ACME Solar Holdings Limited, recognized as one of India’s largest renewable energy Independent Power Producers, is set to launch its IPO with a total issue size of ₹29,000 crores. This comprises a fresh issue of 828.71 lakh shares valued at ₹2,395 crores and an offer for sale of 174.74 lakh shares totaling ₹505 crores. The subscription period for this IPO will commence on November 6, 2024, and conclude on November 8, 2024. Following the closure of subscriptions, allotments are expected to be finalized around November 11, 2024, with shares likely to be listed on both the BSE and NSE by November 13, 2024.

The share price band is set between ₹275 to ₹289 per equity share, which would give ACME Solar Holdings a market capitalization of approximately ₹17,515.70 crores at the upper end of the price band. The minimum investment for retail investors is ₹14,739 for a lot size of 51 shares, while High-Net-Worth Individuals (HNIs) are required to invest in 14 lots (totaling 714 shares), amounting to ₹2,06,346.

Nuvama Wealth Management Limited, ICICI Securities Limited, JM Financial Limited, Kotak Mahindra Capital Company Limited, and Motilal Oswal Investment Advisors Limited serve as the book-running lead managers for this IPO, with KFin Technologies Limited acting as the registrar.

Financial Performance and Valuation

The financial metrics leading up to the IPO indicate that ACME Solar Holdings has experienced fluctuations in revenue and profitability. For the fiscal years 2022, 2023, and 2024, the company's revenues from operations were ₹15,627.26 million, ₹13,613.73 million, and ₹14,662.67 million, respectively. Notably, the company reported a profit after tax of ₹6,977.81 million for FY2024, a significant recovery from the previous fiscal year where it incurred a loss of ₹31.74 million.

With a pre-issue EPS of ₹12.55 and a post-issue EPS of ₹11.51, the pre-issue P/E ratio stands at 30.99x, while the post-issue P/E ratio is at 33.79x, contrasting sharply with the industry average P/E ratio of 170.3x. The company's Cash RoE for FY24 is an impressive 38.83%, indicating strong profitability relative to equity.

Market Sentiment and Recommendations

The Grey Market Premium (GMP) for ACME Solar Holdings is currently reported at ₹0, indicating no anticipated listing gains. Given the company's financial performance and the valuation metrics, the recommendation is to avoid the ACME Solar Holdings Limited IPO for both listing gains and long-term investment strategies. Investors are encouraged to weigh these insights carefully before making investment decisions.

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