Solar Industries stock jumps 5% on solid Q4 show, Nuvama raises target price

Solar Industries' share price has gained over 140 percent in the past year.

Solar Industries' share price jumped over five percent in the morning session on May 21, after the defence firm reported its highest-ever net profit in the March quarter.

The defence player's net profit rose 10 percent to Rs 243 crore for the three months ended March, up from Rs 221 crore for the same quarter in the year-ago period. However, sales slipped 16 percent year-on-year to Rs 1,611 crore from Rs 1,929 crore a year ago.

At 11.20 am, Solar Industries shares were quoting Rs 9,295 apiece on the NSE, higher by 3.5 percent as compared to the previous session's close.

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Solar Industries posted strong volume growth of 24 percent YoY but a sharp fall in realisations, led by input costs, led to revenue decline.

The company faced a revenue loss of Rs 300 crore in Q4FY24 due to hyperinflation and significant currency depreciation in Nigeria and Turkey. Despite these challenges, gross margin expanded 1024 bps to 48.5 percent due to lower raw material costs.

The company's defence segment clocked sharp growth of 75 percent year-on-year and the firm's management is confident of 3x increase in defence revenues in FY25 led by a strong order book contributing 20 percent to sales.

Nuvama Institutional Equities maintained its hold call, but revised its target price upwards to Rs 9,254 per share, up from Rs 7,056 apiece. This implies an upside of around 4.2 percent from the previous close.

"We envisage SOIL’s earnings growth momentum remaining solid led by domestic growth in explosives of 15 percent with 3x growth in defence and pickup in international markets to drive overall revenue growth at 30 percent," said the brokerage.

Over the past year, Solar Industries' shares have more than doubled investors' wealth, gaining over 140 percent in trade. In comparison, the frontline index Nifty 50 has risen around 23 percent during the same time period.