Domestic brokerage firm Motilal Oswal has initiated coverage on Solar Industries with a Buy rating and a target price of Rs 23,000 (24% upside), citing multiple growth levers in the years ahead. In today's session, the stock rose 3% to its day's high of Rs 19,775 apiece.
Motilal Oswal expects Solar Industries India (SOIL) to deliver a 43% CAGR in consolidated revenue and 34% CAGR in PAT over FY26-30. The brokerage expects growth in the industrial explosives segment to settle at mid-teens after FY28, while the defence segment is expected to sustain a higher growth rate.
Why is the brokerage bullish?
1. Market leader in explosives - The company is a market leader in India's commercial explosives industry with a volume market share of 26% in FY25, supported by a comprehensive portfolio of bulk explosives, packaged explosives, initiating systems, and blasting accessories.
“The company enjoys a strong wallet share of 20-23% with Coal India and is also gaining wallet share with private miners. Solar has already established a growing international footprint through exports and overseas manufacturing operations. It recently acquired South Africa-based Omnia to further enhance its positioning in several international markets,” analysts said in a note. It expects growth in SOIL’s existing explosive segment (excluding Omnia) to be led by volume and strong pricing in FY27, followed by stable growth of 10-15% YoY.
2. Adding new revenue streams - Solar Industries has significantly expanded its defence product portfolio beyond its traditional offerings of HMX, TMT and RDX. The company has diversified into warheads and rockets, including the Pinaka system, and is now entering the drones and UAV segment with products such as Nagastra, for which it has already received orders, and Rudrastra. SOIL is also conducting test trials of its counter-drone product, Bhargavastra.
The company already manufactures indigenous booster systems for the BrahMos missile and is expanding its facilities to build capacity for 155mm ammunition.
3. Likely order inflow in defence - Motilal expects the defence segment to benefit from multiple growth drivers, including additional Pinaka regiments, guided Pinaka, replenishment rockets and export demand; future variants such as Nagastra-2 and Nagastra-3; potential Bhargavastra orders following successful trials; domestic and export orders for 155mm ammunition; and the development of a 125kg air bomb for NATO and Russian aircraft.
The company also plans to enter the proximity fuze segment and expand into high-performance UAVs, UAS and C-UAS for surveillance and defence against aerial threats. “We expect defence segment order inflows to grow at 29% over FY26-30.”
4. Backward integration to aid margins - The company’s margin performance will benefit from increasing defence revenue, a resilient supply chain network and backward integration. The company has price escalation clauses in most contracts, and its shift toward defence and exports has been complemented by deep backward integration, with in-house manufacturing of most of the raw materials. The Omnia acquisition also provides backward integration in ammonium nitrate.
Going ahead, Motilal Oswal says Solar Industries will focus on acquisition synergies, scale-up of Pinaka execution, follow-on orders for Nagastra, potential induction of Bhargavastra and Rudrastra, and growth in export defence orders.
Solar Industries’ share price has gained over 60% in 2026 and about 800% in the last five years.
Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.
