Solar Industries India Ltd's defence business has undergone remarkable transformation, with revenue growing at a compound annual growth rate of 82% between FY21 and FY25. According to an Elara Securities report dated 24 March, the defence segment's share of total sales increased dramatically from just 5% in FY21 to 18% in FY25. The company has successfully diversified from being an industrial explosives franchise into a vertically integrated defence manufacturer with presence in high-entry-barriers segments such as propellants and warheads. As reported by Elara Securities, the segment's contribution is expected to expand further to 42% by FY28E from about 24% currently, driven by India's ₹2.2 trillion defence capex for FY27 and rising geopolitical tensions. The company's defence business has scaled rapidly, with revenue growing at a CAGR (compound annual growth rate) of 82% between FY21 and FY25, according to an Elara Securities report dated 24 March. Its share of total sales rose from just 5% in FY21 to 18% in FY25. "We see this segment driving the next phase of superior growth," the report said, citing India's ₹2.2 trillion defence capex (FY27 BE), rising geopolitical tensions and a global uptick in military spending. Elara expects the segment's contribution to expand further to 42% by FY28E from about 24% currently.
The company maintains a robust order book of ₹18,000 crore as of Q3FY26 for the defence segment, representing approximately nine times trailing twelve-month segment revenue. According to the latest reports, revenues from the high-margin defence vertical have already increased 76% in 9MFY26. Among the major orders include supply of ammunition for Nagastra (an indigenously developed loitering munition), Bhargavastra (a counter-drone system), and additional orders for Pinaka systems. The recent successful trial of the extended-range Pinaka rocket clears the path for commercial deliveries, providing strong visibility for future revenue streams. A robust order book of ₹18,000 crore as of Q3FY26 for the defence segment of the total ₹21,000 crore, roughly nine times trailing twelve-month segment revenue, underpins visibility. Among the big-ticket orders are supply of ammunition for Nagastra (an indigenously developed loitering munition), Bhargavastra (a counter-drone system), and additional order for Pinaka systems. The recent successful trial of the extended-range Pinaka rocket clears the path for commercial deliveries.
Solar Industries has established manufacturing facilities in seven countries, primarily across Africa and East Asia, with three more facilities in the West Asia region expected to be commissioned in the next two years. As reported by Nuvama Research, the company has comparatively lower import intensity at about 9% of FY25 revenue, compared with peers such as Hindustan Aeronautics Ltd and Bharat Electronics Ltd. The improved international traction in commercial explosives, which has grown at 28% CAGR during FY21-25, accounts for over 40% of total revenue and is seeing robust demand from the mining sector supported by firm commodity prices. The company plans ₹2,200 crore in FY26 capex to expand into advanced ammunition and aerospace, and has signed a memorandum of understanding with the Maharashtra government for a ₹12,700 crore investment over a decade in drones and unmanned aerial systems.
In 9MFY26, revenue and EBITDA rose 26% each to ₹6,785 crore and ₹1,797 crore respectively. According to the latest reports, the company plans ₹2,200 crore in FY26 capex to expand into advanced ammunition and aerospace, and has signed a memorandum of understanding with the Maharashtra government for a ₹12,700 crore investment over a decade in drones and unmanned aerial systems. Management remains optimistic, guiding for FY26 revenue of ₹10,000 crore, implying 33% growth. Backward integration into emulsifiers and detonator shells has lifted EBITDA margins to about 25%, versus roughly 20% for peers. The company's defence business has scaled rapidly, with revenue growing at a CAGR (compound annual growth rate) of 82% between FY21 and FY25, according to an Elara Securities report dated 24 March. Its share of total sales rose from just 5% in FY21 to 18% in FY25.
Despite strong defence performance, the domestic non-defence segment, where the company holds about 24% market share, remains subdued with growth of just 1% in 9MFY26. As reported by Nuvama Research, together with related segments accounting for roughly a third of revenue, performance has been impacted by weak mining demand, exacerbated by heavy monsoon that curtailed power consumption. However, analysts believe valuations have normalized at approximately 43x FY28E EPS following the correction post the June-25 rally, with downside largely priced in. The sustainability of defence momentum and recovery in non-defence demand remain key factors for future performance. "Following the correction post the June-25 rally, we believe valuations have normalized (~43x FY28E EPS), with downside largely priced-in," Nuvama said in its 23 March note. Sustained momentum in defence orders and a recovery in non-defence demand remain key. Any delays in large defence contracts or an unexpected shift in global geopolitics could weigh on the outlook.
