Multibagger stock: Solar Industries shares zoomed 535% in last 3 years; will the rally continue?

In the span of these three years, an investment of ₹1 lakh in Solar Industries would have turned into a stellar ₹6.30 lakh. This exponential growth has positioned Solar Industries as one of the standout performers in the equity markets.

The stock has consistently demonstrated remarkable gains throughout this period. In the calendar year 2021, it delivered a multi-bagger return of 122%, followed by another impressive rally of 83% in the subsequent year. In the calendar year 2023, the stock added a notable gain of 54%.

Looking ahead, the stock is poised to maintain its upward trajectory, fueled by its substantial export orders, according to domestic brokerage firm Centrum Broking.

Solar Industries is engaged in the business of manufacturing and supplying industrial explosives and explosive accessories. It primarily serves sectors such as mining, infrastructure, and defence. The company has a significant presence in the international market, and it exports its products to various countries.

Large export orders

The company on January 09 secured export orders worth ₹9.94 billion in the defence business. The scope of work will include the supply of products for defence-based application to an international client with a delivery period of three years.

Also Read: Multibagger stock: Up 955%, Mazagon Dock shares turned ₹10,000 into ₹1 lakh in 3 years

This is the second big defence export order in recent years, after the ₹3 billion Pinaka export order received in September last year. The current export order worth ₹9.94 billion would effectively double SOIL’s defence order book of ₹10.5 billion as of Q2 FY24, the brokerage said.

Expanding defence portfolio set to drive long-term growth and profitability

Centrum Broking underscores Solar Industries expanding defence portfolio as a key driver for long-term growth and profitability. The brokerage projects an earnings CAGR of 25% over the period FY23–26E, buoyed by a 15-20% increase in volume for industrial explosives and the strategic scaling up of defence sales.

Also Read: Market in 2024: 3 important triggers that could drive equities this year and what investors should do

The brokerage expects the company’s defence sales to surge from ₹4 billion in FY23 to ₹7 billion in FY24E. It further expects defence sales to touch ₹12 billion and ₹15.4 billion over FY25 and 26E (inclusive of domestic Pinaka supplies).

This would constitute 14.4% and 16.1% of consolidated sales in FY25E and FY26E, respectively, a substantial increase from the 5.7% recorded in FY23. Additionally, defence sales are expected to contribute an even larger share to EBITDA, it said.

Following the company’s strong expected growth in the defence portfolio, the brokerage retained its ‘buy’ call on the stock, setting a target price of ₹7,355 apiece, reflecting an upside  of 7% from the stock’s latest closing price. 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

Milestone Alert!
Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!

Published: 10 Jan 2024, 04:59 PM IST