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Motilal Oswal Report
Solar Industries shares could remain in focus after domestic brokerage firm Motilal Oswal Financial Services initiated coverage on the stock with a 'Buy' rating and a target price of Rs 23,000, implying a potential upside of about 24% from the reports current market price of Rs 18,555.
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According to the report, Solar Industries has transformed from a supplier of high-energy explosive materials into an integrated defense manufacturer with offerings spanning ammunition, rockets, drones, loitering munitions and counter-drone systems. The company has a defense order book of around Rs 18,000 crore, including international orders worth Rs 11,000 crore and a Pinaka rocket order worth Rs 6,000 crore.
Motilal Oswal expects the defense segment to benefit from additional Pinaka orders, demand for ammunition, follow-on orders for Nagastra drones, potential orders for Bhargavastra counter-drone systems and opportunities under Project Kusha. The brokerage estimates defense revenue to rise from Rs 2,630 crore in FY26 to nearly Rs 9,900 crore by FY30.
The brokerage also highlighted Solar Industries' proposed acquisition of South Africa-based Omnia Holdings, which is expected to strengthen its global presence and provide backward integration in ammonium nitrate, a key raw material used in explosives. Post acquisition, the company's distribution network is expected to expand to over 110 countries.
Motilal Oswal forecasts Solar Industries to deliver a CAGR of 43%, 36% and 34% in revenue, EBITDA and profit after tax, respectively, over FY26-FY30. The brokerage believes strong defense execution, expanding global operations and new product launches will support the company's next phase of growth.
Key risks and concerns
Key risks to our estimates and rating would emerge from delays in order inflows and in the finalization of a large platform order pipeline or country-specific risks due to high exposure to the African market. Poor performance of subsidiaries and sharp currency fluctuations can also impact overall margin performance.
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