SOLARINDS - Solar Industries India Limited Share Price

The management of Solar Industries India Limited provided an optimistic outlook, emphasizing strong growth driven by defense and international segments. Key highlights include:

1. Financial Performance: Achieved record quarterly revenue (Rs.1,973 crore, up 38%), EBITDA (Rs.536 crore, up 46%), and PAT (Rs.338 crore, up 52%). Nine-month revenue stood at Rs.5,374 crore (up 21%), with defense revenue surging 578% YoY to Rs.409 crore in Q3.

2. Defense Growth: Defense remains a major growth pillar, with an order book of Rs.4,971 crore (expected to rise to ~Rs.11,000 crore post-Pinaka deal). The Cabinet Committee on Security (CCS) approved a significant Pinaka rocket order, which will drive long-term revenue. Development of advanced systems like Bhargavastra (anti-drone tech) and loitering ammunition is underway, with trials showing promise.

3. International Expansion: Exports/overseas revenue grew 21% YoY to Rs.758 crore in Q3. Facilities in Thailand (operational) and Kazakhstan (soon starting) will bolster global presence.

4. Domestic Market: Subdued mining demand (due to elections and monsoons) impacted short-term volumes, but recovery is expected post-January 2025. Long-term domestic growth remains robust, supported by infrastructure and housing sectors.

5. Investments: Signed an MoU with Maharashtra for a Rs.12,700 crore investment over 10 years to expand defense manufacturing. Current annual CAPEX is ~Rs.1,200 crore, funded via internal cash flows.

6. Margins & Guidance: EBITDA margins improved to 27%, driven by defense and export mix. FY25 revenue growth may fall slightly short of 30% (due to domestic slowdown), but profitability (PAT) is exceeding expectations. Long-term revenue CAGR of 20%+ is projected, backed by defense orders and international expansions.

Outlook: Management remains confident in sustained growth, underpinned by defense modernization, global ammunition demand, and capacity expansions. Strategic diversification and government initiatives (Atmanirbhar Bharat) position the company for multi-year growth.

Question 1:
"If you look at the export orders that we have received over the recent past, particularly the last one that we received, it was like Rs. 2,000 crores. So, just wanted to get a sense on the ammunition export market. How do you see it panning out over the next 12"“15 months? Are we seeing some more opportunities over there? And is it possible to give the categories where we are seeing high mg explosive or Pinaka, for instance, or something else that we might be getting into?"

Answer Summary:
The Company highlighted strong international demand for high-energy materials and Pinaka rockets, with an existing defense order book of Rs.4,971 crores. Anticipated signing of the Pinaka order (around Rs.6,000 crores) will boost the total defense order book to ~��11,000 crores. Solar Industries is actively supplying propellants to BrahMos and other defense projects, with global interest in Pinaka rising.

Question 2:
"Company has signed with Government of Maharashtra for investing Rs. 12,700 crore in next 10 years to establish an anchor mega project. Please elaborate on this project and how the Company will arrange the funding?"

Answer Summary:
The MoU with Maharashtra aims to expand defense manufacturing capabilities over 7"“10 years. Funding will come from internal cash flows, with annual PAT projected at Rs.1,250"“1,300 crores, growing due to defense and international business. The project aligns with India's Atmanirbhar Bharat initiative to enhance private sector participation in defense.

Question 3:
"Defense growth has been phenomenal this quarter. Earlier guidance was ~Rs.1,500 crores for FY25. Any revision to this guidance? Also, when will the execution timeline begin for the Pinaka order?"

Answer Summary:
The defense revenue guidance of Rs.1,500 crores for FY25 remains intact (nine-month revenue: Rs.975 crores). Pinaka order execution (Rs.6,000 crores) is expected to start within six months of signing, spanning 7"“12 years. Existing defense orders (Rs.4,971 crores) have a 3"“4-year timeline, while Pinaka will drive long-term growth.

Question 4:
"What is the outlook for domestic explosives volume growth, given subdued demand due to elections and monsoons? When will this segment recover?"

Answer Summary:
Domestic explosives volume growth is expected to reach 8"“10% in FY25 (vs. initial 15% guidance), impacted by elections and monsoons. Demand has improved since January 2025, with a recovery anticipated in subsequent quarters. Long-term growth remains robust due to mining and infrastructure expansion.

Question 5:
"What is the EBITDA margin trajectory for defense vs. overall business? Could margins improve further?"

Answer Summary:
Current EBITDA margin for the Company stands at ~27%, driven by defense and international segments. Management expects margins to sustain at similar levels due to operational efficiency and favorable product mix, though exact defense-specific margins were not disclosed.

Question 6:
"What are the growth expectations for international explosives business, and which geographies are driving this?"

Answer Summary:
International revenue grew 21% YoY in Q3 (Rs.758 crores), with nine-month revenue at Rs.2,136 crores. Growth is driven by existing markets and new territories. Facilities in Thailand are operational, while Kazakhstan will commence soon, supporting further expansion.

Question 7:
"What is the status of the Bhargavastra anti-drone system and its commercialization timeline?"

Answer Summary:
Bhargavastra (anti-drone system) trials showed encouraging results. Commercialization is expected within two years, leveraging domestic R&D. Solar aims to capitalize on India's focus on indigenous defense tech, with orders likely post-trial validation.

Question 8:
"How will the U.S. political climate impact global defense demand, particularly for Solar's exports?"

Answer Summary:
Global defense demand is expected to remain strong for 7"“10 years due to NATO's budget hikes and ongoing conflicts. Solar is well-positioned to benefit from rising ammunition needs, with exports already contributing significantly to order books.

Question 9:
"What is the long-term revenue growth outlook (3"“5 years) given defense and international expansions?"

Answer Summary:
Management anticipates 20%+ revenue CAGR over 3"“5 years, driven by 15% volume growth in explosives and defense expansion. Margins will sustain due to operational leverage and higher-margin defense contributions.

Question 10:
"What is the CAPEX plan for FY26/27, and how will Pinaka investments be funded?"

Answer Summary:
FY25 CAPEX is Rs.1,200 crores, focusing on defense and international expansions. Future CAPEX guidance will be shared post-Q4 results. Pinaka investments are part of ongoing plans, funded via internal accruals.