Shares of Solar Industries India Ltd have turned into multibagger in the last five years. The defence sector stock, which closed at Rs 1,113 on August 8, 2019 rose to Rs 10,440 in the current session, delivering 838% returns during the period. An amount of Rs 1 lakh invested in the multibagger stock three years ago would have turned into Rs 9.38 lakh today. In comparison, the parent BSE 200 index has surged 143.42% during the period. The benchmark Sensex rose 112 per cent during the period.
The defence stock has clocked stellar returns of 162% and 230% in one and two years, respectively.
However, the stock has been in a downtrend, falling 14% in the last one month. The stock surged to a record high of Rs 13,300 on July 11 this year.
Meanwhile, the stock rose 1.61% to Rs 10,440 today against the previous close of Rs 10,273.70 on BSE. Market cap of the firm stood at Rs 93,559 crore. Total 251 shares of the firm changed hands amounting to a turnover of Rs 26 crore on BSE. The stock had a beta of 1 in the last one year, indicating average volatility during the period.
In terms of technicals, the relative strength index (RSI) of Solar Industries India stands at 41.7, signaling the stock is trading neither in the overbought nor in the oversold zone. Solar Industries India shares are trading lower than the 10 day, 20 day, 30 day, 50 day but higher than the 100 day, 150 day and 200 day moving averages.
Financial Performance
Solar Industries India logged a 49.08 percent year-on-year rise in Q1 net profit to Rs 300.54 crore against Rs 201.59 crore in the June 2023 quarter. However, revenue climbed just 0.75% to Rs 1694.78 crore in Q1 against Rs 1682.21 crore in the June 2023 quarter.
The firm reported a 43% rise in EBITDA to Rs 473.67 crore in Q1 of this fiscal against Rs 331.31 crore in the June 2023 quarter.
Stock outlook
ICICI Securities has assigned a buy call to the stock with a price target of Rs 13,250. It values the stock at 65 times FY26 estimated EPS.
Nuvama has maintained hold stance on the stock. It has raised its price target to Rs 11,140 against Rs 9,247 earlier.
“Management remains confident of a sustained pickup in the defence segment and healthy revenue growth in international driving operating leverage. Factoring in the pickup in growth momentum and margin expansion, we are raising FY25E/26E EPS by 9%/12%. This lifts our TP to INR11,140 (from INR9,247) while valuing its defence business at INR1,797 and rolling over the valuation to Q2FY27; retain ‘HOLD’, the brokerage said.
Centrum Broking has retained its buy stance on the Solar Industries stock. The brokerage has revised its price target to Rs 11,665.
"Solar Industries expects robust sales growth in FY25 led by defence (Rs 1500 crore sales), domestic market (plus 15% volume growth) and overseas markets. EBITDA margin in FY25 is likely to be in excess of 25% due to better sales mix (rising share of defence) and improving profitability in overseas markets. We raise our EPS for FY25E/26E by 6%/3%. We roll over the valuation to Sept’26 and retain BUY rating with a revised target of Rs 11,665, based on unchanged P/E of 55x H1FY27E EPS," said Centrum Broking
Antique Broking has assigned a price target of Rs 9730 to the stock and maintained hold rating post Q1 earnings.
“Capex spends of Rs 8 bn/ INR 2 bn for FY25E/ 1QFY25. Management upgraded FY25 volume/ EBITDA margin guidance to +15%/ 25% (earlier 15%/ 23%). Guidance of INR 15 bn FY25 defence revenue. Considering better margins, we increase our FY25/ 26/ 27 EPS estimate by 7%/ 5%/ 5%. We maintain HOLD rating with a revised price target of Rs 9,730 (earlier Rs 9,310) based on a PE multiple of 50x 1HFY27 EPS (five-year avg., high, low of 33x, 63x, 18x),” said the brokerage.
Q1 shareholding
Seven promoters held 73.15 per cent stake or 6.61 crore shares and 72,846 public shareholders owned 26.85 per cent or 2.42 crore shares in the firm for the quarter ended June 2024.
Of these, 68,663 resident individuals held 39.74 lakh shares or 4.39% stake with capital up to Rs 2 lakh. Three shareholders held 0.58% stake or 5.27 lakh shares with individual capital over Rs 2 lakh.
28 mutual funds owned 12.06% stake or 1.09 crore shares at the end of Q1 this fiscal.
About Solar Industries India
Solar Industries is an India-based manufacturer of industrial explosives for the mining and infrastructure sector. The company offers industrial explosives and defence products.