ACME Solar Holdings Ltd is Rated Sell

Current Rating and Its Implications

MarketsMOJO’s current rating of 'Sell' for ACME Solar Holdings Ltd indicates a cautious stance towards the stock. This rating suggests that investors should consider reducing exposure or avoiding new purchases at present, based on a comprehensive evaluation of the company’s quality, valuation, financial trend, and technical indicators. The rating was revised on 01 December 2025, reflecting a significant change in the company’s outlook, but the following analysis is grounded in the latest data available as of 09 January 2026.

Quality Assessment: Average Operational Efficiency

As of 09 January 2026, ACME Solar Holdings Ltd exhibits an average quality grade. The company’s ability to generate returns on its capital employed remains modest, with a Return on Capital Employed (ROCE) averaging 8.37%. This figure signals relatively low profitability per unit of total capital, encompassing both equity and debt. Additionally, the company’s debt servicing capacity is constrained, as evidenced by a high Debt to EBITDA ratio of 6.00 times. This elevated leverage ratio raises concerns about the firm’s financial flexibility and risk profile, particularly in a volatile market environment.

Valuation: Very Expensive Relative to Capital Employed

Currently, ACME Solar Holdings Ltd is classified as very expensive, with an Enterprise Value to Capital Employed ratio of 1.6. This valuation metric suggests that the market is pricing the company at a premium relative to the capital it employs, which may not be justified given its moderate profitability and financial risks. Despite this, the company has demonstrated a remarkable 328% increase in profits over the past year, a factor that may partially explain the elevated valuation. However, investors should weigh this profit growth against the broader context of returns and market performance.

Financial Trend: Positive Profit Growth Amidst Underperformance

The latest data shows that while ACME Solar Holdings Ltd’s profits have surged by 328% over the past year, the stock’s price performance has been disappointing. As of 09 January 2026, the stock has delivered a negative return of 7.56% over the last 12 months. Furthermore, it has consistently underperformed the BSE500 benchmark index in each of the past three annual periods. This divergence between profit growth and share price performance may reflect investor concerns about sustainability, valuation, or broader market conditions affecting the holding company sector.

Technical Outlook: Mildly Bearish Momentum

From a technical perspective, ACME Solar Holdings Ltd currently holds a mildly bearish grade. The stock has experienced a 3.68% decline in the last trading day and an 8.67% drop over the past week. Over the last three months, the stock has fallen by 21.80%, and over six months, it has declined by 16.36%. These trends indicate downward momentum, which may deter short-term investors and traders. The technical signals align with the 'Sell' rating, reinforcing the recommendation to approach the stock with caution.

Stock Returns and Market Performance

As of 09 January 2026, ACME Solar Holdings Ltd’s stock returns reflect a challenging environment. The year-to-date return stands at -7.38%, while the one-month return is a modest +1.03%. Longer-term returns remain negative, with a 16.36% decline over six months and a 7.56% drop over one year. These figures underscore the stock’s underperformance relative to broader market indices and highlight the risks associated with holding this equity at present.

What the 'Sell' Rating Means for Investors

For investors, the 'Sell' rating on ACME Solar Holdings Ltd signals a recommendation to reduce or avoid exposure to this stock. The combination of average operational quality, very expensive valuation, positive but potentially unsustainable profit growth, and bearish technical indicators suggests that the stock may face continued downward pressure. Investors should carefully consider these factors in the context of their portfolio objectives and risk tolerance.

Sector and Market Context

ACME Solar Holdings Ltd operates as a holding company within the smallcap segment, a category often characterised by higher volatility and risk. The stock’s consistent underperformance against the BSE500 benchmark over the last three years highlights the challenges faced by the company in delivering shareholder value relative to broader market opportunities. This context reinforces the prudence of the current 'Sell' rating, as investors may find more attractive risk-adjusted returns elsewhere.

Conclusion: Cautious Approach Recommended

In summary, ACME Solar Holdings Ltd’s current 'Sell' rating by MarketsMOJO reflects a comprehensive assessment of its financial health, valuation, and market dynamics as of 09 January 2026. While the company has shown impressive profit growth, this has not translated into positive stock returns, and the elevated valuation combined with high leverage and bearish technical signals warrants caution. Investors should monitor developments closely and consider alternative opportunities that offer stronger fundamentals and more favourable risk profiles.

Unlock special upgrade rates for a limited period. Start Saving Now →