Buy

Valuation at 17x P/E on FY27E earnings, is at significant discount as compared to peers' valuations. Despite factoring in the fact that NRB's presence in only auto space, we believe that this seems unjustified considering the company's focus on growth. We maintain BUY on NRB with...

Solar Industries India Limited (SOIL)’s Q2FY26 EBITDA of INR 5.5bn rose 24%/3% YoY/QoQ; though, slightly lower than consensus estimate of INR 5.7bn.

Well poised to see significant recovery in explosives & exports/overseas segment: With market leading share of ~25% in domestic industrial explosives market, we believe that company is well poised to grow steadily led by healthy demand prospects from segments like mining, housing and infrastructure. Though domestic explosives segment remained muted during the quarter, we expect recovery going ahead led by healthy demand from housing, infra and mining sectors. With an order backlog of 1600+ crore in explosives and stable raw material prices, we expect ~14%...

Inox India (Inox) saw a steady quarter as earnings aligned with our estimates. Revenue stood at INR 3.6bn (+17% YoY). EBITDA margins improved 100bps YoY to 21.8%; as a result, EBITDA expanded 22% YoY to INR 0.8bn.

About the stock: Premier Explosives (PEL) specializes in producing high-energy materials, including bulk and packaged explosives and initiating systems for mining, infrastructure & construction. Company also manufactures missile and rocket propellants, strap-on motors for satellite launches, and various defence products like chaff, infrared flares, explosive bolts, and tear gas grenades. Defence contributes ~86% of revenue. OB at Rs 989 crore as of Q1FY26 Strong product portfolio with well-built manufacturing capabilities: PEL is one of the lead manufactures in the Indian explosives and defence...

Expanding capacities across defence segment with focus on increasing better-margin products: PEL is initiating a capital expenditure program to strengthen its defence and energetic materials portfolio. The Katepally facility, which focuses on RDX, HMX, and rocket integration, is set to increase production. A greenfield plant in Odisha is planned in three phases, (~Rs. 800 crores over ten years). Phase I, which includes production of ammunition, warheads, and HTPB raw materials, will require ~Rs 100 crore. To finance these initiatives, PEL aims to raise ~Rs. 300 crores through...

PTC Industries’ (PTCIL) Q1FY26 EBITDA of INR 88mn was subdued, primarily on account of underperformance at Trac Precision Solutions (Trac; reported EBITDA-level loss due to execution delays, spillover of some contracts to Q2, leading to negative operating leverage).

Solar Industries (SOIL)’s operating performance was in line with consensus’ estimate. EBITDA, at INR 5.3bn, jumped 19% YoY driven by robust defence and exports, compensating for the subdued performance in mining and infra segments, which were impacted on account of monsoon arriving early.

Solar Industries’ (SOIL) Q4FY25 EPS was 5% and 13% ahead of our estimates and consensus, respectively. EBITDA rose 53% YoY to INR 5.4bn. Defence revenue rose 2.2x YoY to INR 4.3bn.

INOX reported single digit growth in profit in 9MFY25 owing to trade headwinds. However, it finished the year on a strong note. It recovered lost ground with revenue growth of 34% YoY to INR3.7bn and profit growth of 49% YoY to INR 655m in Q4.

In the current volatile markets, Solar Industries’ (SOIL) stock has outperformed its peers. Its traditional India business continues to be on a stable footing and the exports and overseas segment is also expanding.

INOX is India’s largest manufacturer of cryogenic equipment with 30+ years of experience in cryogenic equipment and systems. It operates in three business divisions – Industrial Gas, LNG, and Cryo Scientific Division (CSD).

Aeroalloy Technologies (ATL), a wholly-owned subsidiary of PTC Industries (PTCIL), has received a significant longterm order from Safran Aircraft Engines, entailing supply of seven cast aero-engine components, utilising both titanium (Ti) and superalloys for CFM’s advanced LEAP-1A and LEAP-1B engines.

We attended the Q3FY25 earnings call of PTC Industries (PTC). Installations and commissioning of key facilities are on track and expected to be completed within CY25.

We see PTC at an earnings inflection point on the back of 3Cs – Capabilities, Contracts and Capacity. One of the few companies in the world to develop single crystal technology

We recently hosted the management of Solar Industries (SOIL) for an interaction with investors. Defence and exports & overseas segments could shepherd growth over the next five years.

The Ministry of Defence has inked a contract with Economic Explosive Limited (EEL)- 100% subsidiary of Solar Industries (SOIL) and Munitions India Limited (MIL) for procurement of Area Denial Munition (ADM) Type-1 (DPICM) and High Explosive Pre Fragmented (HEPF) Mk-1 (Enhanced) rockets, respectively, for Pinaka Multiple Launch Rocket System (MLRS) at a total cost of INR 101.4bn.

Proxy play on the global wind energy sector with significant operating leverage

Solar Industries’ (SOIL) stock has been running sideways due to the delay in the award of the Pinaka order. However, we believe, Street is underestimating the potential of continuous export order inflows (OI) in defence. With an OI of INR 45bn so far in CY24,for a 3–5-year duration, we believe these orders alone potentially form an annual revenue accretion of INR 11–13bn.

Solar Industries (SOIL) has posted its highest-ever quarterly EBITDA, EBITDA margin and defence revenue in Q1FY25. EBITDA rose 39% YoY at INR 4.5bn despite a mere 1% YoY uptick in realisation.