ACME Solar slashes debt costs with Rs 2,491cr refinancing—find out how it boosts India’s green energy push

ACME Solar Holdings Limited, one of India’s foremost renewable energy companies and the flagship enterprise of the ACME Group, has finalized a landmark ₹2,491 crore long-term project refinancing facility. This financial restructuring aims to cut down the cost of debt for its clean energy projects located in Andhra Pradesh, Rajasthan, and Punjab. Structured for a tenure of 18 to 20 years, this refinancing initiative covers operational assets that are already generating revenue, positioning the company more competitively within India’s renewable energy finance landscape.

The funding has been secured through State Bank of India and REC Limited, two of India’s largest infrastructure and power sector lenders. ACME Solar has locked in a weighted average interest rate of 8.8% on the refinanced debt—significantly below typical project finance rates in India’s infrastructure sector. This move aligns with ACME Solar’s strategy of reducing its capital costs, improving credit ratings under a co-obligor structure, and enhancing overall financial resilience across its portfolio.

The projects in focus include 160 MW in Andhra Pradesh and 30 MW in Punjab, both of which have operational track records nearing nine years, and a 300 MW project in Rajasthan that has been operational for about three years. The company’s Chief Financial Officer, Purushottam Kejriwal, stated that this refinancing aligns with their broader vision to maintain financial discipline, optimize capital structure, and facilitate expansion while ensuring stable cash flows and investor confidence.

Why is refinancing essential for ACME Solar’s long-term growth?

Debt refinancing has become a strategic necessity for Indian renewable energy developers, particularly those operating under long-term Power Purchase Agreements (PPAs) with state utilities. Payment delays, tariff renegotiations, and discom creditworthiness have historically placed pressure on project IRRs and working capital cycles. In this context, ACME Solar’s refinancing initiative allows the company to secure lower interest rates, spread repayment obligations, and unlock capital to invest in future growth.

The use of a co-obligor structure for this refinancing is particularly significant. By pooling multiple projects into a single credit obligation, ACME Solar has improved the overall creditworthiness of its assets, thus obtaining better credit ratings and lowering borrowing costs. This model allows underperforming assets to be cross-collateralized with stronger ones, thereby de-risking lender exposure and enabling larger financial commitments.

What does this mean for India’s renewable energy ambitions?

India’s target of 500 GW of non-fossil fuel-based capacity by 2030 hinges on the ability of private developers like ACME Solar to deliver large-scale projects at low tariffs and high efficiency. Financing is a key lever in this equation. The success of ACME Solar’s ₹2,491 crore refinancing deal sends a positive signal to investors and financiers about the viability of operating renewable projects, even those involving state electricity boards as counterparties.

This development is emblematic of a broader shift in India’s green finance strategy. Public sector institutions such as REC and SBI have taken on a central role in funding operational renewable energy assets, especially those requiring financial restructuring. As interest rates stabilize and environmental, social, and governance (ESG) considerations become central to capital deployment, such refinancings enhance the long-term investment attractiveness of Indian clean energy projects.

How does ACME Solar plan to expand its capacity pipeline?

ACME Solar currently operates 2,540 MW of installed renewable energy capacity and has set an ambitious goal to reach 6,970 MW over the next three years. The company’s pipeline includes utility-scale solar, hybrid renewables, and potential ventures into battery storage and green hydrogen. Given its proven project execution track record and established EPC capabilities, ACME Solar is strategically positioned to scale rapidly while maintaining operational efficiency.

This refinancing effort is part of a broader capital optimization plan that ensures access to competitive financing even as the company bids aggressively in state and central auctions. By lowering its weighted average cost of capital (WACC), ACME Solar can offer more competitive tariffs in reverse auctions while maintaining profitability.

The company’s previous investments in green hydrogen projects, including international ventures in Oman, indicate a willingness to diversify across emerging clean technologies and markets. By securing long-term financial sustainability through refinancing, ACME Solar now has the runway to diversify and innovate without compromising its core asset stability.

What does the stock performance say about ACME Solar’s outlook?

ACME Solar Holdings Limited trades publicly under the symbol ACMESOLAR, and its recent stock performance reflects both sectoral challenges and long-term investor optimism. As of April 2, 2025, the stock closed at ₹192.10 on the National Stock Exchange (NSE). Over the past 52 weeks, it has ranged from a low of ₹167.75 to a high of ₹292.40, placing it about 34% below its peak and 14% above its lowest point.

Despite recent volatility, the company’s Price-to-Earnings (P/E) ratio of 17.58 suggests a potentially undervalued stock when compared to the industry median P/E of 50.52. Its Price-to-Book (P/B) ratio of 4.49 is slightly above the industry average of 4.43, indicating moderate premium valuation based on book value. These figures suggest that while investors are cautiously optimistic, the stock may still have room for growth depending on execution and broader macroeconomic trends.

Notably, the Return on Equity (ROE) stands at 31.07%, reflecting efficient use of shareholder equity. However, Return on Capital Employed (ROCE) at 7.75% and Return on Assets (ROA) at 5.20% remain moderate, reflecting sector-wide pressure on margins. Investors may also note the company’s low interest coverage ratio, which suggests sensitivity to debt obligations—a factor that the recent refinancing directly addresses.

Should investors consider buying, selling, or holding ACME Solar stock?

Analyst sentiment on ACME Solar is cautiously optimistic. Leading brokerage houses such as JM Financial and Motilal Oswal have issued ‘Buy’ ratings, citing strong fundamentals and the company’s ability to improve its capital structure and execute complex projects. The refinancing deal further strengthens this narrative, as it reflects prudent financial management and a strong banking relationship ecosystem.

However, risks remain. The stock has declined around 18.5% over the last three months, indicating near-term headwinds. While the refinancing helps reduce future interest obligations, investors must monitor execution risk, tariff dynamics, and regulatory changes, especially around renewable energy payments and project approvals.

For long-term investors, ACME Solar represents a high-potential green energy stock with improving fundamentals. Short-term traders may want to await further clarity on upcoming project bids and quarterly financial performance before making significant allocations. Given the refinancing development and robust expansion plans, a ‘Hold’ to ‘Accumulate’ stance may be appropriate for those already invested, while new investors should consider a staggered entry aligned with broader market conditions.