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Nirmal Bang Report
Solar Industries India Ltd.'s revenue declined by 16.5% YoY to Rs 16.1 billion with gross margin improvement of 1,024 basis points YoY to 48.5%. Ebitda margin expanded by 342 bps to 22%. Adjusted profit after tax increased by 14% YoY to Rs 2.4 billion.
Volume grew by 24% YoY to 1,66,899 million tonne, while realisation declined by 34% YoY to Rs 44,072/mt. Order book stood at Rs 51.3 billion at the end of Q4 FY24.
The stock has run up ~30% from our last published note (Feb, 08, 2024). While we remain positive on Solar Industries over the longer term – mainly on account of demand from defence contracts and infrastructure sectors, we believe that near term challenges such as inflationary pressures, and exchange rate effect may impact profitability.
Furthermore, Ammonium nitrate (key raw material) prices have stabilised and come to a point where it is expected to remain stable for the near future.
As a result, we maintain Accumulate with a revised target price of Rs 8,620 (versus Rs 7,240 earlier), valuing it at 54 times March'26E earnings per share.
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