Solar Industries scales defence and explosives growth on strong order book

Investment View and Business Overview

ICICI Direct Research’s August 14, 2026 result update on Solar Industries retains its BUY view, supported by strong execution across defence, domestic explosives and international operations. The broker has set a target price of Rs 23,200 against a CMP of Rs 19,750.

Solar Industries is a major domestic manufacturer of bulk and cartridge explosives, detonators, detonating cords and related components used in mining, infrastructure and construction. Its product range also includes packaged explosives, initiating systems, UAS drones, ammunition, military explosives, rocket integration and bombs.

Q1FY27 Financial Performance

Solar Industries reported Q1FY27 net sales of Rs 3,668 crore, up 70.3 per cent year-on-year and 20.2 per cent quarter-on-quarter, driven by robust performance across its defence and explosives businesses. EBITDA margin improved to 27.7 per cent from 24.8 per cent in Q1FY26 and 27.1 per cent in Q4FY26, aided by a favourable mix of defence and export business.

Defence Emerges as the Next Growth Leg

The broker identifies defence as Solar Industries’ next major growth leg. In Q1FY27, the domestic explosives segment grew 52 per cent year-on-year, international business grew 65 per cent and defence revenue grew approximately 123 per cent, reflecting execution of key contracts.

Management has guided for defence revenue of approximately Rs 4,500 crore in FY27, representing approximately 70 per cent growth. The defence order book exceeded Rs 18,000 crore and includes Pinaka ammunition, guided munitions, 155mm ammunition, loitering munitions and counter-drone systems.

Management remains confident of maintaining momentum, supported by its indigenous product portfolio and domestic and international opportunity pipeline, and expects sizeable new orders in coming quarters.

Capacity Expansion and New Defence Technologies

Solar Industries is expanding into UAVs, robotics, missiles and long-range munitions. Management is also expanding domestic explosives capacity through commissioning of the Dhule plant, expansion at Dholpur and North India facilities, and an upcoming Odisha facility.

FY27 capex is planned at Rs 2,050 crore, of which approximately Rs 450 crore had been deployed in Q1FY27. The company also has longer-term phased investment plans of Rs 12,780 crore, principally for UAVs, robotics platforms and next-generation defence technologies.

Order Book and Industry Demand Outlook

ICICI Direct sees favourable global demand-supply conditions in explosives and high-energy materials supporting pricing. The broker notes that key raw-material prices increased by 30-40 per cent recently, supporting revenue growth through both higher volumes and higher value per tonne.

Solar Industries’ overall order book was Rs 21,350 crore, or approximately 1.9 times trailing twelve-month revenue. This provides visibility alongside international expansion and recovery in domestic explosives. Management remains on track for FY27 revenue guidance of Rs 14,000 crore.

Earnings Estimates and Valuation

ICICI Direct has increased its FY27E and FY28E earnings estimates to reflect strong execution across segments. Its forecasts are summarised below:

The Rs 23,200 target price is based on 70 times FY28E EPS.

Key Risks

• Dependence on government contracts.
• Volatility in ammonium nitrate prices.
• Availability of key raw materials and components.