Defence orders bolster Solar Industries' firepower
Given the strong outlook and the rising share of defence in overall revenues, the stock has risen almost 70% so far in 2025. Yet, at 90x its FY26 estimated earnings, the stock may be running ahead of its financials.
The defence sector is expected to drive growth for the explosives manufacturing company.
'Solar's defence vertical has remained the fastest growing segment in the last five years (62% revenue CAGR over FY20-25), led by strong order inflows, healthy execution and a focus on continuously expanding the portfolio," pointed out Emkay Global Financial Services.
Defence boost
Defence revenues rose 160% in FY25, doubling their contribution to 18% from 9% in FY24. The management's revenue guidance of ₹3,000 crore for FY26 implies year-on-year growth of 120%, with the share in total sales climbing to 30%.
Here, the defence ministry's award of a high-value order of over ₹6,000 crore for the Pinaka multiple rocket launcher system in February helps revenue visibility. Plus, Solar expects to receive some more orders that are being fast-tracked after the recent military escalation on the western borders.
Also, the company's international business, accounting for 38% of FY25 sales, is seeing strong traction amid a volatile geopolitical situation. Some of its overseas loss-making subsidiaries turned around in FY25, thus taking aggregate pre-tax profits of subsidiaries up sharply by 82% to ₹656 crore.
To leverage its international presence, Solar has recently operationalized its facilities in Thailand and Indonesia and is setting up new facilities in Saudi Arabia and Kazakhstan. On the other hand, the company's exposure to Turkey, at nearly 10% of total FY25 revenue, could face uncertainty because of its role in the military confrontation.
Solar's international order book is ₹8,500 crore, to be executed over the next 4-5 years. Overall, the order book at FY25 End is ₹17,000, more than triple the figure of ₹5,100 crore in FY24. Its other customers include Coal India Ltd, which forms 13% of sales, and industrial clients across mining, housing, and infrastructure.
Solar's estimated domestic market share stands at about 25%. Overall, FY26 revenues are expected to rise 33% over FY25's ₹7,500 crore seen in FY25. The company's FY25Ebitda margin at 27% was far higher than the guidance of 23% and should sustain or even improve with the rising share of defenceorders. Ebitda stands for earnings before interest, taxes, depreciation, and amortization.
Capex push
To leverage its presence in defence, Solar has been investing in new product development, in collaboration with the Defence Research and Development Organisation (DRDO). After the successful delivery of Nagastra-1, a loitering munition or a suicide drone, deployed during Operation Sindoor, it has developed Nagastra-2 and Nagastra-3 and expects to receive orders for those products. The other product, Bhargavastra, a counter-drone micro-missile, has passed trials at two levels for different applications.
The capital expenditure plan of about ₹2,500 crore in FY26 is more than double the figure of ₹1,200 crore for FY25, to be metprimarily through internal accrual.
While the defence business continues to do well, other domestic segments, such as coal mining, are seeing subdued demand and lower power consumption. Also, international business faces currency and country risk, although the potential impact would be lower with presence across a large number of geographies.
The stock doubled from its 52-week low of ₹8,500 on 18 February after the receipt of the Pinaka order, further bolstered after Operation Sindoor. Despite the run-up, order inflows from defence would keep investors' interest alive in the stock.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
India.com
20 minutes ago
- India.com
Not Chinese F-35 fighter jet, Pakistan working on dangerous 'invisible weapon', it is..., Asim Munir's dangerous plan is...
New Delhi: Pakistan is increasing its military strength after the conflict with India from 7-10 May this year. Pakistan, which failed to face India's attacks during Operation Sindoor, wants to avoid such a situation in future. In such a situation, the Pakistan Army is working on new plans. Till now it was being told in the Pakistani media that the Pakistan Army is working on strengthening its air defense and increasing the purchase of fighter planes from China. Now it has come to light that the Pakistani Army is working on creating an invisible network. Which weapon is Pakistan working on? Pakistan's defense website quwa has revealed in a report that the next big military project of the Pakistani Army is not around fighter aircraft but it is on creating an invisible network. The report says that the future of air power does not depend only on the speed, technology and weapon carrying capacity of the fighter aircraft. More important than this is the ability to sense the danger in time and take action first. What is Unseen Defence Network? The report says that the focus of the Pakistani Army is on creating an unseen defence network, which will help strengthen air defence. However, this will be extremely challenging for military planners. It will not be easy for the army to communicate and cooperate seamlessly during wartime, when an electromagnet strike can surprise at any time. This is the most important tension of modern air warfare. The Pakistani Army says that for effectiveness in the battlefield, broadcasting and networking huge amounts of sensor data across dozens of assets will have to be done and working with low electromagnet field profiles will have to be done. It should be invisible to the enemy's vigilant electronic support. Any aircraft or system that makes noise can face difficulty. What do experts say? The report says that there is a need to emphasize the technical and strategic imperative behind the development of the next generation tactical datalink (TDL). It is not just an upgrade of technology, but it is about creating an entirely new language of war. Pakistani defense experts believe that this is necessary for the country's Air Force (PAF) and defense industry to remain a credible army.
