Solar Industries witnessed a significant surge in its share price, rising over five percent during the morning session on May 21, following the announcement of its highest-ever net profit in the March quarter.
The defence firm reported a remarkable 10 percent increase in net profit, reaching Rs 243 crore for the three months ended March, compared to Rs 221 crore in the same quarter last year. However, sales experienced a decline of 16 percent year-on-year, dropping to Rs 1,611 crore from Rs 1,929 crore in the previous year.
As of 11:20 am, Solar Industries shares were trading at Rs 9,295 apiece on the NSE, marking a 3.5 percent increase from the previous session’s close.
Despite facing challenges such as hyperinflation and currency depreciation in Nigeria and Turkey, which resulted in a revenue loss of Rs 300 crore in Q4FY24, Solar Industries posted strong volume growth of 24 percent year-on-year. Furthermore, the company’s gross margin expanded to 48.5 percent, up 1024 basis points, attributed to lower raw material costs.
The defence segment of Solar Industries witnessed a sharp growth of 75 percent year-on-year, with management expressing confidence in achieving a threefold increase in defence revenues in FY25, driven by a robust order book contributing 20 percent to sales.
Nuvama Institutional Equities maintained a hold call on Solar Industries but revised its target price upwards to Rs 9,254 per share, indicating an upside of around 4.2 percent from the previous close. The brokerage anticipates solid earnings growth momentum for Solar Industries, driven by domestic explosives growth of 15 percent, 3x growth in defence, and a pickup in international markets, contributing to an overall revenue growth of 30 percent.
Over the past year, Solar Industries’ shares have demonstrated significant growth, more than doubling investors’ wealth with gains exceeding 140 percent in trade, outperforming the frontline index Nifty 50, which rose approximately 23 percent during the same period.
