640% return in 5 years! Here's why ICICI Securities sees further upside in Solar Industries stock

Shares of Solar Industries India Limited have delivered over 640 per cent return in the last 5 years. The multibagger stock is up over 100 per cent in the last 12 months.

ICICI Securities, in its recent report, has maintained its 'Buy' rating on the defence counter with a target price of Rs 9,050. It believes that investors who are accustomed to seeing Solar as an explosives company need to see the company with a fresh view, as the proportion of revenue from defence is expected to rise to a meaningful 18-20 per cent from FY25.

"Among segments, defence is likely to be the second-largest, after international business from FY25. Besides, margins are likely to be propelled even higher from current levels to over 25 per cent. We raise our valuation multiple by 10 per cent to 55x (from 50x) given the possibility of further export orders and improvement in overall margins," it added.

The brokerage firm is bullish on Solar stock as higher overburden removal at Coal India is likely to keep volume growth at 15 per cent, government’s focus on infrastructure and the low price of explosives is likely to result in better demand from construction and infrastructure segment and foray into new geographies – Kazakhstan and Saudi Arabia shall keep the performance of international subsidiaries robust.

It also expects the Pinaka order to be awarded soon, resulting in a higher defence order book and opening up further export opportunities.

About Solar Industries

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

The company reported a marginal fall in Q3 net profit to Rs 203.3 crore against Rs 204.6 crore in the December 2022 quarter.

Revenue fell to Rs 1,440 crore in the December 2023 quarter against Rs 1819 crore in the December 2022 quarter.