Solar Industries India Ltd has delivered a whopping return of over 80% in 2026 so far, as the industrial explosives manufacturer’s rapidly expanding defence business drives strong earnings growth. With continued investment in domestic defence modernization and higher global military spending, the defence segment is expected to become increasingly significant to Solar Industries.
The company’s defence order book, including international and domestic orders, stood at ₹18,000 crore as of the June quarter-end (Q1FY27), or nearly six times the segment’s trailing 12-month revenue. Strong defence order inflows have helped the total order book reach ₹21,350 crore, up more than four times from the ₹5,100 crore at FY24-end.
Among the large orders is the Pinaka rocket launcher system and its ammunition, worth ₹6,100 crore, from the Indian Army, as well as another order from Armenia. The company started deliveries for both orders in Q4FY26, and a follow-on order from the Indian Army is being negotiated.
Bhargavastra, the guided micro-missile-based counter-drone system, is in the final stage of development, with trials expected to be completed in 2026. Solar hopes to receive orders for the system from FY28.
Defence momentum
Defence exports are also gaining traction amid heightened geopolitical tensions and record-high military spending.
“The demand situation for ammunition and high-energy materials in the global market remains very favourable, and given the number of qualifications/certifications that the company enjoys for various relevant materials, it is well-positioned to win more orders from overseas customers,” noted Antique Stock Broking in its Q1 results review.
Given the backlog and underlying demand momentum, Jefferies India projects Solar Industries’s defence revenue to grow at a 42% compound annual growth rate (CAGR) during FY26-30, leading to earnings per share (EPS) growth of 31% CAGR. During FY24-26, defence revenue grew by 130% on a low base.
The segment currently accounts for about 27% of total revenue and is expected to reach 40% by FY30.
Earnings accelerate
The remaining revenue comes from Solar’s non-defence business, which includes mining, construction & infrastructure. Within non-defence, domestic and international explosives segments contributed 34% and 39%, respectively, of FY26 revenue. The company has a manufacturing presence across nine countries.
Solar’s consolidated revenue grew 30% year-on-year in FY26 to ₹9,840 crore. The company has guided for FY27 revenue of ₹14,000 crore.
Q1FY27 revenue rose 70% year-on-year to ₹3,670 crore, well above the 42% growth required to meet the guidance. Ebitda grew 90% to ₹1,015 crore, while margin expanded by 285 basis points to 27.7%, aided by better operating leverage.
Defence revenue grew by over 120%, while international and domestic segments also recorded impressive growth of 65% and 52%, respectively. Antique raised its FY27 and FY28 EPS estimates by 11.4% and 8.1%, respectively, to factor in Q1 beat.
But the hurdle now is that while financial performance and the outlook are strong, the stock’s valuation does not appear cheap at about 85 times its FY27 estimated EPS, as per Bloomberg.
The company would need to sustain its execution momentum to justify that valuation. Besides, any delay in order inflows, development or acceptance of new products could dampen investor sentiment.