ADVERTISEMENT

Solar Industries Q2 Results Review - Record Margins; Benign Prospects: ICICI Securities

Exciting prospects but partially priced in

<div class="paragraphs"><p>Solar Industries India Ltd. (Source: Company website)</p></div>
Solar Industries India Ltd. (Source: Company website)

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Solar Industries India Ltd.’s Q2 FY24 profitability is its best-ever. Key points:

  1. Ebitda margin surged to a record 24.9% on better price-cost spread.

  2. Explosive volume uptick of 13% YoY.

  3. Defence comprised 8% of overall volume.

  4. Order book of Rs 39.2 billion, of which Rs 10.5 billion is for defence.

Going ahead, management believes that:

  1. FY24 volume growth of 20% YoY is achievable.

  2. FY24 Ebitda margin is likely to be higher than Solar Industries' 20-22% guidance.

  3. Defence revenue is likely to skyrocket hereon.

We believe that the stock’s current market price already has some of these benefits priced in. Taking cognisance of management’s guidance, we raise our FY24E/FY25E earnings per share by 14%/12% and valuation multiple to 45 times FY25E EPS (earlier 40 times).

Our revised target price works out to Rs 5,920 (earlier Rs 4,700). Downgrade to 'Add' (earlier 'Buy')

Key Risks

  • Delay in Award of Pinaka order.

  • Further fall in Ammonium nitrate price leading to negative price-cost spread.

  • Slow traction in construction and infrastructure segment.

Click on the attachment to read the full report:

ICICI Securities Solar Industries India Q2FY24 Results Review.pdf
Opinion
Bharat Dynamics Q2 Review - See No Risk To Our FY24E Revenue Guidance Of Rs 3200 Crore: ICICI Securities

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.