ACME Solar Holdings IPO: Key Highlights, financials, risks revealed in DRHP

ACME Solar Holdings IPO: Leading renewable energy player ACME Solar Holdings is all set to go public with the launch of its Initial Public Offering (IPO). Through this IPO, the company seeks to raise Rs 3,000 crore by offering a fresh issue of equity shares and an Offer for Sale, with promoters divesting their stake from the company. The promoters of the company include Mamta Upadhyay, Manoj Kumar Upadhyay, ACME Cleantech Solutions, MKU Holdings, and the Upadhyay Family Trust.

 

As investors await further details from ACME Solar Holdings, here are the key takeaways from the Draft Red Herring Prospectus (DRHP) that the company submitted to the market regulator, the Securities and Exchange Board of India (sebi): 

 

 

ACME Solar Holdings IPO issue size  

The public offering of ACME Solar Holdings comprises a fresh issue of shares worth around Rs 2,000 crore and an Offer for Sale with promoter company ACME Cleantech Solutions offering shares worth around Rs 1,000 crore. "The Price Band and Offer Price will be determined by our Company in consultation with the BRLMs, and in accordance with applicable law, on the basis of assessment of market demand for the Equity Shares offered through the Book Building Process and quantitative and qualitative factors," said ACME Solar Holdings in its DRHP.

 

ACME Solar Holdings financial details  

ACME Solar Holdings' revenue from operations for FY24 rose to Rs 1,919.25 crore from Rs 1,294.90 crore in FY23 and Rs 1,487.90 crore in FY22.   

The company's total expenses for FY24 fell to Rs 1,305.48 crore, down from Rs 1,416.21 crore in FY23 and Rs 1,789.86 crore in FY22.   

ACME Solar Holdings' net profit attributable to owners of the company in FY24 surged impressively to Rs 698.22 crore from Rs 62.23 crore in FY22. Notably, the company had posted a loss of Rs 3.15 crore in FY23.

 

ACME Solar Holdings IPO objectives  

The company stated in its DRHP that it proposes to utilise Rs 1,500 crore from the net proceeds towards funding the repayment or prepayment, in full or in part, of certain outstanding borrowings availed by its subsidiaries. The remaining proceeds will be used for general corporate purposes, which may include funding growth opportunities, business development initiatives, meeting ongoing general corporate purposes, or contingencies. The proceeds from the Offer for Sale will be received by the Promoter Selling Shareholder, ACME Cleantech Solutions Private Limited. The company will not receive any proceeds from the Offer for Sale.

 

ACME Solar Holdings IPO registrar details  

KFin Technologies is the registrar for the ACME Solar Holdings IPO. The book-running lead managers include Nuvama Wealth Management, ICICI Securities, JM Financial, Kotak Mahindra Capital Company, and Motilal Oswal Investment Advisors.

 

ACME Solar Holdings IPO key risks   

The company has outlined the following key risk factors in its DRHP:

 

• Inability to grow its portfolio of renewable energy power projects.
• Dependence on power purchase agreements for revenue and sale of power.
• Reliance on the top 10 off-takers, which contributed 89.97%, 89.15%, and 87.77% of revenue from operations in FY24, FY23, and FY22, respectively.
• Dependence on its top supplier, ACME Cleantech, and the absence of definitive supply agreements for components.
• Dependence on a continued relationship with one of its promoters, ACME Cleantech.
• Lack of experience in commissioning wind, hybrid, and FDRE power projects.
• Constraints in electricity grid availability and challenges in obtaining access to transmission lines.
• Potential issues in receiving approvals for land use for project development.
• Dependence on counterparties fulfilling obligations under power purchase agreements.
• Concentration of power projects in Rajasthan, Andhra Pradesh, and Telangana, with exposure to policy changes in these states.

 

About ACME Solar Holdings  

ACME Solar Holdings is one of India’s largest independent power producers (IPP) in renewable energy, ranking among the top 10 in terms of operational capacity as of March 31, 2024 (Source: CRISIL Report). As of the date of the DRHP, the company has an operational capacity of 1,320 MW (1,802 MWp) and an under-construction capacity of 2,220 MW, with an awarded under-construction capacity of 1,810 MW. The CRISIL Report highlights that renewable energy installations, including large hydro projects, have increased fivefold to around 191 GW as of March 2024, compared to 63 GW in March 2012, driven by various incentives from central and state governments.

 

ACME’s subsidiaries include Grahati Solar Energy, Dayakara Solar Power, ACME Solar Energy (Madhya Pradesh), ACME Odisha Solar Power, Nirosha Power, ACME Solar Technologies (Gujarat), ACME Raipur Solar Power, ACME Nalanda Solar Power, ACME Magadh Solar Power, ACME PV Powertech, ACME Yamunanagar Solar Power, ACME Mahbubnagar Solar Energy, ACME Rewa Solar Energy, ACME Jodhpur Solar Power, and ACME Eco Clean Energy.