Buy Solar Industries India, target price Rs 13,720: ICICI Securities

ICICI Securities has a buy call on Solar Industries India with a target price of Rs 13,720. The current market price of Solar Industries India Ltd. is Rs 8804. Solar Industries India, incorporated in 1995, is a Mid Cap company with a market cap of Rs 80047.96 crore, operating in the Chemicals sector.

Solar Industries' key products/revenue segments include Explosives (Industrial) and Other Operating Revenue for the year ending 31-Mar-2024.



Financials
For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 1982.62 crore, up 13.53% from last quarter Total Income of Rs 1746.28 crore and up 37.68% from last year same quarter Total Income of Rs 1440.05 crore. The company has reported net profit after tax of Rs 336.54 crore in the latest quarter.

The company?s top management includes Mr.Satyanarayan Nuwal, Mr.Manish Nuwal, Mr.Suresh Menon, Mr.Milind Deshmukh, Mr.Natrajan Ramkrishna, Mr.Jagdish Chandra Belwal, Mrs.Rashmi Prasad, Mr.Dinesh Kumar Batra. Company has Akshay Rathi & Associates as its auditors. As on 31-12-2024, the company has a total of 9 Crore shares outstanding.

Investment Rationale
Rather than estimating the margin of Solar Industries based on explosives and ammonium nitrate spread, it is prudent to value the company based on future growth verticals- defence and aerospace. Based on its current orderbook, initiatives being taken by the company and potential in the ecosystem, ICICI Securities reckons, defence revenue could grow over 4x from FY25 level over the next five years. Also, Solar Industries has plans to make the value chain robust by backward integration, forward integration and developing new products in non-defence domain. As per I-Sec analysis, EBITDA CAGR (FY22-FY27E) is likely to be 33% and margins are expected to hover above 27% as the proportion of defence and exports & overseas increases. Also, they see a long runway for 25% plus growth in EBITDA as the benefits of capex fructify in future. ICICI Securities maintains a BUY on Solar Industries India with an unchanged target price of Rs 13,720 on 60x FY27E EPS.

Promoter/FII Holdings
Promoters held 73.15 per cent stake in the company as of 31-Dec-2024, while FIIs owned 7.23 per cent, DIIs 12.78 per cent.