Multibagger defence stock zoomed 266% in three years; still down 19% from record high

Shares of Solar Industries India Ltd have turned into a multibagger in the last three years. The defence sector stock, which closed at Rs 1003 on July 16, 2020 was trading at Rs 3675 in the current session, delivering 266% returns during the period. In comparison, Sensex has risen 79.30% in three years. The stock zoomed rose 1.14% to an intraday high of Rs 3724.90 on BSE today. Solar Industries stock has gained 39.21 per cent in a year and fallen 17.11 per cent in 2023. Solar Industries stock has climbed 125 per cent in two years. However, the Solar Industries stock is trading 19% lower to its record high of Rs 4535.95 on January 3, 2023. It fell to a 52 week low of Rs 2630 on July 19, 2022.

Total 2207 shares of the firm changed hands amounting to a turnover of Rs 81.48 crore on BSE. Market cap of the firm stood at Rs 33,259 crore.

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In terms of technicals, the relative strength index (RSI) of Solar Industries stands at 45.6, signaling it's trading neither in the overbought zone nor in the oversold zone. Solar Industries stock has a one-year beta of 0.5, indicating very low volatility during the period.

Phillip Capital has initiated coverage on the Solar Industries stock with a buy call. It expects the stock to touch Rs 4,318 in a year.

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“Solar Industries (SOIL) is a dominant player in industrial explosives, controlling a significant one fourth of this market in India. We value SOIL at 35 times Sept’25 EPS (40% premium to average PE), to factor in its deepening foray into defence, which can disproportionately contribute to PAT, due to its superior margin profile. We believe premium valuations will sustain, as SOIL has displayed traits of being a winner with the least cyclicity, despite catering to a cyclical sector, and we also expect its moat to sustain, as no near competitor can match its scale and capabilities. We initiate with a BUY rating and a target of Rs 4,318, valuing it at 35x Sept’25 EPS,” the brokerage said.

Abhijeet from Tips2Trades said, "Solar Industries is slightly bearish on the daily charts with strong resistance at Rs 3727. A daily close above this resistance could lead to target of Rs 3900 in the near term."

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The defence firm reported a 22.76% rise in profit at Rs 206.10 crore in the March 2023 quarter, against Rs 167.89 crore profit in the corresponding quarter of previous fiscal. Sales rose 47.23% to Rs 1939.88 crore in Q4 of last fiscal against Rs 1317.62 crore in the March 2022 quarter. Basic EPS stood at Rs 22.78 in Q4 compared to Rs 18.55 for Q4FY22, reflecting a growth of 22.80%.

Solar Industries is an India-based manufacturer of industrial explosives for the mining and infrastructure sector. The company offers industrial explosives and defense products.

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