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Business News/ Markets / Stock Markets1000 share turns to 4000 in 2 years as defence sales of this midcap firm crosses key milestone
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₹1000 share turns to ₹4000 in 2 years as defence sales of this midcap firm crosses key milestone

The strong bull run in Solar Industries has been due to its Q2 earnings for FY23. The company posted a 152% yoy growth in net profit to ₹189 crore, while revenue saw a growth of 99% yoy to ₹1,567 crore. EBITDA climbed by a huge 112% yoy to ₹303 crore.

Those investors who invested let's say ₹1 lakh in this stock -- are now sitting on a corpus of between ₹3.97 lakh to ₹4.08 lakh. (Shutterstock)Premium
Those investors who invested let's say 1 lakh in this stock -- are now sitting on a corpus of between 3.97 lakh to 4.08 lakh. (Shutterstock)

Solar Industries, a midcap company, has garnered tremendous growth in its share price, making many investors rich. In a matter of 2 years, this stock has made a fruitful journey from 1,000 to a breathtaking over 4,200 thanks to its strong September 2022 quarter where its defense business recorded a key milestone. 1 lakh investment has risen to a corpus of more than 4 lakh due to its robust stock performance. Going forward, Solar's stock is expected to perform further on the upside.

On Monday, Solar Industries touched a new 52-week high of 4200.15 apiece on BSE. However, the shares closed at 4,087.50 apiece up by 80.80 or 2.02% on the exchange. The company's market cap is near 36,990 crore.

Solar stock is currently at nearly a one-month-high. It entered the 4,000 mark on November 4 and extended its gain to a fresh 1-year. However, the stock has been rallying for the eighth consecutive day. The last time the stock was over the 4,000 mark was on October 10, 2022.

Between October 25 to November 7, the stock climbed by over 5%.

Solar had touched a 52-week low of 2,160.05 apiece on February 15, 2022, --- from this level --- it has jumped by over 89%. Noteworthily, the stock has advanced by over 71% so far in the current year. Overall, in a year, the stock has gained by nearly 65%. It was around 2,483 levels on November 8, 2022.

But two years ago, the stock traded a little over just the 1,000 mark. On November 6th, 2020, the stock was around 1,029 levels. From this price level, Solar has become a multi-bagger with an upside of a whopping 297.15% (taking into consideration the closing price of November 7, 2022) to date. In consideration of the new 52-week high, the stock skyrocketed by a massive 308%.

Those investors who invested let's say 1 lakh in this stock -- are now sitting on a corpus of between 3.97 lakh to 4.08 lakh.

The strong bull run in Solar Industries has been due to its Q2 earnings for FY23. The company posted a 152% yoy growth in net profit to 189 crore, while revenue saw a growth of 99% yoy to 1,567 crore. EBITDA climbed by a huge 112% yoy to 303 crore.

Among the key highlights of Q2 was the company's defence business which achieved a milestone of crossing 100 crore in Q2.

Manish Nuwal, Managing Director & CEO, of Solar Industries India said, "Our Strategy to nurture Overseas businesses, expand in Non- Coal India Markets & Defence continue to boost our performance. Exports & overseas business has

outperformed by showing a growth of 107% yoy. Defence business has achieved another milestone by crossing 100 crore in this quarter. Now after establishing ourselves in Indian ammunition markets, exports opportunities are providing us new avenues for growth, and we are the first private sector company in India to receive an export order for ready to use ammunitions worth 300 crore."

The progress made by the company over the past two and half decades has put Solar in a more sustainable position within the challenging economic and business environment, it said.

Should you buy Solar Industries shares?

In a report, analysts at Centrum said, "Defence progressed well, with healthy sales of Rs1.1 billion, export order of 3 billion, and likely commercialization of Pinaka rockets."

Analysts note added, "With robust order book position and strong H1 performance, SOIL has revised its FY23 revenue growth guidance to 50% YoY (vs. 30% earlier) with sustainable EBITDA margin of 18-20%. Factoring in higher realization and defence scale-up, we increase our FY23E/24E earnings estimates by 11%/18%. from FY24."

On valuation, the note said, "We roll forward our valuation to H1FY25E with a revised target price of 4,700 based on P/E of 45x (up from 42x earlier due to imminent and large Pinaka opportunity). Maintain BUY."

Centrum expects a strong revenue/EPS CAGR of 27%/33% over FY22-25E for the company.

The stock valuation as per Centrum will be aided by --- (1) market leadership and robust margin profile in a licensed-controlled explosive industry with high entry barriers, (2) strong overseas growth prospects led by foray in large countries, and (3) imminent defence scale-up due to large Pinaka opportunity.

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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Published: 08 Nov 2022, 06:47 PM IST
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