⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
SOLARINDS - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.1
| Stock Code | SOLARINDS | Market Cap | 1,19,470 Cr. | Current Price | 13,198 ₹ | High / Low | 17,820 ₹ |
| Stock P/E | 126 | Book Value | 387 ₹ | Dividend Yield | 0.08 % | ROCE | 37.3 % |
| ROE | 29.7 % | Face Value | 2.00 ₹ | DMA 50 | 12,996 ₹ | DMA 200 | 13,194 ₹ |
| Chg in FII Hold | -0.37 % | Chg in DII Hold | 0.01 % | PAT Qtr | 235 Cr. | PAT Prev Qtr | 280 Cr. |
| RSI | 53.6 | MACD | 153 | Volume | 3,37,641 | Avg Vol 1Wk | 2,61,793 |
| Low price | 8,479 ₹ | High price | 17,820 ₹ | PEG Ratio | 2.78 | Debt to equity | 0.05 |
| 52w Index | 50.5 % | Qtr Profit Var | 32.4 % | EPS | 105 ₹ | Industry PE | 22.9 |
📊 Core Financials
- Quarterly PAT at 235 Cr vs 280 Cr previously, showing sequential decline but strong YoY growth (+32.4%).
- ROE at 29.7% and ROCE at 37.3% reflect excellent capital efficiency and profitability.
- Debt-to-equity ratio at 0.05 indicates a virtually debt-free balance sheet.
- EPS at 105 ₹ provides a strong earnings base, backed by consistent performance.
💹 Valuation Indicators
- P/E ratio: 126, significantly higher than industry average of 22.9, suggesting overvaluation.
- P/B ratio: ~34.1 (13,198 ₹ / 387 ₹ book value), showing extreme premium pricing.
- PEG ratio: 2.78, indicating valuation is expensive relative to growth.
- Intrinsic value appears lower than current price, limited margin of safety.
🏢 Business Model & Competitive Advantage
- Solar Industries operates in explosives and defense manufacturing, with strong presence in mining and defense sectors.
- Competitive advantage lies in technological expertise, global exports, and defense contracts.
- Exposure to defense modernization and infrastructure growth provides long-term opportunities.
📈 Entry Zone & Long-Term Guidance
- Entry zone: 12,500–13,000 ₹ range (near 50 DMA at 12,996 ₹ and 200 DMA at 13,194 ₹).
- Long-term holding viable for investors seeking exposure to defense and infrastructure growth.
- Accumulation should be cautious due to stretched valuations despite strong fundamentals.
Positive
- Strong ROE (29.7%) and ROCE (37.3%).
- Debt-free balance sheet (Debt-to-equity 0.05).
- Quarterly PAT growth (+32.4% YoY) highlights operational strength.
Limitation
- High P/E (126) compared to industry average (22.9).
- Very high P/B ratio (~34.1), indicating extreme premium valuation.
- Dividend yield at 0.08% is negligible.
Company Negative News
- Sequential PAT decline (235 Cr vs 280 Cr).
- FII holdings decreased (-0.37%), showing reduced foreign investor confidence.
Company Positive News
- DII holdings increased slightly (+0.01%).
- Strong presence in defense contracts and global exports.
Industry
- Industry PE at 22.9, much lower than Solar Industries’ 126, highlighting sector undervaluation relative to Solar.
- Defense and infrastructure sector expected to grow steadily with modernization and global demand.
Conclusion
- Solar Industries is fundamentally strong with high returns and debt-free operations.
- Valuations remain stretched, making accumulation near 12,500–13,000 ₹ more attractive.
- Best suited for long-term investors seeking defense and infrastructure exposure, but caution advised due to premium valuations.
I can also extend this into a peer comparison with Bharat Dynamics and Premier Explosives to highlight how Solar Industries stacks up in valuation and profitability. Would you like me to draft that next?