ACME Solar Holdings is set to sharply increase renewable energy and battery storage capacity over the next four years, with merchant electricity sales expected to contribute to earnings as projects move through construction and commissioning.
The company is expected to commission 1.1 GW in FY27, 2 GW in FY28, 2.95 GW in FY29 and another 1.75 GW in FY30, according to estimates by Axis Capital. Battery energy storage additions are projected at 6.7 GWh in FY27, 6 GWh in FY28 and 3.9 GWh in FY29. The expansion comes as ACME moves from predominantly standalone solar projects towards renewable projects involving storage and firm power delivery.
Merchant Earnings To Supplement Contracted Revenue
A notable component of the earnings estimates comes from electricity sold outside contracted power purchase agreements. Axis Capital estimates merchant EBITDA of Rs 960 crore in FY27, rising to Rs 1,400 crore in FY28 before moderating to Rs 1,170 crore in FY29 and Rs 840 crore in FY30. The estimates include merchant gains generated by BESS projects before commissioning. No merchant BESS contribution has been assumed for FY31. Including contracted capacity and merchant earnings, EBITDA is projected to grow at a compound annual rate of 38 per cent between FY26 and FY31.
The expansion will nevertheless keep leverage elevated. ACME's net debt-to-EBITDA stood at 7.2 times in FY26 and is estimated to decline to 5.9 times by FY30 as additional projects become operational. The projections therefore hinge on the pace of commissioning, storage deployment and the ability to capture merchant-market opportunities alongside contracted revenues.
Axis Capital initiated coverage on ACME Solar with a Buy rating and a target price of Rs 550, compared with Rs 420 at the time of the report. This version doesn't sell ACME. It extracts the news: unusually large commissioning schedule + BESS ramp-up + the fact that a meaningful part of near-term earnings expectations relies on merchant opportunities.