Solar Industries India Ltd has delivered exceptional returns of over 80% in 2026 as its defence business drives strong earnings growth. The company's defence order book, including international and domestic orders, stood at ₹18,000 crore as of Q1FY27, representing nearly six times the segment's trailing 12-month revenue. According to reports from Antique Stock Broking, strong defence order inflows have helped the total order book reach ₹21,350 crore, up more than four times from ₹5,100 crore at FY24-end. Jefferies has initiated coverage on Solar Industries with a Buy rating and a ₹28,160 price target, expecting the company's defence business to increase from 27% of sales in FY26 to 40% by FY30.
Among the significant orders is the Pinaka rocket launcher system and its ammunition, worth ₹6,100 crore, from the Indian Army, as well as another order from Armenia. As reported by Antique Stock Broking, the company started deliveries for both orders in Q4FY26, and a follow-on order from the Indian Army is being negotiated. The Bhargavastra, the guided micro-missile-based counter-drone system, is in the final stage of development with trials expected to be completed in 2026. Jefferies expects Solar's defence revenue to grow at a 42% compound annual growth rate through FY30, supported by the substantial order book and execution timeline.
Solar's consolidated revenue grew 30% year-on-year in FY26 to ₹9,840 crore, with the company guiding for FY27 revenue of ₹14,000 crore. In Q1FY27, the company delivered exceptional results with sales jumping 70% year-on-year and net profit rising 89%, well above the 42% growth required to meet guidance. According to Equitymaster, over the past five years, sales have grown at a compound annual rate of 31.4%, while net profits have surged 43.2%. Ebitda grew 90% to ₹1,015 crore, while margin expanded by 285 basis points to 27.7%. Defence revenue grew by over 120%, while international and domestic segments also recorded impressive growth of 65% and 52% respectively.
Solar Industries is executing significant expansion plans to meet robust demand growth. The company is commissioning its Dhule plant in western India and implementing substantial expansions at its Dholpur facility in north India and an upcoming facility at Orissa. As reported by Equitymaster, the company has deployed about ₹450 crore during Q1FY27 as part of its planned capital investment of ₹2,050 crore. These expansions will strengthen the company's presence and enable more efficient customer service. The company's international presence is growing as it aims to become a global leader in industrial and military explosives and related technologies.
The defence segment currently accounts for about 27% of total revenue and is expected to reach 40% by FY30. Jefferies projects Solar Industries' defence revenue to grow at a 42% compound annual growth rate (CAGR) during FY26-30, leading to earnings per share growth of 31% CAGR. However, as reported by Bloomberg, the stock's valuation appears expensive at about 85 times its FY27 estimated EPS, requiring sustained execution momentum to justify current levels. Jefferies maintains that the defence sector's growth outlook comes with execution risks, including delays in order execution, slower ramp up of new products and weaker international demand that could affect earnings expectations. Key risks include defence execution challenges, raw material volatility, regulatory changes, and international geopolitical developments affecting the substantial portion of the defence order book.
