Solar Industries hits record high on winning orders worth Rs 1,853 crore from Coal India

Solar Industries gained 4 percent to hit an all-time high of Rs 5,359 per share on the BSE on October 9 after it bagged orders worth Rs 1,853 crore from Coal India for supply of bulk explosives. The S&P BSE Sensex was down 290 points or 0.4 percent to 65,705 levels, as of 10:40 am.

So far this year, the stock of this explosive manufacturer has soared 17 percent, as against 8 percent rise in the Sensex benchmark. Earlier, shares of Solar Industries touched 52-week high level of Rs 5,200 apiece on October 3, 2023.

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In an exchange filing on October 7, the management said that the delivery of bulk explosives to Coal India is estimated to be completed in the span of 2 years.

The Nagpur-based company is one of the largest manufacturers and suppliers of explosives and explosive accessories in India. The company covers an entire range of products, including bulk and cartridge explosives, detonators, detonating cards, cast boosters, among others.

Apart from Coal India, the company majorly supplies to Steel Authority of India (SAIL), Hindustan Zinc, and Singareni Collieries Company. Solar Industries’ products are also exported to countries like Indonesia, Malaysia, Oman, Jordan, Kenya, Nigeria, and others.

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Analysts at Centrum picked Solar Industries as their top bet from capital goods sector, owing to its leadership in industrial explosives (25 percent market share), proxy play on infrastructure capex, and strong scale-up in defence and overseas segment.

“The strong margin profile over last 8 years due to price variation clause in bulk explosives makes it an attractive investment opportunity. We expect margins to further improve in future amid improving revenue mix and growing share of defence segment,” they added in a recent note.

That said, analysts cautioned that any slowdown in mining and construction activities could hamper demand for explosives. Additionally, with 40 percent of revenue emerging from overseas, any delay or inability in managing sharp fluctuations in currencies could negative impact Solar Industries’ margins.

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That apart, analysts at Phillip Capital said that Solar Industries is well-poised to sustain its dominance in domestic explosive volumes over FY25-26.

“We expect Solar Industries revenue/PAT/Ebitda compounded annual growth rate (CAGR) at 10/15/17 percent over FY23-26. We value the company 35x Sept 2025 EPS due to its deepening foray in defence, which can disproportionately contribute to its PAT due to its superior margin profile,” the brokerage firm added.

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