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Nirmal Bang Report
Solar Industries India Ltd. reported Q4 FY23 revenue of Rs 19.3 billion, up 46.5% YoY (26.9% above our estimate). While Coal India Ltd./institutional/exports/defence revenue grew by 16.1% / 91.7% / 89.7% / 53.6% YoY to Rs 3 billion/Rs 3.8 billion/Rs 7.4 billion/Rs 1.1 billion, housing and infra revenue declined by 1.5% YoY to Rs 3.8 billion.
Gross margin expanded by 30 bps YoY to 38.3% on the back of easing commodity cost pressures. Ebitda grew by 36% YoY to Rs 3.6 billion. Operating margin stood at 18.5%, down by 150 bps YoY (80 bps below our estimate), mainly on account of higher other expenses (up 88% YoY).
Solar Industries reported its highest-ever quarterly profit after tax of Rs 2.1 billion, up 22.9% YoY (21.2% above our estimate). In Q4 FY23, Solar Industries acquired Rajasthan Explosives and Chemicals Ltd. for a consideration of Rs 700 million.
Solar Industries has acquired land in South India and Northwest India for new facilities. The management has guided for 15-20% volume growth for FY24.
The company expects defence revenue to double to Rs 8 billion for FY24.
Overall, we believe that while volume growth outlook remains strong on account of higher off-take by Coal India and strong demand from miners amid the ongoing housing and infra push by the Government, maintaining similar levels of realisations will be a challenge going forward as we expect the price of ammonium nitrate (key raw material) to continue to soften from multi-year highs.
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