Solar Industries - Defence Likely To Be The Mainstay: ICICI Securities

ICICI Securities Report

Taking cognisance of the traction in ammunitions, rocket force and drones and the possibility of Solar Industries India Ltd.’s participation in the same, we believe defence is likely to garner 22-25% of revenue in FY25/26E.

Key points:

1. Media reports suggest Solar Industries is developing bombs for Su-30 MKI;

2. our channel checks suggest Pinaka order is likely to be awarded soon;

3. global shortage of ammunition provides an opportunity; and

4. Solar Industries is well equipped to develop loitering munitions, counter drones and long range rockets.

Considering the aforesaid, we raise our FY25/26E earnings per share by 4%/16%; however, we maintain multiple as 55 times as we still see significant prospects in defence space, which have not yet been captured in our estimates.

Our revised target price works out to Rs 10,950 (earlier Rs 9,050). Maintain Buy.

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