Fundamental Analysis of Solar Industries India: The Centre’s vision of an ‘Atmannirbhar Bharat’ has greatly benefitted Indian companies. Furthermore, the government’s focus on meeting 75% of defence requirements from domestic suppliers has put Indian players such as Solar Industries India Ltd. in a sweet spot.

The explosives producer is riding two waves at the same time: higher defence outlay and rising capital expenditure in India. In this article, we’ll perform a fundamental analysis of Solar Industries India to know if it can be an attractive opportunity. 

Fundamental Analysis of Solar Industries India

Solar Industries India logo

We’ll start off our fundamental analysis of Solar Industries India by learning about the business and scale of its operations. Next, we’ll brief ourselves on the explosives landscape and the key demand drivers.

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After that, we’ll race through the financials of the stock to arrive at the future plans and any recent developments at the company. A summary concludes the article at the end.

Company Overview

Solar Industries Ltd. was founded by Shri Satyanarayan Nandlal Nuwal in 1995 as a single manufacturing facility. In the last three decades, the company has grown into a leading explosives manufacturer in India with a global brand name.

It is engaged in the manufacturing of explosives for industrial and defence uses. Its product portfolio includes explosives for drones, military use, bombs & warheads, counter-drone systems, seismic & permitted uses, and more.

As a feather in its cap, Solar Industries became the first company in India to reach an annualized production of 3,00,000 million tonnes (MT) of explosives. 

In addition to this, the group also provides initiating systems such as electronic detonators, non-electric detonators, plain detonators, cord relays, cast boosters, aluminium elemented det, and more.

The company caters to a multitude of industries including mining, road & infrastructure, housing, space, defence, hydro projects, seismic exploration, irrigation, and more.

It has a huge manufacturing base with 39 production facilities and employs 8,215 people of which 164 are in its R&D and quality control team. 

Talking about its revenue sources, Indian customers contributed 76% of the income of the company. The balance 24% came from overseas customers.

We got a good understanding of the business and scale of operations of the explosives giant. Let us now move forward to equip ourselves with the explosives industry landscape for our fundamental analysis of Solar Industries.

Industry Overview

Explosives are broadly classified into two segments as per their end use: industrial and defence. Let us read about both of them below:

Industrial Explosives

These are primarily used in the mining and construction industries with the former having the larger market share. Furthermore, within mining, they are deployed towards coal mining, quarrying, non-metal mining, and metal mining. 

Overall, the global industrial explosives market is projected to expand at a CAGR of 5.4% during the 2023 to 2028 period to reach $ 16 billion in value.

The growing demand from the mining industry, rising urbanisation, and higher infrastructure spending have been identified as key growth drivers.

Defence Explosives

Talking about the global defence landscape, the last two years have seen turmoil with Russia attacking Ukraine resulting in severe geopolitical tensions. As a result, large economies put economic sanctions on other countries which led to a sharp rise in commodity processes and supply chain disruptions.

According to Deloitte, the international aerospace and defence sector is projected to see a growth of 5.3% CAGR till 2026, primarily driven by a focus on new and upgraded weapon systems, aircraft for military use and other defence spending. 

The outlook for the Indian defence companies is particularly stronger because of the Centre’s push towards indigenisation of the country’s defence needs as part of the ‘Atnmanirbhar Bharat’ vision. 

Along these lines, the Hon’ble Finance Minister Nirmala Sitharaman earmarked that the Centre has allocated Rs 5.94 lakh crore towards the nation’s defence needs. Furthermore, the government has increased the share of domestic procurement to 75% which was at 68% previously.

Solar Industries – Financials

Revenue & Profit Growth

The profit after tax and operating revenue of Solar Industries grew at an impressive CAGR of 30.8% and 29.5% during the past five financial years to Rs 811 crore and Rs 6,923 crore in FY23. 

The table below showcases the fast growth of the revenue and profit of Solar Industries over the last five financial years.

Fiscal YearOperating RevenueEBITDANet Profit
5-Yr CAGR29.5%26.4%30.8%

(figures in Rs Cr except for CAGR)

Profit Margins

Moving on to study margins for our fundamental analysis of Solar Industries, we can note that the growth in the top line and bottom line was led by volume expansion and margin expansion.

During the study period, the EBITDA margin and net profit margin improved from 7.5% and 4.0% in FY19 to 19.1% and 11.7% respectively.

The table below tracks the growth in profit margins of Solar Industries in recent financial years.

Fiscal YearEBITDA MarginNet Profit Margin

(figures in %)

Return Ratios

The return ratios: return on capital employed (RoCE) and return on equity (RoE) are used to measure the profitability of any business. As the bottom line grew for the explosives giant, led by higher sales and better margins, it directly resulted in higher profitability with RoE and RoCE touching 29% and 37% in FY23.

The figures below highlight the growth RoCE and RoE of Solar Industries India for the previous few fiscals.

Fiscal YearRoCERoE

(figures in %)

Debt Analysis

During the study period, the company’s debt levels marginally increased because of capital expenditure to increase capacity. Solar Industries reported a comfortable debt-to-equity ratio and high-interest coverage ratio of 0.45 and 14.6 times in FY23 respectively.

The figures in the table below highlight stability in the debt/equity ratio and increasing interest coverage ratio of Solar Industries India over the last five years.

Fiscal YearDebt/EquityInterest Coverage

Future Plans Of Solar Industries India

So far we looked at the previous years’ data for our fundamental analysis of Solar Industries India. Let us read about the recent developments and any future plans of the company to get some sense of what lies ahead for its investors.

  1. Solar Industries spent Rs 471 crore or more than half of its FY23 profit towards capital expenditure (CAPEX) in FY23 to increase its capacity.
  2. The management has proposed to further increase the borrowing limit to Rs 3,000 crore from Rs 1,500 crore at present to fund its working capital and investment requirements anticipating growth opportunities in the coming period.
  3. Furthermore, the company has been deploying funds towards setting up capacity for new technologies and products for the defence sector.
  4. The recent Vikram 5 space rocket launch and indigenous 30 MM  ammunition made use of Solar’s explosives. It is eying more such projects in the near future.
  5. Targeting inorganic opportunities, Solar Industries recently acquired Rajasthan Explosives and Chemicals, a small manufacturer of industrial explosives and associated products for the mining and infrastructure sector.

Key Metrics Of Solar Industries India

We are almost at the end of our fundamental analysis of Solar Industries India. Let us take a quick look at the key metrics of the stock.

CMP ₹4,095Market Cap (Cr.)₹35,775
EPS₹84Stock P/E45.60
Promoter Holding73%Book Value₹288
Debt to Equity0.45Price to Book Value12.80
Net Profit Margin11.7%Operating Margin19.2%


As we conclude our fundamental analysis of Solar Industries India, we can say that the explosives giant executed in the past to take advantage of positive macroeconomic developments. Its shareholders got handsomely rewarded with the stock delivering 243% returns in the previous five years.

Going forward, investors should keep a close eye on any defence contracts, margin performance and quarterly revenue growth. What is your take on Solar Industries? How about we continue this conversation in the comments below?

Written By Vikalp Mishra

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