Acme Solar Holdings Limited — Q3 FY25 earnings call

Call held 29 Jan 2025

Management summary

ACME Solar Holdings reported a strong Q3 FY25, marked by a significant increase in operational capacity and robust financial performance. The company successfully commissioned 1,200 MW of solar capacity, doubling its operational portfolio to 2,540 MW. This expansion, coupled with effective debt management and refinancing efforts, led to substantial improvements in revenue, EBITDA, and PAT, while reducing net debt. Management expressed optimism about converting the remaining PPA pipeline and outlined a clear strategy for funding future growth through internal accruals and securitization.

Highlights

  • Operational capacity doubled from 1,340 MW to 2,540 MW, a 90% increase, driven by 1,200 MW solar commissioning.

  • Net debt reduced by INR 2,070 crores to INR 6,882 crores from INR 8,755 crores in the previous quarter.

  • Q3 FY25 Revenue stood at INR 401 crores, up 45% YoY on an adjusted basis.

  • Q3 FY25 EBITDA was INR 359 crores, marking a 59% YoY increase on an adjusted basis with a 90% reported margin.

  • Q3 FY25 PAT surged 152% YoY (adjusted) to INR 112 crores, and Cash PAT increased 149% YoY (adjusted) to INR 189 crores.

  • CUF improved to 23.7%, with plant availability at 99.4% and grid availability at 99.6%.

  • Total contracted portfolio reached 6.97 GW, with 1,900 MW won in FY25 and 2,340 MW of PPAs signed.

Key financials

2 periods

Headline

  • Revenue
    ₹401 Cr
    YoY +45%
  • EBITDA
    ₹359 Cr
    YoY +59%
  • PAT
    ₹112 Cr
    YoY +152%
  • Cash PAT
    ₹189 Cr
    YoY +149%
  • PAT Margin
    28%
  • EBITDA Margin
    90%
  • CUF
    23.7%
  • Operational Capacity
    2,540 MW
    YoY +90%
  • Net Debt
    ₹6,882 Cr
  • Net Debt to EBITDA
    5×
  • Net Debt to Equity
    1.6×
  • Plant Availability
    99.4%
  • Grid Availability
    99.6%

9M FY25

  • Generation
    ₹250 Cr
    YoY +34.5%

What they filed

Q1 FY27: revenue up 67.9%, net profit up 79.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue260 349 487 511 468 +80%497 +42%548 +13%858 +68%
EBITDA221 307 436 458 400 +81%444 +45%479 +10%734 +60%
Net profit15 112 122 131 115 +667%114 +2%138 +13%235 +79%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

6,970 MW

as of 2024-12-31 quantified

Inflow this quarter

1,900 MW

Execution

6,970 MW capacity to be operational by FY27-28

Composition

Mix 2 contract types
  • Central Offtakers 67%
  • State Offtakers 33%

Share of order book by contract type

Pipeline

other

2,000 MW available for future bids

The company has a robust contracted portfolio of 6.97 GW, with significant new wins in FY25 and a strong pipeline of PPAs signed and tariffs adopted, ensuring future growth.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹800 Cr
    So, this year, like we said, this 350 MW, we need to commission. So, Arun, any idea on what's the CAPEX left? I think less than that, it should be less than that, around INR 800 crores of CAPEX we will be doing in the next six months in next two quarters.
  • Debt Net ₹6,882 Cr · 5.0× EBITDA Cost 8.8%
    • Repayment Debt reduced using IPO proceeds ₹2,070 Cr
    • Refinance 50-55% of debt refinanced at 8.8% p.a., yielding INR 650 crores top-up ₹5,500 Cr
    • New borrowing Greenfield financing sanctioned for 40% of under-construction projects ₹16,500 Cr
    So, net debt is now at INR 6,882 crores in this quarter as compared to INR 8,755 crores in the previous quarter.

Guidance & targets

Operational Assets

  • Annual Project Bid Run Rate Operational Assets · Annual · High confidence INR 1,750 to INR 1,800 crores
    In terms of the next slide, capacity road map, so 2,540 MW, which is operational for us will give us a run rate annual project to bid of around INR 1,750 to INR 1,800 crores.

    — Nikhil Dhingra

Profitability

  • Pre-tax ROCE Profitability · High confidence 14.5%
    And in terms of the ROCE, which is basically pre-tax ROCE, we do 14.5%.

    — Nikhil Dhingra

  • EPC Profits Profitability · High confidence 5%
    And in terms of the EPC profits, I think it will be in the range of 5%.

