ACMESOLAR - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.4
| Stock Code | ACMESOLAR | Market Cap | 13,819 Cr. | Current Price | 229 ₹ | High / Low | 324 ₹ |
| Stock P/E | 266 | Book Value | 76.2 ₹ | Dividend Yield | 0.09 % | ROCE | 7.63 % |
| ROE | 5.18 % | Face Value | 2.00 ₹ | DMA 50 | 229 ₹ | DMA 200 | 247 ₹ |
| Chg in FII Hold | -1.54 % | Chg in DII Hold | 0.48 % | PAT Qtr | 31.7 Cr. | PAT Prev Qtr | 29.4 Cr. |
| RSI | 55.9 | MACD | -2.45 | Volume | 31,17,663 | Avg Vol 1Wk | 17,10,259 |
| Low price | 172 ₹ | High price | 324 ₹ | PEG Ratio | 4.83 | Debt to equity | 0.64 |
| 52w Index | 37.3 % | Qtr Profit Var | 2,394 % | EPS | 0.88 ₹ | Industry PE | 26.2 |
📊 ACMESOLAR is trading at extremely high valuations (P/E 266 vs industry 26.2) despite modest profitability metrics (ROE 5.18%, ROCE 7.63%). The dividend yield is negligible at 0.09%, and the PEG ratio of 4.83 suggests the stock is expensive relative to its growth. While quarterly profit showed a sharp jump (PAT 31.7 Cr. vs 29.4 Cr., variance 2,394%), the EPS remains very low (0.88 ₹), raising concerns about sustainability. Technicals show neutral momentum (RSI 55.9, MACD negative), with the stock trading near its 50 DMA but below the 200 DMA, indicating weak long-term trend.
💡 Ideal Entry Price Zone: 180 ₹ – 200 ₹, closer to long-term support levels and valuation comfort. Current price (229 ₹) is expensive relative to fundamentals.
📌 Exit Strategy / Holding Period: If already holding, consider reducing exposure near 250–270 ₹ resistance levels. Long-term investors should only hold if expecting structural growth in renewable energy earnings. Otherwise, reallocate capital to stronger peers with better ROE/ROCE. Holding period should be limited until profitability metrics improve significantly.
Positive
- Strong market capitalization (13,819 Cr.) ensures liquidity.
- Quarterly profit growth (PAT up 2,394%) shows operational improvement.
- DII holdings increased (+0.48%), indicating domestic institutional support.
Limitation
- Extremely high P/E ratio (266) compared to industry average (26.2).
- Weak ROE (5.18%) and ROCE (7.63%) indicate poor efficiency.
- Low dividend yield (0.09%) offers minimal income return.
- PEG ratio (4.83) highlights expensive valuation relative to growth.
Company Negative News
- FII holdings decreased (-1.54%), showing reduced foreign investor confidence.
- Stock trading below 200 DMA (247 ₹) indicates weak long-term momentum.
Company Positive News
- Quarterly PAT improved from 29.4 Cr. to 31.7 Cr.
- DII holdings increased (+0.48%), reflecting domestic support.
Industry
- Industry P/E is 26.2, highlighting ACMESOLAR’s steep premium valuation.
- Renewable energy sector has strong long-term demand potential in India.
Conclusion
⚠️ ACMESOLAR is currently overvalued with weak profitability metrics. It is not an ideal candidate for long-term investment at current levels. Entry should be considered only around 180–200 ₹ for valuation comfort. Existing holders may exit near 250–270 ₹ resistance unless ROE/ROCE improve significantly and earnings growth becomes sustainable.