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 recommendation is based on a comprehensive evaluation of four key parameters: quality, valuation, financial trend, and technicals. The rating was adjusted on 01 December 2025, reflecting a decline in the company’s overall Mojo Score from 57 to 41, signalling a notable deterioration in its investment appeal.
Quality Assessment
As of 23 February 2026, ACME Solar Holdings Ltd holds an average quality grade. The company’s ability to generate returns relative to its capital employed remains modest, with a Return on Capital Employed (ROCE) averaging 8.37%. This figure suggests that the company is delivering low profitability per unit of total capital, which includes both equity and debt. Additionally, the firm’s capacity to service its debt is limited, as evidenced by a high Debt to EBITDA ratio of 6.00 times. Such a leverage level raises concerns about financial flexibility and risk, especially in a volatile market environment.
Valuation Considerations
Valuation metrics as of today paint a challenging picture for ACME Solar Holdings Ltd. The stock is classified as very expensive, with an Enterprise Value to Capital Employed ratio of 1.6. This elevated valuation multiple indicates that the market is pricing the company at a premium relative to its capital base, which may not be justified given its current profitability and debt profile. Despite this, the stock has delivered a one-year return of 19.17%, reflecting some investor optimism. However, such returns must be weighed against the underlying fundamentals and the risk of overvaluation.
Financial Trend and Performance
The latest data shows a mixed financial trend for ACME Solar Holdings Ltd. While profits have surged by an impressive 328% over the past year, this growth has not translated into a sustained positive momentum in the stock price, which has experienced volatility. Over the past six months, the stock has declined by 19.87%, and year-to-date it is down 2.02%. Shorter-term performance has been more encouraging, with a 17.01% gain over the last month and a 3.05% increase in the past week. These fluctuations highlight the stock’s sensitivity to market sentiment and sector dynamics.
Technical Outlook
From a technical perspective, ACME Solar Holdings Ltd is currently rated as mildly bearish. This suggests that the stock’s price action is showing signs of weakness or downward pressure, which may deter momentum-driven investors. The one-day gain of 0.54% on 23 February 2026 offers some respite, but the broader technical indicators imply caution. Investors relying on chart patterns and market trends should consider this bearish tilt when making decisions.
Institutional Investor Participation
Another important factor influencing the stock’s outlook is the declining participation of institutional investors. As of the latest quarter, institutional holdings have decreased by 1.06%, now representing 10.9% of the company’s share capital. Institutional investors typically possess greater analytical resources and market insight, so their reduced stake may signal concerns about the company’s prospects or valuation. This trend warrants attention from retail investors who often look to institutional activity as a barometer of confidence.
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What This Rating Means for Investors
For investors, the 'Sell' rating on ACME Solar Holdings Ltd serves as a signal to exercise caution. The combination of average quality, very expensive valuation, positive yet volatile financial trends, and a mildly bearish technical outlook suggests that the stock may face headwinds in the near term. While the company’s recent profit growth is encouraging, the elevated debt levels and declining institutional interest raise concerns about sustainability and risk.
Investors should carefully assess their risk tolerance and portfolio objectives before considering exposure to this stock. Those holding positions may want to review their allocations in light of the current fundamentals and market conditions. Prospective buyers should weigh the premium valuation against the company’s financial health and market sentiment, recognising that the 'Sell' rating reflects a cautious stance based on comprehensive analysis.
Summary of Key Metrics as of 23 February 2026
Market Cap: Smallcap
Mojo Score: 41.0 (Sell Grade)
Debt to EBITDA Ratio: 6.00 times
Return on Capital Employed (ROCE): 8.37%
Enterprise Value to Capital Employed: 1.6
Stock Returns: 1 Day +0.54%, 1 Week +3.05%, 1 Month +17.01%, 3 Months -2.16%, 6 Months -19.87%, Year-to-Date -2.02%, 1 Year +19.17%
Institutional Holding: 10.9% (down 1.06% last quarter)
In conclusion, ACME Solar Holdings Ltd’s current 'Sell' rating by MarketsMOJO reflects a balanced but cautious view of the company’s prospects. Investors are advised to consider the detailed fundamentals and market context presented here to make informed decisions aligned with their investment goals.
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