ACME Solar Holdings Ltd Q3 FY26 Earnings Analysis

- ACME Solar plans to commission 450 MW of renewable energy capacity in FY26, with 378 MW already commissioned and 72 MW under advanced construction (page 4). - Operational portfolio now stands at approx. 2,918 MW, targeting annual steady-state project EBITDA of INR 2,025-2,075 crores, yielding ~14%-15% EBITDA margin (page 5). - Under construction portfolio extends to around 4.5 GW including signed PPAs of 2.3 GW (page 5). - New projects won totaling 720 MW capacity which will contribute to near-term growth (page 5). - Battery energy storage system (BESS) operations (1 GWh) expected from Q4 FY26, providing additional annual EBITDA upside of ~INR 170 crores (page 4). - Early commissioning of projects like Sikar has a minor impact (1.5%-2%) on annual revenue but overall beneficial (page 20). - Overall, the company aims to maintain around 14%-15% EBITDA yield, driven by growth in solar, wind, and battery storage integration.

- ACME Solar targets commissioning 450 MW renewable energy capacity in FY26, on track with 378 MW done and 72 MW under advanced construction. - Operational portfolio capable of delivering annual EBITDA between INR 2,025 to 2,075 crores, with a stable EBITDA margin of ~14%-15%. - Merchant 1 GWh battery energy storage system (BESS) operations from Q4 FY26 expected to generate additional annual EBITDA of ~INR 170 crores. - The company maintains a ROCE target of 14%-15% for new projects, ensuring attractive risk-adjusted returns. - Continued cost optimization and capital efficiency through increased use of domestic modules, optimized debt-equity mix (75-80% debt), and reduced capex requirements with solar-heavy configurations. - Interest rate reductions and refinancing efforts are expected to improve net profits and cash flows. - With ongoing project wins and expansions, including 5.1 GWh BESS orders and 7,390 MW total portfolio, ACME is well positioned for steady profit and EPS growth.

- FY 2026 Capex Target: INR 12,000 crores with 75-80% debt and 20-25% equity funding. - FY 2027 Capex Plan: INR 12,000-13,000 crores anticipated with similar debt-equity ratio. - INR 3,000 crores equity already available in the balance sheet for current projects; some equity portion reserved for next year's projects. - Funding sources include undrawn securitization proceeds (~INR 1,000 crores), refinancing proceeds (~INR 1,000 crores), and operating cash flows (PAT plus tax depreciation generating ~INR 260-275 crores annually). - Capex focus is on solar-heavy configurations, batteries (5 GWh ordered, significant capex expected starting January), and Indian solar modules. - Battery energy storage system (BESS) investments include 1 GWh expected to generate INR 170 crores in early revenues. - Financing includes INR 7,000 crores recently secured for 680 MW FDRE projects, enhancing cost efficiency. - Strategic focus on reducing capex by optimizing equipment procurement and installation timelines.

- For FY26 capex (~INR 12,000 crores), funding is planned with 75-80% debt and 20-25% equity. - INR 3,000 crores equity portion for FY26 capex is partially drawn; some will be used for this year projects and the rest for next year. - Undrawn securitization proceeds of around INR 1,000 crores and upcoming refinancing adding another INR 1,000 crores are available. - Operating cash flows (PAT plus tax depreciation) generate around INR 260-275 crores annually, supporting equity needs. - For FY27, with similar capex (~INR 12,000-13,000 crores), equity funding sources are expected from operational cash flows and refinancing. - About 80% of signed PPA projects already have loan documents ready; some first disbursements are made. - Refinancing efforts have reduced interest rates (around 8% floating) and are ongoing, which will improve cash flow and reduce funding cost.

- ACME Solar has an under-construction portfolio of around 4.5 gigawatts, including 2.3 gigawatts with signed PPAs. - During the recent quarter, they won new projects totaling 720 megawatts: 50 MW FDRE with Tata Power and 670 MW solar plus BESS. - The operational portfolio stands at approximately 2,918 megawatts. - About 720 MW of new capacity won, but portfolio size increased only by 420 MW due to removal of a 300 MW NTPC project. - The 42 gigawatt capacity awarded in FY24 and FY25 had about 6-6.5 GW still pending PPA signing (SECI) with improvements expected. - ACME is in advanced discussions for several PPAs, expecting signings soon, with no cancellations anticipated given attractive tariffs and state demands. - The company manages connectivity timelines actively, with maximum expected project delays limited to one quarter within PPA timelines.