Business Standard
36 minutes ago
- Business Standard
Board of Equitas Small Finance Bank approves raising Tier II capital up to Rs 500 cr
At meeting held on 21 July 2025 The Board of Equitas Small Finance Bank at its meeting held on 21 July 2025 has approved the issuance of up to 50,000 Rated, Listed, Unsecured, Redeemable, Fully Paid-Up, Subordinated, Non-Convertible Debentures having a face value of Rs.1,00,000/- each, of the aggregate nominal value of up to Rs.500 crore including a green shoe option of up to 25,000 Rated, Listed, Unsecured, Redeemable, Fully Paid-Up, Subordinated Non Convertible Debentures having a face value of Rs. 1,00,000/- aggregating up to Rs. 250 crore, in a single series, to be categorized as Lower Tier II Capital (in compliance with Basel II framework on Capital Adequacy) (Bonds/ NCDs/ Debentures) on a private placement basis.
Time of India
an hour ago
- Time of India
No taxes on overtime or tips? What the new proposal could mean for your paycheck
No tax on overtime pay Live Events How employers must report overtime No tax on tips Who can't use the tip deduction Law Medicine Accounting Consulting Finance Performing arts Athletics Investing Stock trading Any job based mainly on the person's skill or fame How employers must report tips FAQs (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel A new law called the One Big Beautiful Bill Act (OBBBA) was passed. It helps former President Trump fulfill two campaign promises: No taxes on overtime and No taxes on tips . These tax breaks start from January 2025 and end after 2028. This law affects both workers and business owners, as per the don't have to pay income tax on some of your overtime money. You can deduct up to $12,500 if you're single, or $25,000 if you file taxes as a couple. If you earn more than $150,000 (single) or $300,000 (married), this benefit goes away, as per the report by don't have to do itemized deductions to get this — it's automatic. This only works on extra money you earn from overtime, not your regular pay. Example: If your normal pay is $20/hour and you earn $30/hour for overtime, only the extra $10/hour counts for the tax break, as per the legal overtime under federal law (over 40 hours/week) is allowed. Overtime paid through contracts or state law doesn't count unless it also follows federal rules. You still pay Social Security and Medicare taxes on overtime pay, as stated by the NAHB must show the overtime amount separately on your W-2 form. Right now, overtime and regular pay are combined on W-2, but this will change in 2025. For 2025, employers can use a 'reasonable guess' to separate regular and overtime pay while adjusting to the new rule, as per the IRS will give more instructions about how to report this soon. Employers are told to work with accountants or payroll experts to track overtime who get tips can also avoid paying income tax on some of their tip money. You can deduct up to $25,000 in tips from your taxable income. This benefit also phases out if you earn over $150,000 (single) or $300,000 (married). You don't need to itemize to get the tip deduction — it's automatic, as stated by the NAHB qualify, you must work in a job that normally gets tips, like waiters, repair workers, etc. The Treasury Department will release a list of approved 'tipped jobs' by around October 2025. Tips must be given freely by the customer — mandatory service charges don't count, as per the jobs can't use the tip deduction, even if they get include people working inTips will also need to be reported separately on your W-2 form. In 2025, employers can use a reasonable method to estimate tip amounts while the system updates. Just like overtime, you still pay Social Security and Medicare taxes on tips, as mentioned by the NAHB says this is just general information — not legal or tax advice. Before doing anything, you should talk to a real tax or accounting under the OBBBA law, qualified workers can deduct up to $12,500 (single) or $25,000 (married) of overtime pay from their taxable income starting in are still subject to payroll taxes, but eligible workers can deduct up to $25,000 in tip income from federal income tax under the new OBBBA law.
