Solar Industries India (SOIL IN) – Visit Update – Defense to propel future growth – Not Rated

We visited Solar Industries India’s (SOIL) manufacturing facility in Nagpur and engaged with the management discussing the company’s financial and operational performance, capacity expansion plans, and growth outlook. We believe SOIL is strategically positioned for growth driven by strong execution and order prospects across its Defense and Explosive businesses. SOIL has been strategically expanding its global footprint over the years and caters to >91 countries across globe. In the explosives segment, SOIL has positioned itself as a market leader with >25% domestic market share in coal mining. With strong order prospects in Ammunition, UAV’s, Rockets and Missiles from both domestic and international markets, SOIL is aiming to achieve Rs80bn revenue in the next 4-5 years. SOIL’s long-term growth prospects remain strong led by capacity expansion, acquisitions & increasing footprint across the globe, and expanding the Defense portfolio. The management has guided for revenue of Rs100bn with EBITDA of ~27% and capex plan of Rs20bn for FY26. The stock is currently trading at a PE of 55.5x/46.3x on FY27/28E (consensus). We remain positive on SOIL given, 1) the Defense business driving revenue growth, 2) expanding and gaining market share in international markets for the Non-defense business, 3) its market leadership in the Explosives business, and 4) strong traction for defense products from globe market amid geopolitical tensions.