Clean Max Enviro Energy Solutions Ltd. (Neutral)

Highlights

Clean Max Enviro Energy Solution Limited (CMEESL) incorporated in 2010, offer a range of renewable energy offerings to their customers across geographies through their two business segments: (i) Renewable Energy Power Sales Segment; and (ii) Renewable Energy Services Segment.

(i) Under Renewable Energy Power Sales Segment, they sell electricity generated at their renewable energy plants to customers through long-term PPAs and EAPAs across a range of offerings. (ii) Under Renewable Energy Services Segment, the company provides turnkey development services, including land, evacuation infrastructure, EPC services, power evacuation and O&M services for the lifetime of the project, additionally they also offer suite of Net Zero offerings to meet their carbon neutrality mandates to their customers.

CMEESL specialize in delivering Net Zero and decarbonization solutions, including supplying renewable power and offering energy services and carbon credit solutions to customers across data centres, AI and technology industries (Technology customers); and C&I enterprises across a range of sectors, including infrastructure, cement, steel, industrial manufacturing, FMCG, pharmaceuticals, real estate, and global capability centres (Conventional C&I customers).

As one of the early movers in the C&I renewable energy sector in India, CMEESL had gained 8 pct market share of annual open access renewable energy capacity additions in FY5. As of October 2025, the company had total portfolio of 10,929 MW under which 3,172 is contracted (29 pct), 2,799 MW is operational (26 pct), 3,044 MW is in advance stage (28 pct) and 1,914 is under development (17 pct).

Out of the total proceeds of Rs. 31,000 mn, Rs. 11,227 mn would be go towards repayment of all or certain outstanding borrowings of the company and/or certain of their subsidiaries, Rs. 773 mn would go towards general corporate purpose and Rs. 19,000 mn would go towards existing selling shareholders of the company.

Key Highlights

• India is expected to experience rapid growth, with its annual solar and wind capacity additions increasing from 35 GW in 2024 to 61 GW in 2030. This would translate into a total Renewable Energy capacity addition of about 345 GW between 2025-2030. Open Access (OA) mode, which enables C&I consumers to procure electricity directly from an Independent Power Producer rather than the state utility, is emerging as an attractive option for both consumers given the potential cost savings. As a result, the share of OA in solar and wind capacity addition has increased to 34 pct in CY24 from just 5 pct in CY19.
• CMEESL have developed in-house capabilities in various aspects of execution, including project development, land acquisition, EPC, financing and asset management. These capabilities help them achieve project returns, source and develop new projects to support long-term growth, and maintain control over the entire project lifecycle, from greenfield/brownfield development to ownership and operations.
• Their business model is distinct from utility-scale renewable energy developers, as CMEESL do not participate in competitive tenders with state/central owned distribution companies. CMEESL pursue customer-specific contracting by tailoring projects for corporate consumers’ needs and selling energy generated from their renewable sources. it has enabled them to price offerings at a premium, as compared to large utility-scale peers.
• Most of the companies’ customer have a credit rating of A or above or are subsidiaries of multinational corporations with such credit ratings, which enables CMEESL to minimize counterparty risk. Through their disciplined contracting practices, they have built a portfolio of PPAs with a weighted average tenure of 22.85 years, and average lock-in period of 16.86 years, as of H1FY26.
• Their strategy is guided by the dual approach of (1) preserving core purpose and values and (2) evolving operating practices and strategies to address the changing needs of customers and the evolving energy landscape.
• Sales of the company has grown by 26.8 pct CAGR in over FY23-25 and EBITDA grew by 58.1 pct CAGR over same period. During FY25 the sales of the company rose by 7.6 pct YoY to Rs. 14,957 mn. While EBITDA of the company grew by 36.9 pct YoY to Rs. 10,151 mn and EBITDA margin expanded by 1455 bps to 67.9 pct YoY in FY25. During FY25, the company reported profit of Rs. 278 mn against loss of Rs. 310 mn. Heavy Finance cost and depreciation impacted bottom-line.

Key Risk

• CMEESL developing their first CTU project and ISTS project and have not commissioned a CTU project before. Any failure to develop this project successfully could have a material adverse impact on their expansion plans.
• CMEESL have pledged certain of their shareholding in their subsidiaries in favour of certain lenders. If any event of default arises under the financing agreements, such lenders could invoke the relevant share pledge agreements, adversely affecting their business.
• Land title in India can be uncertain and the company may not be able to identify or correct defects or irregularities in title to the land which they own, lease or may from time to time acquire in connection with their current or future operations.

Financial Performance

Valuation

Clean Max Enviro Energy Solution Limited (CMEESL), is India’s largest C&I renewable energy service provider with market share of 8 pct. With the total portfolio of 10,929 MW and premium pricing power among other utilities players, CMEESL placed well in the India’s electrification journey. At the upper end of the price of Rs. 1053, the issue quotes EV/EBITDA of 16.3x on FY26E annualized earnings. The issue looks fully priced.

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