Acme Solar, NTPC Green shares: Nomura initiates coverage, targets suggest up to 21% upside

According to International Renewable Energy Agency data for calendar year 2025, India has the world's third-largest installed renewable energy capacity, excluding hydro power. The country's renewable capacity, excluding hydro, increased from 46 GW in FY16 to 223 GW in FY26, supported by sizeable renewable resources, government policies and declining tariffs. Lower capital expenditure requirements and operation and maintenance costs also contributed to the expansion.

The share of renewable energy-based power generation rose from about 1 per cent in FY06 to 17 per cent in FY26. However, the increasing share of renewables in India's electricity mix has created grid instability and a mismatch between the timing of power generation and consumption because renewable sources are variable and intermittent.

The mismatch has led to lower utilisation of thermal power capacity during the day and peak usage at night. This has caused variations of more than 2,000 basis points in utilisation rates and increased the operating costs of the thermal fleet. Excess solar generation during the day has also resulted in curtailment.

Energy storage has consequently become necessary to store surplus solar power generated during the day and use it during non-solar hours. The growing importance of storage is reflected in the composition of recent tenders, with the share of tenders backed by grid storage rising from 22 per cent in FY22 to 87 per cent in FY26. Storage also helps maintain grid stability and frequency and improves grid flexibility through a planning reserve margin.

Nomura said Acme Solar, one of India's leading renewable independent power producers, was transitioning from a conventional solar power producer to a firm and dispatchable renewable energy platform. The brokerage expects Acme Solar's revenue and Ebitda to grow at compound annual growth rates of 66 per cent and 65 per cent, respectively, from FY26 to FY29.

The projected growth is expected to be driven by the commissioning of firm and dispatchable renewable energy projects, which offer high equity internal rates of return. Nomura also cited the decline in battery energy storage system prices over the past few years and the early commissioning of such systems, allowing them to operate independently in merchant and short-term markets and support equity returns. Acme Solar aims to install 25 GWh of battery energy storage capacity.

Of Acme Solar's total portfolio of 8.4 GW, 5.4 GW is under execution. Power purchase agreements have been signed for 4.3 GW of capacity, which Nomura said improved the company's growth visibility.

The brokerage's target price of Rs 505 for Acme Solar is based on a one-year forward enterprise value-to-Ebitda multiple of 10.2 times its December 2028 Ebitda.

NTPC Green is the renewable energy arm of NTPC, which Nomura does not rate. The public sector undertaking has India's largest renewable capacity, excluding hydro power. Nomura expects NTPC Green's revenue and Ebitda to grow at compound annual growth rates of 74 per cent and 72 per cent, respectively, from FY26 to FY29.

The growth estimate is supported by a pipeline that includes 16 GW of awarded capacity and memoranda of understanding signed with other public sector undertakings and state entities. As a sovereign-backed company, NTPC Green also benefits from a lower cost of debt than its peers.

Nomura said NTPC Green plans to install about 34 GWh of battery energy storage capacity and contract pumped storage project capacity. Nomura said these plans would support the company's next structural shift towards renewable energy.

However, the brokerage expects NTPC Green to face execution delays because of tight transmission availability. It has consequently factored in lower capacity additions than the company's guidance. The target price of Rs 100 is based on a one-year forward enterprise value-to-Ebitda multiple of 13.3 times its December 2028 Ebitda.

Nomura has therefore assigned a Buy rating to Acme Solar, citing its shift towards firm and dispatchable renewable energy and its project pipeline, while rating NTPC Green Neutral because expected growth could be tempered by transmission-related execution constraints.