Solar Industries India Ltd. share price target

Solar Industries (SIL) reported weak Q4FY17 numbers as the company witnessed a sharp decline in cartridge' realisations (down 13.5% YoY) for the quarter. Overseas segment also reported muted growth of 8.8% YoY (| 87.8 core in Q4FY17 vs. | 80.7 crore in Q4FY16). We estimate overseas revenue of | 103 crore. On the positive side, the company reported volume growth of ~14% and ~13% in bulk and cartridge segment, respectively. The topline was below our estimates. EBITDA and bottomline numbers were in line...

Background Established in 1984, Solar Industries is the largest manufacturer of industrial explosives and explosive initiating systems in India. With a licensed explosives capacity of over 290,000 MT/annum, the company has ~28% market share in India. Solar, with a 70% market share in exports from India, exports to 19 countries in Africa and South East Asia. Economic Explosives, a 100% subsidiary, manufactures detonators. Solar has manufacturing facilities spread across 16 locations and eight states in India. In recent years expanded its manufacturing base to Nigeria, Zambia and Turkey. SIIL has also interests in the coal mines (in Chattisgarh) through two JVs. Solar is...

Background Established in 1984, Solar Industries is the largest manufacturer of industrial explosives and explosive initiating systems in India. With a licensed explosives capacity of over 290,000 MT/annum, the company has ~28% market share in India. Solar, with a 70% market share in exports from India, exports to 19 countries in Africa and South East Asia. Economic Explosives, a 100% subsidiary, manufactures detonators. Solar has manufacturing facilities spread across 16 locations and eight states in India. In recent years expanded its manufacturing base to Nigeria, Zambia and Turkey. SIIL has also interests in the coal mines (in Chattisgarh) through two JVs. Solar is...

Background Established in 1984, Solar Industries is the largest manufacturer of industrial explosives and explosive initiating systems in India. With a licensed explosives capacity of over 290,000 MT/annum, the company has ~28% market share in India. Solar, with a 70% market share in exports from India, exports to 19 countries in Africa and South East Asia. Economic Explosives, a 100% subsidiary, manufactures detonators. Solar has manufacturing facilities spread across 16 locations and eight states in India. In recent years expanded its manufacturing base to Nigeria, Zambia and Turkey. SIIL has also interests in the coal mines (in Chattisgarh) through two JVs. Solar is...

Solar Industries (SIL) reported decent Q3FY17 numbers due to a strong performance in domestic markets. The topline and bottomline numbers of the company came in line with our estimates whereas...

Background Established in 1984, Solar Industries is the largest manufacturer of industrial explosives and explosive initiating systems in India. With a licensed explosives capacity of over 290,000 MT/annum, the company has ~28% market share in India. Solar, with a 70% market share in exports from India, exports to 19 countries in Africa and South East Asia. Economic Explosives, a 100% subsidiary, manufactures detonators. Solar has manufacturing facilities spread across 16 locations and eight states in India. In recent years expanded its manufacturing base to Nigeria, Zambia and Turkey. SIIL has also interests in the coal mines (in Chattisgarh) through two JVs. Solar is...

Solar Industries (SIL) reported weak Q2FY17 numbers as the company witnessed a decline in bulk segment volumes by 9.3% YoY coupled with weak volume growth in cartridge segment at 22.3% YoY. The company also witnessed a translation loss due to currency devaluation in Nigeria and Turkey to the tune of | 11 crore in Q2FY17...

Solar Industries India Ltd (SIIL), the market leader in industrial explosives and largest Indian exporter, is poised to sustain its fast paced growth on the back of its leadership position with a well diversified product portfolio, overseas expansion, entry into the defence sector, helped by strong client relationships with low cost realization. SIIL holds a ~22% market share of the domestic industrial explosives and a ~55% of market share in international industrial explosive. Coal India is the largest client of SIIL and contributed ~24% of revenue in Q1FY16, even as SIIL diversifies its customer base, increasing its footprint in the industry. We estimate consolidated revenue to grow at ~17% CAGR over FY16-18E, resulting in...

Net sales grew 10.6% YoY to INR 4.2bn in 1QFY17 vs INR 3.8bn in 1QFY16 led by robust volume growth of 36.7% YoY in cartridge from 22,426MT to 30,665MT and 10.7% growth in bulk explosive segment from 43,224MT to 47,843MT; exports revenue grew 16.5%YoY. The company’s has consistently reduced its reliance on CIL (Coal India Ltd) for revenues diversifying its customer portfolio. Consequently, customer share (in terms of revenue) stood at – CIL (24%), Non CIL & Inst (20%), Export & Overseas (25%), Trade & Others (31%), Defense (0.35%). Moreover management highlighted that the company has INR 720mn of defense orders in the order pipeline which would be completed within the year.

Valuation: Strong order book, expected rapid revenue growth from defense and growing export revenues are the key growth drivers. At current levels, the stock trades at P/E of 23.0X its FY18E. Consequently, we rate the stock an OUTPERFORMER, assigning P/E of 26X to FY18E EPS to arrive at a target price of INR 696.