Leading brokerage Motilal Oswal Financial Services Ltd (MOFSL) has initiated coverage on Solar Industries India Ltd (SOIL) with a 'BUY' rating, projecting the company's stock could hit Rs 23,000. This bullish outlook is underpinned by an anticipated 43% Compound Annual Growth Rate (CAGR) in consolidated revenue between FY26 and FY30, driven by its robust position in commercial explosives and a rapidly expanding defence manufacturing segment.
SOIL has solidified its standing as a dominant force in India's commercial explosives industry, commanding a 26% volume market share by FY25. The company’s comprehensive product portfolio includes bulk and packaged explosives, alongside initiating systems and blasting accessories. Domestically, SOIL maintains a significant wallet share with Coal India, approximately 20-23%, while also actively growing its presence among private mining operations. Its international footprint has also expanded through strategic exports and overseas manufacturing facilities.
Strategic Expansion into Defence Manufacturing
A pivotal aspect of SOIL's growth strategy is its transition from a primary explosives supplier to a diversified defence manufacturer. The company has moved up the defence value chain, broadening its offerings from high-melting explosives like HMX to include ammunition, rockets, and advanced counter-drone systems.
- Expanded Product Line: SOIL's defence portfolio now encompasses warheads, rocket systems (including Pinaka), and new systems like Nagastra, Rudrastra, and Bhargavastra.
- Order Book Growth: The defence order book and revenue witnessed impressive CAGRs of 148% and 81% respectively between FY22 and FY26. As of June 2026, the defence order book stood at approximately Rs 18,000 crore, including substantial international defence orders.
- Future Opportunities: Potential growth drivers include additional Pinaka regiments, guided Pinaka systems, replenishment rocket orders, and export opportunities for 155mm ammunition and Nagastra variants. SOIL is also targeting air bombs, proximity fuzes, and high-performance UAVs for surveillance and defence.
Impact of Omnia Holdings Acquisition
The acquisition of a 100% stake in Omnia Holdings for around Rs 13,000 crore is expected to significantly deepen SOIL's presence in South Africa and neighboring markets. This strategic move will also enhance backward integration, particularly in ammonium nitrate, a critical raw material. While the transaction may impact near-term margins, MOFSL estimates Omnia’s revenue could climb from Rs 13,300 crore in FY26 to Rs 16,200 crore by FY30, contributing to the overall consolidated growth.
Financial Outlook and Key Risks
MOFSL projects SOIL’s consolidated EBITDA and PAT to grow at CAGRs of 36% and 34% respectively, alongside the 43% revenue CAGR, between FY26 and FY30. These estimates incorporate growth across both the explosives and defence sectors, as well as the contribution from the Omnia acquisition. The brokerage sees further upside potential if SOIL secures large defence platform orders beyond current estimates or achieves greater-than-expected synergies from the Omnia deal.
Identified Risks:
- Delays in order inflows and slower finalization of large defence platform orders.
- Significant exposure to African markets, posing country-specific risks.
- Weaker-than-expected performance by subsidiaries and adverse foreign exchange rate movements.
Based on these projections, MOFSL has set a target price of Rs 23,000, derived from a 50-times multiple applied to its estimated December 2028 EPS, reflecting a strong belief in the company's long-term growth trajectory.