Solar Industries India shares surged 3.6 percent on March 12 after analysts at ICICI Securities retained a “buy” call on the counter, raising the target price to Rs 9,050 a share, implying an upside of 13 percent from the current level.
The industrial explosives manufacturer’s stock has surged over 18 percent this year against a 2 percent rise in the benchmark Sensex. Solar Industries hit a 52-week high of Rs 8,499 on November 20, 2023.
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Analysts at ICICI Securities said that investors must look at Solar Industries with a fresh view as a proportion of revenue from defence is expected to rise to a meaningful 18-20 percent from FY25.
"Among segments, defence is likely to be the second-largest after international business from FY25. Besides, margins are likely to be propelled even higher from current levels to over 25 percent," the brokerage firm said.
The brokerage firm raised their valuation multiple on Solar Industries by 10 percent to 55x from 50x, given the possibility of further export orders and improvement in overall margins.
Some key risks to analysts call included delay in award of Pinaka order, further fall in ammonium nitrate price leading to negative price-cost spread, and slow traction in construction and infrastructure segment.
ALSO READ: Solar Ind Standalone December 2023 Net Sales at Rs 902.25 crore, down 14.78% Y-o-Y
Earlier, the company announced that it had bagged export orders worth Rs 455 crore for the supply of defence products. The export order is for the next two years.
Solar Industries makes industrial explosives for the mining and infrastructure sector. The company offers industrial explosives and defence products.
At 11.44 am, the stock was trading at Rs 7,833.85 on the National Stock Exchange, up 1.33 percent from the previous close.
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