HSBC raises ACME Solar target price by 15%; stock jumps 5%. Why is the brokerage bullish?

Shares of ACME Solar rallied as much as 5% to their day’s high of Rs 421 on the BSE on Tuesday after HSBC upped the target price by 15% to Rs 450 from Rs 390 while retaining its Buy rating on the stock.

With a fresh target price of Rs 450, analysts predict that the stock can rally another 13.30% from current market levels. HSBC says there are signs of a recovery in renewable energy auction activity after a period of slower momentum over the past year. The brokerage noted that ACME converted 730MW of Letters of Award into power purchase agreements in Q2, which gives it greater confidence in the company’s ability to sustain business momentum.

Renewable energy auctions are showing signs of a revival after a muted Q1FY27 and a relatively weak FY26. The recovery is being supported by a surge in power demand, particularly during evening peak hours. Battery energy storage systems (BESS) are emerging as a key enabler, while complex firm and dispatchable renewable energy (FDRE) tenders are also gaining traction.


In Q2FY27, around 4.8GW of renewable capacity was auctioned, comprising 2.3GW of wind capacity, 1GW of thermal mimic RTC capacity and 1.5GW of assured peak FDRE capacity.

ACME Solar is seeing stronger momentum in converting awarded projects into power purchase agreements (PPAs), with 730MW of PPAs signed so far, although return metrics have deteriorated slightly. In Q2FY27 so far, the company added another project to its portfolio by winning 300MW of contracted capacity at a discovered tariff of Rs 6/kWh for four-hour assured supply during the evening. ACME also participated in the thermal mimic round-the-clock tender, bidding for 250MW of contracted capacity, but did not win in the reverse auction process.

During the quarter, ACME converted another 130MW of awarded capacity into a PPA, taking the total conversion over the past two quarters to 730MW. Overall, the brokerage remains positive on ACME’s ability to sign new projects, as it continues to be among the fastest deployers of BESS in India, as well as convert letters of award (LoAs) into PPAs. The company has shown a willingness to go beyond initial contracted terms to ensure conversion. However, project economics have slightly deteriorated amid competitive intensity.

“We believe ACME is in a high growth phase adding significant capacity over the next two years. Strategically, the business is evolving from a pure-play solar provider to more complex FDRE projects, which require a combination of solar, wind, and BESS,” HSBC in a note. “Further, it is using a strategy of early BESS commissioning to generate merchant revenue. All this positions it well to benefit from India’s renewable energy growth story.”

HSBC identifies three key downside risks for ACME Solar. These include high leverage, with projects financed at an 80:20 debt-to-equity ratio, a rise in equipment and borrowing costs, and delays in commissioning contracted capacity.

Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.