    — Manoj K Upadhyay

Capacity

  • Operational Capacity Capacity · FY27-28 · High confidence 6,970 MW
    So, we are at 2,540 MW. We will make all efforts to prepone this, but in the base case we have 6,970 MW of capacity which we will be operating by FY'27-28.

    — Nikhil Dhingra

  • Total Capacity Target Capacity · by 2030 · High confidence 10 GW
    so we achieve a 10 GW, our target.

    — Manoj K Upadhyay

Capacity Utilization

  • 1,200 MW Plant CUF Capacity Utilization · High confidence 30%
    This 1,200 MW is designed to achieve 30% of CUF. When we started for example, last few days we are touching 32, 33, 31, right, so this whole plant will operate at 30% CUF.

    — Nikhil Dhingra

Commissioning

  • 350 MW Solar Commissioning Commissioning · Q4 FY25 · Medium confidence Q4 FY25
    So, we - yes, yes, we are doing our best to commission the 350 MW in this quarter. So, that is the intent that 350 MW gets fully commissioned. Of course, we will do our best to try and do that. It may spill over to April, 350 MW in worst case, but that is what we are trying.

    — Nikhil Dhingra

  • 100 MW Wind Commissioning Commissioning · Q1/Q2 FY26 · Medium confidence June to September quarter
    And the 100 MW wind, again, we'll try in best case to do it by let's say between June to September quarter.

    — Nikhil Dhingra

What to watch in Q4 FY25

350 MW Solar Commissioning

Next quarter (Q4 FY25 / April 2025)
Current In advanced stages, targeted for Q4 FY25
Target Fully commissioned

Why it matters

Adds to operational capacity and revenue, contributing to the company's growth targets.

So, we - yes, yes, we are doing our best to commission the 350 MW in this quarter. So, that is the intent that 350 MW gets fully commissioned. Of course, we will do our best to try and do that. It may spill over to April, 350 MW in worst case, but that is what we are trying.

Risks & concerns

  • PPA Signing Delays for remaining 2,090 MW

    medium

    Management is optimistic for quick resolution within a month or two, citing central government push and attractive tariffs.

    Analyst acknowledged

  • ALCM Tariff Reset for Solar Projects

    medium

    Management expects a tariff reset for solar under ALCM, but believes it will make existing bids more attractive.

    Both acknowledged

Q&A highlights

8 direct
Capacity conversion from LOA to PPA and associated risks Direct
So, the first thing is LOA, right? We have LOA for all of this capacity, right, which is around 4.45 GW. Now, coming to the PPA status, PPA signed for 2,340 MW we mentioned. I think you're more interested in what will happen to the rest of the PPA which is around 2,090 MW, right? ... So, we are quite hopeful that they will be signed soon.

Clarifies the status of the significant pipeline and management's confidence in converting LOAs to PPAs, crucial for project execution.

Asked by Puneet Gulati

Impact of CERC regulation on infirm power charges for renewables Direct
No, actually, we read that article, and we were going to release a clarification, our regulatory head has drafted it also, he is going to shortly do it. So, see, in terms of renewables, right, we don't have any fuel charges and other things. So, we have no, no issues with that in terms of the merchant plant or in terms of the, you can say the infirm power sale.

Addresses a potential regulatory risk, clarifying that the new CERC regulation does not negatively impact ACME Solar's renewable projects.

Asked by Puneet Gulati

Cost control and employee benefits post-Cleantech transfer Direct
So, actually to clarify it, it is basically as you add more and more megawatt, per megawatt cost at the corporate level will go down.

Explains how operational leverage helps maintain cost efficiency despite employee transfers, indicating scalability benefits.

Asked by Ankit Mittal

PLF/CUF of the newly commissioned 1,200 MW plant Direct
This 1,200 MW is designed to achieve 30% of CUF. When we started for example, last few days we are touching 32, 33, 31, right, so this whole plant will operate at 30% CUF.

Provides specific performance metrics for a major new asset, confirming its strong operational efficiency.

Asked by Ankit Mittal

Near-term commissioning timelines for 450 MW capacity Direct
So, we - yes, yes, we are doing our best to commission the 350 MW in this quarter. So, that is the intent that 350 MW gets fully commissioned. Of course, we will do our best to try and do that. It may spill over to April, 350 MW in worst case, but that is what we are trying. And the 100 MW wind, again, we'll try in best case to do it by let's say between June to September quarter.

Gives specific timelines for upcoming capacity additions, providing clarity on near-term growth drivers.

Asked by Ankit Mittal

Impact of ALCM regime on tariffs and attractiveness of existing bids Direct
Yes, yes, we have to see how much very attractive or more attractive because that ALCM tariff is yet to be out but yes, it will definitely make them better for, for the purchase.

