ICICI Securities has increased its target price for Acme Solar Holdings to ₹520, citing progress in its battery storage capacity and new power supply contracts. The company aims to reach 12GWh of storage capacity by FY27. Investors should keep an eye on project execution timelines and the company’s debt levels given the high spending needed for these projects.
ICICI Securities has raised its target price for Acme Solar Holdings to ₹520 from ₹450, reflecting a positive outlook on the company’s focus on Battery Energy Storage Systems (BESS). The brokerage noted that the storage segment is becoming a major contributor to the company’s earnings growth. Acme Solar has expanded its operational BESS capacity to 5.2GWh after adding 2.1GWh during the most recent quarter. The company has also accelerated its expansion timeline, setting a new goal to reach 12GWh of capacity by the financial year 2027, an increase from its earlier estimate of 10GWh.
Battery storage technology is essential for managing the variable nature of renewable energy, such as solar and wind power. By storing excess energy when production is high and releasing it when demand peaks, these systems play a critical role in modern power grids. Acme Solar’s push into this area is part of a broader strategy to capture demand in the growing energy storage market.
In addition to capacity expansion, the company has strengthened its revenue visibility by securing 0.8GW of new power purchase agreements (PPAs) during the quarter. These agreements are formal contracts to sell electricity to utility companies, which helps in predicting future income. Currently, 92% of the projects that Acme Solar has under construction are already backed by such agreements. The company has also projected short-term market revenues of ₹16 billion for FY27 and ₹15 billion for FY28.
While the expansion plans are significant, there are risks to consider. Building large-scale battery storage facilities requires substantial spending on construction and technology. This can lead to higher debt levels, which investors should monitor closely. Since the company listed on the stock exchanges in late 2024, its track record as a public entity is still being established. Additionally, the success of these projects depends on grid connectivity, government policies, and the availability of battery technology at reasonable costs. Any delays in commissioning these projects or sudden increases in costs could put pressure on profit margins. The primary monitorable for shareholders will be the company’s ability to execute its 12GWh roadmap on time and manage its financial commitments without excessive reliance on borrowing.