Buy Solar Industries; target of Rs 13720: ICICI Securities

BUY

ICICI Securities's research report on Solar Industries

The Ministry of Defence has inked a contract with Economic Explosive Limited (EEL)- 100% subsidiary of Solar Industries (SOIL) and Munitions India Limited (MIL) for procurement of Area Denial Munition (ADM) Type-1 (DPICM) and High Explosive Pre Fragmented (HEPF) Mk-1 (Enhanced) rockets, respectively, for Pinaka Multiple Launch Rocket System (MLRS) at a total cost of INR 101.4bn (Link). The development comes after a long wait but has far-reaching benefits as it opens up export markets. Besides, SOIL is likely to participate in other variants, including Enhanced range and Guided Pinaka.

Outlook

We believe it could also trigger re-rating in the stock. We maintain BUY on SOIL with an unchanged TP of INR 13,720 on 60x FY27E EPS.

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