SOLARINDS

Positions for Multi-Year Earnings Visibility Beyond Mining

is evolving from a predominantly mining-linked explosives company into a diversified defence manufacturer and global outsourcing partner. With defence revenues scaling up and overseas operations deepening, the company’s earnings trajectory is improving. This transition is expected to reduce earnings volatility, enhance cash-flow quality, and position Solar as a long-term compounder. Core Explosives Business - India’s largest industrial explosives manufacturer with 25–30% domestic market share. - Mining accounts for ~80% of explosives demand, with coal contributing two-thirds. - Coal India and subsidiaries historically contribute 15–18% of revenues. - Domestic explosives expected to remain a stable cash generator. Defence Scale-Up - Defence portfolio spans propellants, warheads, ammunition, fuzes, rockets, and missile systems. - Current order book: ₹16,600 crore, including Pinaka rocket systems. - Defence contributed ~20% of revenues in FY25, expected to reach 30% by FY26. - Target: ₹3,000 crore defence revenue in FY26 (vs ₹1,355 crore in FY25). - Long programme cycles and repeat orders provide multi-year visibility. Overseas Expansion - Overseas contributed ~38% of FY25 revenues. - Manufacturing footprint across Africa, Southeast Asia, and Europe (Nigeria, Ghana, Tanzania, South Africa, Indonesia, Thailand, Turkey). - New markets: Zimbabwe, Kazakhstan, Saudi Arabia. Capex and Strategic Initiatives - Elevated FY26 capex plan: ₹2,500 crore, focused on defence, explosives, and overseas expansion. - MoU with Maharashtra government to develop defence & aerospace hub in Nagpur. Outlook & Valuation - Combines regulated domestic leadership with expanding defence and overseas platforms. - High entry barriers, strong return ratios, and large defence order book ensure earnings visibility. - Valuations expected to increasingly reflect Solar’s defence manufacturing franchise rather than a cyclical explosives company.