PL Capital has commenced coverage of Solar Industries India Ltd. (SOIL) with a 'Buy' rating, projecting a target price of Rs 23,124. The brokerage firm's investment thesis hinges on expectations of sustained multi-year growth for the company, citing its strong position in both domestic and international explosives markets, alongside significant traction in its defence segment.
The valuation is based on a price-to-earnings multiple of 62x September 2028 estimates, with an implied EV/EBITDA of 34x for the same period. The stock is currently trading at 58.7x and 48.2x P/E on FY28 and FY29 estimates, respectively, reflecting confidence in its future earnings potential.
Expanding Defence Sector Footprint
A key driver for Solar Industries' growth is its rapidly expanding defence revenue. The company is making significant strides in various defence energetics, including ammunition, loitering munitions, and advanced missile systems. Furthermore, SOIL is broadening its technology base with drone systems like Nagastra, HALE/MALE UAVs, Rudrastra, and Bhargavastra, positioning itself as a critical supplier in India's evolving defence landscape.
Dominance in Industrial Explosives
Solar Industries maintains a formidable presence in the industrial explosives market, holding approximately 26% of India's domestic share. This leadership is supported by integrated manufacturing operations, strong backward integration for key raw materials, and an extensive distribution network strategically located near mining sites. The company commands about a 23% 'wallet share' of Coal India's explosives consumption, underscoring its pivotal role in the nation's mining sector.
Beyond India, SOIL has successfully established a growing international presence across more than 10 countries, particularly in mining markets across Africa and Australia. This global expansion provides substantial opportunities to scale its explosives business in alignment with worldwide mining activity.
Strong Financial Outlook
Analysts anticipate robust financial performance for Solar Industries. Revenue and adjusted Profit After Tax (PAT) are projected to grow at a Compound Annual Growth Rate (CAGR) of approximately 28% and 30%, respectively, over FY26-29E. This growth is expected to be fueled by the fast-growing defence business, the scaling up of international explosives operations, and a favorable revenue mix that is set to improve overall profitability through enhanced scale and operating leverage.
The company's journey began as an explosive trading entity before transitioning into manufacturing through its subsidiary, Economic Explosives. Renamed Solar Industries India Ltd. in 2009, it has evolved into a comprehensive provider of industrial and defence energetics.