Solar Industries share price: Triggers for stock post Q1 earnings; should you buy or sell?

Solar Industries share price: Shares of Solar Industries, the defence major, are set for over 15% upside, according to brokerage Nuvama. Raising the stock's target price to Rs 23,435 from Rs 20,000, the brokerage maintained a ‘BUY’ call on the stock. The brokerage listed out near-term catalysts for the stock from Pinaka ER order, capacity expansion (explosives/defence) and 155 mm artillery shell commercialisation. 

"We have revised FY27E/28E EPS by 7%/6% and roll forward to Sept-28E EPS at 55x, yielding a TP of Rs 23,435 (Rs 20,000 earlier). The stock trades at 70x/53x FY27E/28E EPS," said Nuvama. 

In terms of order book, a backlog of Rs 21,350 crore, including Rs 18,000 crore defence, provides strong visibility, the brokerage added. 

Net profit zoomed 93% to Rs 653 crore in Q1 against an estimate of Rs 519 crore (Bloomberg Consensus). Revenue climbed 71% to Rs 3670 crore against an estimate of Rs 2,995 crore. 

EBITDA rose 82% to Rs 1,024 crore in Q1 from Rs 564 crore, signaling strong operating performance across business segments. The company also clocked higher profitability, with EBITDA margin rising to 27.7% from 24.8%, a 290 basis points rise year-on-year.

According to Nuvama, SOIL reported two times YoY PAT growth (26% above consensus) in Q1FY27, led by strong execution (+70% YoY). Growth was broad-based, with domestic explosives picking up strongly (plus 52%), alongside exports/overseas (+65%) and defence (+123%). EBITDA margin expanded 290 bps YoY to 27.7%, aided by operating leverage. 

Global brokerage Morgan Stanley is bullish on the Solar Industries stock with an overweight call with a target price of Rs 20,270. The brokerage said Q1 Earnings beat estimates. 

Revenue growth beat estimates across defence (123% vs. 70%), international explosives (+65% against our Morgan Stanley's estimates of 35%), domestic explosives (52% vs. Morgan Stanley 19% estimates). Gross margin came at 49.2% (+110 bps)

On the other hand, Kotak Institutional Equities is bearish on the outlook of the stock.  It has a sell call with a target price of Rs 11,200. It raised FY2027-29 EPS estimates by 2-6%, reflecting stronger execution during the quarter. 

Brokerage ICICI Direct has target price of Rs 23,200 on the stock.

"We have increased our earnings estimates for FY27-28E to factor in strong execution across all the segments. We estimate revenue & PAT to grow at 30% & 32% CAGR respectively over FY26-28E. We maintain BUY on Solar Industries with target price of Rs 23,200 (based on 70x P/E on FY28E EPS)," said ICICI Direct. 

In terms of growth guidance, Solar Industries said it expects to sustain its growth momentum, led by a robust order book worth Rs 21,350 crore. The company is targeting revenue of Rs 14,000 crore in FY27, with growth expected to be driven by strong demand from the defence and mining segments, along with expanding opportunities in international markets.

Solar Industries is an India-based manufacturer of industrial explosives for the mining and infrastructure sector. The company offers industrial explosives and defence products.