Current Rating and Its Implications
MarketsMOJO’s 'Sell' rating for ACME Solar Holdings Ltd indicates a cautious stance towards the stock, suggesting that investors should consider reducing exposure or avoiding new purchases at this time. This rating is derived from a comprehensive assessment of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall outlook and helps investors understand the risks and opportunities associated with the stock.
Quality Assessment
As of 29 December 2025, ACME Solar Holdings Ltd holds an average quality grade. The company’s ability to generate returns on capital employed (ROCE) stands at 8.37%, which is modest and indicates relatively low profitability per unit of capital invested. Additionally, the firm’s debt servicing capability is a concern, with a high Debt to EBITDA ratio of 6.00 times. This elevated leverage level suggests potential challenges in meeting debt obligations, which could weigh on financial stability and investor confidence.
Valuation Perspective
The stock is currently classified as very expensive, with an Enterprise Value to Capital Employed ratio of 1.6. This valuation metric implies that the market is pricing the company at a premium relative to the capital it employs, which may not be justified given the modest returns and financial risks. Despite a significant 328% increase in profits over the past year, the stock’s price performance has been subdued, with a 1-year return of -3.48% as of 29 December 2025. This divergence between profit growth and share price performance suggests that investors remain cautious about the company’s future prospects.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend and Profitability
Financially, ACME Solar Holdings Ltd shows a positive trend in profitability, as evidenced by the substantial profit growth over the past year. However, this improvement has not translated into commensurate stock price gains. The company’s returns have been negative over multiple time frames, including a 3-month return of -16.87% and a 6-month return of -6.94%, reflecting ongoing market scepticism. Furthermore, the stock has consistently underperformed the BSE500 benchmark over the last three years, signalling persistent challenges in delivering shareholder value relative to the broader market.
Technical Analysis
From a technical standpoint, the stock is mildly bearish. This suggests that short-term price momentum and chart patterns are not favourable, which may deter momentum-driven investors. The slight positive movement on the last trading day, with a 0.15% increase, does little to offset the broader negative trend observed over recent months. Technical indicators thus reinforce the cautious stance implied by the fundamental and valuation assessments.
Summary for Investors
In summary, the 'Sell' rating on ACME Solar Holdings Ltd reflects a combination of average quality, expensive valuation, positive yet insufficient financial trends, and bearish technical signals. Investors should weigh these factors carefully, recognising that while the company has demonstrated profit growth, its elevated debt levels, high valuation, and underperformance relative to benchmarks present significant risks. The current rating advises prudence and suggests that the stock may not be an attractive investment at this juncture.
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Performance Overview
Examining the stock’s recent performance as of 29 December 2025, ACME Solar Holdings Ltd has delivered mixed returns. The year-to-date return stands at -1.80%, while the one-year return is -3.48%. Shorter-term returns show volatility, with a 1-month gain of 0.65% offset by a 3-month loss of 16.87%. These figures highlight the stock’s susceptibility to market fluctuations and underline the importance of a cautious investment approach.
Debt and Capital Efficiency
The company’s high Debt to EBITDA ratio of 6.00 times is a critical factor in the current rating. This level of leverage indicates a relatively low capacity to service debt, which could constrain future growth and increase financial risk. Coupled with a modest ROCE of 8.37%, the company’s capital efficiency is limited, suggesting that returns generated on invested capital are not robust enough to justify the current valuation premium.
Market Position and Sector Context
As a holding company within the broader market, ACME Solar Holdings Ltd operates in a sector where capital allocation and asset management are key drivers of value. The current metrics suggest that the company faces challenges in optimising its portfolio and delivering consistent shareholder returns. Investors should consider these sector-specific dynamics alongside the company’s individual financial and technical indicators when making investment decisions.
Conclusion
Overall, the 'Sell' rating assigned to ACME Solar Holdings Ltd by MarketsMOJO as of 01 Dec 2025 remains justified based on the latest data available on 29 December 2025. The combination of average quality, expensive valuation, positive but insufficient financial trends, and bearish technical signals advises investors to approach the stock with caution. While profit growth is a positive sign, the elevated debt levels and underperformance relative to benchmarks suggest that the stock may not currently offer an attractive risk-reward profile.
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