ACMESOLAR - Fundamental Analysis: Financial Health & Valuation
Last Updated Time : 05 Nov 25, 7:43 am
Back to Fundamental ListACME Solar shows promise in renewable energy but is currently overvalued with weak profitability and high volatility. Long-term potential exists if earnings stabilize and valuation cools.
Fundamental Rating: 2.6
📊 Financial Overview: ACME Solar’s financials reflect a challenging picture. With a ROCE of 7.63% and ROE of 5.18%, its capital efficiency is modest. The debt-to-equity ratio of 0.50 suggests moderate leverage. Quarterly PAT improved to ₹0.81 Cr from a loss of ₹9.99 Cr, but the profit variance of -99.5% indicates extreme volatility. EPS is just ₹0.74, highlighting weak earnings.
💰 Valuation Metrics: The stock trades at a staggering P/E of 451, far above the industry average of 30.9. Its P/B ratio is ~3.74 (₹282 / ₹75.3), and the PEG ratio of 8.17 signals severe overvaluation relative to growth. Dividend yield is negligible at 0.07%, offering little income support.
🏢 Business Model & Competitive Edge: ACME Solar is a renewable energy player focused on solar power generation and infrastructure. It benefits from India’s clean energy push and operates across solar, fossil, and alternate sources. However, profitability remains weak, and high debt levels limit flexibility. Its presence above the 200 DMA suggests technical strength, but fundamentals lag.
📉 Entry Zone: A safer entry zone lies between ₹200–₹230, closer to the 52-week low of ₹168 and below DMA 200 (₹262), offering better risk-reward.
📈 Long-Term Holding Guidance: Suitable only for high-risk, long-term investors betting on India’s renewable energy growth. Wait for earnings consistency and valuation correction before accumulating.
✅ Positive
- Quarterly PAT turned positive after previous losses
- Above 200 DMA, indicating technical momentum
- Strong sector tailwinds from India’s renewable energy push
⚠️ Limitation
- Extremely high P/E ratio (451) vs industry average (30.9)
- PEG ratio of 8.17 signals overvaluation
- Low ROE (5.18%) and ROCE (7.63%) reflect weak profitability
- EPS of ₹0.74 is minimal
📉 Company Negative News
- Quarterly profit variance of -99.5% indicates instability
- Decline in both FII (-0.19%) and DII (-0.22%) holdings
📈 Company Positive News
- Three consecutive quarters of revenue growth
- Trading above 200 DMA, suggesting bullish technical sentiment
🏦 Industry
- India’s renewable energy sector is expanding rapidly with government support
- Solar energy adoption is rising across industrial and residential segments
- Industry P/E of 30.9 reflects growth optimism
🧾 Conclusion
ACME Solar is a speculative bet on India’s clean energy future. While technicals show strength, fundamentals are weak and valuation is excessive. Long-term investors should wait for earnings stability and enter below ₹230 for better margin of safety.
Sources
MoneyControl
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