Multibagger stock: Shares of Solar Industries India have corrected 34% from their record high in eight months. The multibagger stock reached its record high of Rs 13,300 on July 11, 2024. The defence sector stock delivered 274% returns in three years. The benchmark Sensex rose 33.31 per cent during the period. The stock clocked returns of 661% in five years.
In terms of technicals, Solar Industries stock looks weak. Solar Industries India shares are trading lower than the 5 day, 10 day, 20 day, 50 day, 100 day, 150 day and 200 day moving averages. The relative strength index (RSI) of Solar Industries India stands at 42.7, signaling the stock is trading neither in the overbought nor in the oversold zone.
Meanwhile, the stock fell 1.46% to Rs 8,739.05 today against the previous close of Rs 8,868.60 on BSE.
Market cap of the firm stood at Rs 79,079 crore. Total 633 shares of the firm changed hands amounting to a turnover of Rs 55.46 lakh on BSE.
The stock had a beta of 1.2 in the last one year, indicating average volatility during the period.
Financial Performance
Solar Industries India logged a 55.2 percent year-on-year rise in Q3 net profit to Rs 315 crore against Rs 203 crore in the December 2023 quarter.
Revenue surged 38% to Rs 1,973 crore in the last quarter compared with Rs 1,429 crore in the same period last year. EBITDA climbed 48% to ?527 crore from Rs 355.3 crore a year ago, while margins reached 26.7% from 25%.
Stock Outlook
ICICI Securities has maintained a buy call on the stock with a price target of Rs 13,720.
“In our view, the capex over the next five years is likely to be INR 130-150bn in both defence and non-defence (exports & overseas) domains. This may be funded mainly through internal accruals. Besides, the company is expected to be in net cash position by end-FY25, hence, there is sufficient headroom in its balance sheet to take incremental debt,” the brokerage said.
“We believe the recent stock price correction provides a good entry point in SOIL. Going forward, growth is likely to be driven by high-margin segments, and SOIL could go further up in value chain to platforms from materials. Retain BUY with an unchanged target price of Rs 13,720 on 60x FY27E EPS,” added ICICI Securities.
Centrum Broking has a price targtet of Rs 11,295 on the stock.
“We expect 24% revenue CAGR over FY24-27E while 460bps rise in EBITDA margin (amid rising defense and overseas sales) would lead to 35% EPS CAGR. Valuation will be aided by: (1) leadership in licensed-controlled explosive industry with high entry barriers (2) rising overseas sales (3) better margins and (4) Pinaka-led defence scale-up,” said Centrum.
“Over the next 3-5 years, SOIL expects revenue CAGR of 20% with domestic and explosives sales growing at least 15% CAGR while defence sales would scale up materially due to robust order book. Current level of EBITDA margin at ~27% is sustainable and may improve with rising defence sales mix. We tweak our estimates and roll over valuation to FY27. Retain BUY rating with a revised target price of Rs11,295, based on P/E of 50x FY27E EPS,” added Centrum Broking
About Solar Industries India
Solar Industries is an India-based manufacturer of industrial explosives for the mining and infrastructure sector. The company offers industrial explosives and defence products.
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