Motilal Oswal's research report onSolar Industries
Solar Industries (SOIL) is a leader in the domestic explosive market and has established a strong presence in international markets for industrial explosives. Its recent acquisition of Omnia Holdings bolsters its position in South Africa and neighboring markets and provides strong support for the backward integration of ammonium nitrate. SOIL has also transitioned from being a supplier of explosive materials to becoming an integrated defense manufacturer. The progression from high-melting explosives (HMX) to ammunition, rockets, and counter-drone systems reflects its deliberate strategy of moving up the defense value chain. Successful trials and commissioning of Nagastra, Rudrastra and Bhargavastra would further diversify the company’s revenue stream beyond Pinaka and HMX. After the completion of the Omnia acquisition, we expect industrial explosives/defense mix of 78%/22% by FY29. We expect SOIL to deliver a CAGR of 43%/34% in consolidated revenue/PAT over FY26-30, with the industrial explosive segment’s growth settling at mid-teens after FY28 and the defense segment sustaining a higher growth rate.
We initiate coverage on SOIL with a BUY rating and a TP of INR23,000, based on a 50x P/E on Dec’28E EPS.
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