Highlights a potential positive impact of regulatory changes on the profitability of the company's existing and future solar projects.

Asked by Subhadip Mitra

Equity funding strategy for the growing 4.6 GW pipeline Direct
So, in terms of the planning of these projects, how we have planned it is that we will finish them by 2028 and that's the calendar, because we have factored in a phase signing and a phase tariff adoption, right. And, and because of that, what we are seeing is that we will commission some projects possibly in '26, some projects in '27. So, as soon as we commission, we our ability to securitize increases, right, our ability to get cash flow increases, right, and our ability to get EPC margin increases. So, as, as we commission something, our ability to do all these things improves. So, because of this phase wise commissioning, we don't see that we will have an equity gap in terms of this capacity which we have won.

Provides a detailed explanation of how the company plans to fund its substantial project pipeline without needing further equity raises for current won capacity.

Asked by Nikhil Abhyankar

Status of grid connectivity for projects where it's not yet granted Direct
So, basically what happens is, yes, so typically this connectivity is in-principle grant is there, right? So, till the time we have the final grant, we don't say that we have secured the connectivity. But in terms of the in-principle connectivity, this is definitely assured. There is no risk in terms of this not getting allotted to us because how the procedure works is within a month of your application, the connectivity is given to you on in-principle basis, but as you get the final agreement signed this connectivity gets confirmed into the binding agreement, but there is no instance of this in-principle not going to the final connectivity.

Addresses a potential project delay risk, clarifying that in-principle grid connectivity is assured and final grants are procedural.

Asked by Nikhil Abhyankar

3 min read 6 chapters

Detailed narrative

Strong Operational Capacity Growth and CUF Improvement

ACME Solar Holdings significantly expanded its operational capacity in Q3 FY25, doubling it from 1,340 MW to 2,540 MW. This 90% increase was primarily driven by the commissioning of a 1,200 MW solar capacity, which is designed to operate at a 30% CUF and is currently achieving 31-33%. The overall CUF for the company improved to 23.7%, contributing to a substantial 34.5% increase in generation for the nine months ended December 31, 2024, reaching 250 crore units.

Robust Financial Performance in Q3 FY25

The company reported strong financial results for Q3 FY25, with revenue reaching INR 401 crores, a 45% increase YoY on an adjusted basis. EBITDA grew by 59% YoY (adjusted) to INR 359 crores, reflecting a high 90% margin on a reported basis. PAT surged 152% YoY (adjusted) to INR 112 crores, and Cash PAT saw a 149% YoY (adjusted) increase to INR 189 crores. The PAT margin for the quarter stood at 28%, significantly higher than 12% in the prior year.

Effective Debt Management and Refinancing

ACME Solar successfully reduced its net debt by INR 2,070 crores, bringing the total net debt down to INR 6,882 crores from INR 8,755 crores in the previous quarter, primarily utilizing IPO proceeds. The company also refinanced INR 5,500 crores (50-55% of its debt) at an average interest rate of 8.8% per annum, which is expected to reduce the cost of debt by approximately 70 basis points for these projects. Greenfield financing of INR 16,500 crores has been sanctioned, covering about 40% of the under-construction projects, and the net operational debt to annual EBITDA is maintained at ~5X, below the guided 5.5X.

Expanding Project Pipeline and PPA Visibility

The total contracted portfolio of ACME Solar now stands at 6.97 GW, with 1,900 MW of new capacity won in the current financial year. PPAs have been signed for 2,340 MW out of the 4,430 MW under-construction capacity, and tariffs have been adopted for 2,500 MW. Management is optimistic about signing the remaining 2,090 MW PPAs within the next one to two months, driven by central government support and attractive tariffs, especially under the new ALCM regime which is expected to make existing bids more favorable.

Strategic Capital Allocation for Future Growth

The company has a clear strategy for funding its substantial project pipeline, which includes an equity requirement of INR 7,500-8,000 crores for the 4.6 GW capacity. This will be met through IPO proceeds of INR 2,400 crores, expected securitization proceeds of approximately INR 2,500 crores (including INR 1,000 crores from the SECI project), and construction margins (EPC accruals) of INR 2,000-2,500 crores. This multi-pronged approach, combined with free cash flow from operational projects, is expected to cover the equity needs for the current won capacity until 2028 without requiring further equity raises.

Operational Excellence and Innovation Focus

ACME Solar maintains high operational standards with plant availability at 99.4% and grid availability at 99.6%. The company is committed to continuous innovation, planning to test new technologies like FDRE projects with battery storage to improve forecasting and deviation settlement. Management also highlighted that the per-megawatt corporate cost is expected to decrease as more capacity is added, demonstrating efficient scaling of operations.

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