The initial public offering (IPO) of ACME Solar Holding sailed through on the third and final day of the bidding process, thanks to the last day bidding from the institutional investors. The issue was booked 42 per cent on day one, while ended day two with 70 per cent subscription.
Gurugram-based ACME Solar Holdings is selling its shares in the price band of Rs 275-289 apiece. Investors can apply for a minimum of 51 shares and its multiples thereafter. It is looking to raise Rs 2,900 crore via IPO, which includes a fresh share sale of 2,395 crore and offer-for-sale (OFS) of up to 17,474,049 equity shares.
According to the data from BSE, the investors made bids for 14,85,93,855 equity shares, or 2.55 times, compared to the 5,82,03,223 equity shares offered for the subscription by 3.15 pm on Friday, November 08. The three-day bidding for the issue, which began on Wednesday November 06, concludes today.
The allocation for qualified institutional bidders (QIBs) was subscribed 3.32 times, while the portion reserved for the retail investors saw a subscription of 2.85 times. The allocation for employees was booked 1.463 times. However, the quota set aside for non-institutional investors (NIIs) saw bids 85 per cent for their allocations as of the same time.
Incorporated In June 2015, ACME Solar Holdings is an Indian electricity producer from renewable energy sources. It is one of the largest producers of electricity from wind and solar energy in India. The company specializes in the development, construction, ownership, operation and maintenance of large-scale renewable energy projects.
The grey market premium (GMP) for ACME Solar Holdings has been falling consistently amid the volatile market sentiments. Last heard, the company was commanding a no premium in the unofficial market. The GMP stood at Rs 30, before the issue kicked-off for the bidding.
Brokerages mostly have a positive view on the issue and suggest subscribing for a long term citing the rising demand for renewable energy, diversified portfolio and strong margin profile. However, inconsistent profits, high debt and aggressive valuations are the major concerns for the issue.
ACME Solar is a large renewable energy player well positioned to capitalize on strong industry tailwinds with end-to-end value chain capabilities and an integrated approach to developing renewable power projects by in-house project development, engineering, procurements, construction, operations and maintenance teams
"It has an expansive portfolio diversified across different renewable energy technologies with Long-term stable cash flows based on contracts with central and state government entities along with Design and value engineering leading to higher efficiencies. The issue is valuing at P/E of 30.17 times, with an EV/Ebitda of 22.4 times," it said with a 'subscribe for long-term' rating.
For the quarter ended on June 30, 2024, ACME Solar reported a net profit of Rs 1.39 crore with a revenue of Rs 340.01 crore. The company had clocked a net profit of Rs 697.78 crore with a revenue of Rs 1,466.27 crore for the financial year ended on March 31, 2024. The company will command a total market capitalization of about Rs 17,486.81 crore.
The company has reserved shares worth Rs 10 crore for the eligible employees of the company, who will get a discount of Rs 27 per share. Of the net offer, 75 per cent shares have been reserved for qualified institutional bidders, while non-institutional investors will have 15 per cent of the issue. Retail bidders will get 10 per cent of the allocation in the IPO.
"We recommend subscribe to the issue as we expect Acme to maintain its upward momentum, supported by favourable government policies and a growing renewable energy market, making it a compelling investment opportunity in the green energy sector as the company is issued at a cheaper valuation than its listed peer in the industry," said SMIFS.
It sees it as a good long term investment due to the high growth being offered by the industry coupled with a strong order book, business re-organisation, asset monetisation of completed projects and capex and focus on the FDRE segment could result in very high growth over the next 2-3 years with due respect to high debt that the company is carrying, said the brokerage.
Nuvama Wealth Management, ICICI Securities, JM Financial, Kotak Mahindra Capital Company and Motilal Oswal Investment Advisors are the book running lead managers of the ACME Solar Holdings IPO, while Kfin Technologies is the registrar for the issue. Shares of Swiggy shall be listed on both BSE and NSE on November 13.