Motilal Oswal initiated coverage on Solar Industries with a “buy” rating and a price target of ₹23,000, indicating an upside potential of 24% from current levels.
The brokerage said that Solar Industries’ recent acquisition of Omnia Holdings bolsters its position in South Africa and the neighbouring markets and provides strong support for the backward integration of Ammonium Nitrate. It also highlighted the company’s transition from being just a supplier of explosive materials to an integrated defence manufacturer.
After the completion of the Omnia acquisition, Motilal Oswal expects Solar Industries to have a revenue mix of 78% from the industrial explosives business and 22% from defence by financial year 2029. It expects the company’s revenue to grow at a Compounded Annual Growth Rate (CAGR) of 43% and Profit After Tax (PAT) to grow at a 34% CAGR over financial year 2026-2030.
By financial year 2030, Motilal Oswal also expects Omnia’s revenue to grow to ₹16,200 crore from ₹13,300 crore in financial year 2026.
The brokerage also expects Solar Industries’ Defence business to continue to benefit from additional Piunaka regiments, replenishment rockets and export demand, orders for Bhargavastra after successful trials, domestic and export orders for 155 mm ammunition and 125 kg air bomb for NATO and Russian aircraft. The defence segment order inflow is likely to grow at a 29% CAGR over financial year 2026-2030.
As part of its “bull case” scenario, Motilal Oswal is expecting a 15% higher profitability and a 10% higher multiple than its base case, taking into account a faster execution of the defence segment order book, higher ammonium nitrate prices, which will result in higher realizations. The bull case price target of ₹28,800 implies an upside potential of 55% from current levels.
Key risks to Motilal Oswal’s estimates would emerge from delays in order inflows and in the finalization of a large platform order pipeline or country-specific risks due to higher exposure to the African market. Poor performance of subsidiaries and sharp currency fluctuations can also impact the overall margin performance, the brokerage said.
20 analysts now cover Solar Industries, of which 16 have a “buy” rating, three say “hold”, and one has a “sell” rating on the stock. The consensus estimate of price targets implies an upside potential of 17% from current levels for the stock.
Shares of Solar Industries are trading 2.3% higher on Monday at ₹18,980. The stock is up 56% so far on a year-to-date basis.