E ratio of approximately 201x,” said Marwadi Shares and Finance.

In addition, SBICAP Securities and Ventura Securities have also assigned a ‘Subscribe’ rating for the issue.

About ACME Solar Holdings

The company is a leading renewable energy company in India, boasting a diverse portfolio that includes solar, wind, hybrid, and firm and dispatchable renewable energy (FDRE) projects. It is one of the largest independent power producers (IPPs) of renewable energy in India and ranks among the top 10 in terms of operational capacity as of June 30, 2024.

Over the years, the company has expanded its portfolio from solely solar power projects to become a comprehensive renewable energy company. It develops, constructs, owns, operates, and maintains large-scale renewable energy projects through its in-house engineering, procurement, and construction (EPC) division and operations and maintenance (O&M) team.

The company generates revenue by selling electricity to various customers, including entities backed by the central and state governments.

Its operational project capacity includes 1,340 MW (1,826 MWp) of solar power projects. It has an under-construction contracted project capacity of 3,250 MW, comprising 1,500 MW (2,192 MWp) of solar power projects, 150 MW of wind power projects, 1,030 MW of hybrid projects, and 570 MW of FDRE projects, as per the company’s DRHP report.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.