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Scaling Global Explosives, Building Defense Powerhouse

We initiate coverage on Solar Industries India Ltd (SOIL) with ‘BUY’ rating at TP of INR23,124, valuing the stock at PE of 62x Sep’28E (implied EV/EBITDA of 34x Sep’28E). We believe SOIL is well placed to deliver multi-year growth, supported by

1) its ~26% market share in domestic industrial explosives, underpinned by an integrated manufacturing footprint and long-standing customer relationships

2) strong growth in Defence revenue driven by increasing traction across ammunition, loitering munitions and missile systems

3) expansion into overseas markets (across 10 countries), providing a meaningful avenue for diversification and scale

4) leap in its technological capabilities with the development of full spectrum of drone systems (Nagastra, HALE/MALE UAVs, Rudrastra, Bhargavastra)

5) improvement in profitability through scale and operating leverage. We estimate revenue/adj PAT CAGR of ~28%/~30% over FY26–29E, driven by fastest-growing Defence business, scale-up in international explosives, and favorable revenue mix. The stock is currently trading at 58.7x/48.2x P/E on FY28/FY29E. Initiate with ‘BUY’.

Explosives: Building a global explosive franchise: SOIL has built a strong position in the industrial explosives market, with an established domestic franchise across bulk explosives, packaged explosives and initiating systems. Its domestic business is well placed to benefit from sustained mining activity, particularly in coal and iron ore, with SOIL commanding ~23% wallet share of Coal India’s (COAL) explosives consumption. Internationally, the company has established a growing presence across Africa, Australia and other mining markets, providing scope to scale its explosives business alongside global mining activity.

Defence:

Evolving into an integrated defense player: SOIL has rapidly expanded its Defence portfolio, moving beyond energetic materials into an integrated offering spanning warheads, ammunition, propellants, missiles and loitering munitions. Defence revenue has scaled sharply over the past few years, supported by a strong order pipeline and increasing localization of defense procurement. With capabilities across the defense value chain and a growing export opportunity, the segment is emerging as a key structural growth driver for SOIL.

Omnia:

Transforming SOIL into a global blasting solutions player: The proposed US$1.355bn acquisition of Omnia Holdings represents a transformational step in SOIL’s global expansion strategy. Omnia provides a diversified platform across commercial explosives, initiating systems and mining chemicals, with operations spanning 23 countries and customers across 40+ countries. The acquisition is expected to significantly expand SOIL’s geographic footprint, strengthen its position across the mining value chain, and create a global integrated blasting solutions platform.

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