Target: ₹13,720
CMP: ₹8,865.40
Recently, an investor interaction with the management of Solar Industries (SOIL) revealed key insights. The company’s growth over the next five years is expected to be driven by the Defence and exports & overseas segments. It is projected that the EBITDA margin will remain around 27 per cent in the coming years and there will be a significant increase in capex intensity. The ammunition sector’s favorable macro environment is seen as a major tailwind, with a continued focus on indigenisation.
It is important to note that SOIL’s potential goes beyond their current successes with Pinaka. The company has signed a MoU with the Government of Maharashtra to establish a major Defence & Aerospace project in Nagpur, with an investment of ₹12,700 crore. This project has the potential to generate annual revenues of ₹25,000 crore.
Recently, SOIL rebranded its fully owned subsidiary in the defence sector from ‘Economic Explosives Ltd’ to ‘Solar Defence and Aerospace Ltd’, highlighting a renewed focus on this segment. It is anticipated that the company will invest ₹13,000-15,000 crore in both defence and non-defence (exports & overseas) sectors over the next five years.
The recent correction in the stock price presents a favorable entry point for investors looking to capitalize on SOIL’s growth potential.