ACME Solar Holdings LtdQ3 FY24Power

ACME Solar Holdings Ltd

Q3 FY24 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Revenue guidance

Category 2

→The company has approximately 4.2 GW of capacity under construction with connectivity tied up for all projects, enabling commissioning aligned with substation availability, mostly by FY27.
→Recent energization of a 1,200 MW plant in October increased capacity significantly, with daily revenue around INR1.5 crore and expected to grow as full operations commence.
→They expect to add another 450 MW in the next quarter and potentially 900 MW more if connectivity enables early commissioning.
→Growth is modulated based on capex availability, mid-teen return targets, and sustainable debt levels; bidding selectively with a bias towards consolidation.
→Seasonality affects quarterly revenues (monsoon impact), but generation efficiency is improving due to operational enhancements like robotic cleaning.
→Tariffs are sustainable with declining module costs, and new projects are coming in at INR2.44 per unit or competitive rates.
→Overall, revenue growth is expected from operational ramp-up of new plants, efficient execution, and selective bidding strategy.

Category 3

→Revenue for H1 FY25 increased by 5.5% YoY, with EBITDA growth of 4.8% YoY, indicating steady growth.
→Cash PAT for H1 FY25 rose 10.6% YoY to INR152 crores, reflecting improving profitability.
→EBITDA margins remain healthy and consistent with operational efficiencies like robotic cleaning improving capacity utilization factor (CUF) from 23.3% to 24.6%.
→EPC business showing robust margins around 14%-16%, a key profit driver.
→Under-construction capacity of 4.2 GW and commissioning of large plants (e.g., 1,200 MW synchronized recently) expected to boost revenue and profits over next 1-2 years.
→Mid-teen IRR targeted for new bids, providing solid return benchmarks for growth.
→Refinancing opportunities and IPO proceeds will help reduce costs and improve financial performance.
→Overall, the company plans disciplined capex with growth calibrated to maintain mid-teen returns and sustainable leverage, supporting future operating earnings and EPS growth.

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Yes

→ACME Solar has tied up around INR14,000 crores of greenfield debt for 4.2 GW under construction from lenders like PFC, REC, SBI, and IREDA.
→An additional INR20,000 crores of financing is anticipated, timed with project disbursements to minimize upfront fees.
→The company plans to use IPO proceeds to repay INR1,800-2,000 crores of debt, improving financial metrics and enabling further capex.
→No immediate plan to raise new equity is indicated; capex costs are trending down, reducing the need for equity dilution.
→Refinancing is ongoing to extend loan tenor and reduce interest rates, with recent refinancing rates around 8.7%-8.9% expected to hold at AA rating.
→Growth will be calibrated based on mid-teen IRR targets and sustainable debt-to-EBITDA ratios.
→InvIT fundraising is not planned currently; the company is focused on consolidating assets rather than monetizing them now.

Yes

→ACME Solar Holdings has around 4.2 GW of capacity under construction.
→Total portfolio including operational and pipeline stands at approximately 6.7 GW.
→The company has won 1,350 MW of new projects recently.
→Around 2.5 GW of capacity is already operational.
→The overall capex for the entire portfolio foreseen is roughly INR 40,000 crores.
→INR 14,000 crores of greenfield debt financing has been tied up for the 4.2 GW under construction.
→Further INR 20,000 crores financing is required as per current capex schedules.
→The company is modulating new bids and focusing on consolidating existing projects rather than aggressive new wins.
→Certain FDRE projects (570 MW SJVN, 380 MW SECI, 350 MW SECI solar+battery, 680 MW NHPC) have pending PPAs to be signed, expected within 1-2 months.
→PPAs for some portions (190 MW and 150 MW) have already been signed.

Yes

→Current capex for the 1200 MW plant is around INR 4,200 to 4,400 crores, with provisions included (Page 12).
→Total capex planned for upcoming projects is around INR 40,000 crores, funded approximately 75% by debt and 25% by equity (Pages 11, 12).
→The company is gearing for commissioning 4.2 GW of capacity under construction, aligned with substation connectivity timelines mostly by FY2027 (Pages 7, 10).
→Capex is on a downturn due to declining costs of domestic solar modules, batteries, and related technology (Pages 17-18).
→Internal cash flows, debt refinancing, and IPO proceeds are key funding sources; equity dilution is not expected imminently (Pages 6, 8).
→InvIT (Infrastructure Investment Trust) structure considered for semi-monetization in future, but no decision made yet (Pages 17-18).
→Strategic focus remains on consolidating assets rather than aggressive asset monetization (Page 17-18).

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