Solar Industries, Astra Microwave shares: Targets as Jefferies initiates coverage

Jefferies has initiated coverage on Solar Industries India Ltd, Astra Microwave Products Ltd  with a 'Buy' rating, citing rising domestic defense spending and growing exports. The foreign brokerage has also initiated coverage on Bharat Dynamics Ltd (BDL) will a 'Hold' rating.

In its note, Jefferies said: "We believe India defence spend should see a double-digit CAGR in the medium-term in the background of global geopolitical tensions. Private sector companies particularly have visible growth prospects north of 20 per cent backed by government focus on domestic manufacturing and building the private sector supply chain. We initiate coverage on Solar Industries (Solar) and Astra Microwave (Astra) with a Buy, and Bharat Dynamics (BDL) with a Hold," it said.

 As per Jefferies, India’s domestic defense capital spending is expected to rise at a 16 per cent compound annual rate over the next four years. It noted that private companies’ share of revenue among key listed defense firms rose to 16 per cent in FY26 from 9 per cent in FY23, though state-owned companies remain dominant.

Jefferies said defence exports are also gaining momentum as operational validation of Indian-made systems such as Akashteer command & control system and BrahMos missiles during Operation Sindoor has improved export credibility. "Our estimates factor defence exports rising at an 11 per cent CAGR over FY26-30E to Rs 58,400 crore," it said.

Solar Industries

For Solar Industries, Jefferies suggested a target price of Rs 28,160, citing its expanding defence business that includes ammunition, explosives, rockets and drones.

"We believe company’s defence business expansion from 27 per cent to 40 per cent of sales should drive 31 epr cent earnings CAGR over FY26-30E. We initiate coverage with a Buy and our PT of Rs 28,160 values it at 70x PE Sept 28E (in-line with the Sept 27E multiple)," Jefferies said.

Astra Microwave Products

Jefferies suggested a target of Rs 2,055 on Astra Microwave Products. Its revenue is estimated to grow at a 19 per cent compound annual rate over the next four years.

"Revenue should rise at 19 per cemt CAGR over FY26-30E led by Defence and Meteorology, with operating leverage benefits driving 28 per cent PAT CAGR. We initiate coverage with a Buy and our Rs 2,055 PT values it at 55x PE Sept 28E, a discount to our 65x target multiple for Data Patterns which has higher proportion of proprietary in-house technologies," Jefferies said.

Meanwhile, Jefferies suggested a target of Rs 1,280 on Bharat Dynamics. India’s primary missile manufacturer is expected to deliver a 30 per cent earnings-per-share growth over the next four years.

"We believe the company should see 30 per cent EPS CAGR over FY26-30E on a low base as execution scales up. We initiate coverage with a Hold as our Rs 1,280 PT does not offer upside and values it at 50x PE Sept 28E, a 22 per cent discount to its 5-year average PE given execution issues," Jefferies said.