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ICICI Securities Report
Solar Industries India Ltd.'s earnings surprised on the back of higher-than-expected domestic volumes and margins. The company has been able to pass through the raw material price increase, leading to improved gross margins/tonne and Ebitda margins/tonne QoQ.
FY22 volume growth of 22% (versus guidance of 20%) along with improvement in gross margins in an inflationary environment where ammonium nitrate prices have increased approx. three times highlights the pricing power that Solar Industries enjoys.
Volume growth has been broad based across sectors (coal, housing and infra). Consolidated gross margin performance has been relatively weak (~300 basis points correction); Ebitda margin has been helped by lower other expense (presumably on account of lower forex loss/gains).
Solar Industries appears favorably placed with possible share in 23 out of 310 defence equipment in negative import list as published by the Ministry of Defence.
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