ACMESOLAR - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 2.1

📊 Core Financials

• Revenue & Profitability: PAT rose to 29.4 Cr. from 0.81 Cr., but quarterly profit variation shows -35.7% volatility.
• Margins: ROE at 5.18% and ROCE at 7.63% reflect weak efficiency and profitability.
• Debt: Debt-to-equity ratio of 0.64 indicates moderate leverage, higher than ideal for stability.
• Cash Flow: Dividend yield of 0.09% is negligible, offering minimal shareholder returns.

💹 Valuation Indicators

• P/E Ratio: 656 vs Industry PE of 26.7 — extremely overvalued.
• P/B Ratio: Current Price 232 ₹ vs Book Value 76.3 ₹ → ~3.0x, moderately expensive.
• PEG Ratio: 11.9, suggesting growth does not justify valuation.
• Intrinsic Value: Current valuation far exceeds fundamentals, making it unattractive at present levels.

🏢 Business Model & Competitive Advantage

• Operates in renewable energy (solar power generation), aligned with India’s clean energy transition.
• Competitive advantage lies in sectoral tailwinds and government support for renewable energy adoption.
• However, profitability and efficiency remain weak, limiting long-term sustainability unless earnings improve.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive only near 160–180 ₹ range, closer to intrinsic fair value and below DMA 200.
• Long-Term Holding: High-risk investment — suitable only for aggressive investors betting on renewable energy growth.

✅ Positive

• Exposure to renewable energy sector with strong long-term demand potential.
• PAT improved significantly compared to previous quarter (0.81 Cr. → 29.4 Cr.).
• Reasonable P/B ratio (~3.0x) compared to peers.

⚠️ Limitation

• Extremely high P/E (656) makes the stock overvalued.
• Weak ROE (5.18%) and ROCE (7.63%) show poor efficiency.
• Dividend yield (0.09%) is negligible.

📉 Company Negative News

• Quarterly profit variation (-35.7%) highlights earnings instability.
• FII holding reduced by -0.19% and DII holding reduced by -0.22%, showing declining institutional confidence.

📈 Company Positive News

• PAT improved sharply compared to previous quarter.
• Stock trading near DMA 50 & DMA 200, showing technical support levels.

🌐 Industry

• Industry PE at 26.7, much lower than ACMESOLAR’s valuation.
• Renewable energy industry benefits from government incentives, climate goals, and rising demand for clean power.

🔎 Conclusion

• ACMESOLAR is fundamentally weak with poor efficiency and extreme overvaluation.
• Despite sectoral tailwinds, current valuations make entry unattractive.
• Best suited for accumulation only near 160–180 ₹ levels.
• Long-term holding is risky unless profitability stabilizes and growth improves.