- Kotak Securities rates Solar Industries India Ltd. as Sell with a Rs 10,300 target price
- Current stock trades at Rs 17,388, implying a 40% downside per Kotak's valuation concerns
- Solar's defence business grew from Rs 130 crore in FY21 to Rs 2,600 crore in FY26
Kotak Securities has initiated coverage on Solar Industries India Ltd. with a ‘Sell' rating and a target price of Rs 10,300, implying a downside of about 40% from the stock's current trading price of Rs 17,388. The brokerage's bearish call comes despite what it describes as one of the most compelling structural growth stories in India's defence sector.
The concern, instead, is valuation. Solar Industries currently trades at about 55 times estimated FY28 earnings, leaving limited room for execution disappointments, Kotak said.
The company's defence business has grown nearly 20-fold, from Rs 130 crore in FY21 to Rs 2,600 crore in FY26. Backed by an order book of Rs 18,000 crore, Kotak expects defence revenue to grow at a 35% compound annual growth rate through FY30, reaching about Rs 8,800 crore.
Forecast for Financials
Pinaka rockets are expected to be a key growth driver, with revenue estimated to rise from around Rs 150 crore in FY26 to nearly Rs 1,800 crore by FY30.
Kotak forecasts Solar Industries' revenue, Ebitda and profit after tax to grow at compound annual rates of 25%, 27% and 28%, respectively, between FY26 and FY30. Ebitda margin is expected to expand by around 170 basis points to 28.4% as the share of the higher-margin defence business rises.
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