SOLARINDS - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.7

📊 Long-Term Investment Analysis

Solar Industries India Ltd (SOLARINDS) is a high-quality, niche industrial explosives and defense supplier with exceptional long-term fundamentals. Despite its premium valuation, it remains a compelling long-term investment due to its consistent growth, strong profitability, and strategic positioning in defense and infrastructure.

✅ Strengths

Exceptional ROE & ROCE: ROE at 32.6% and ROCE at 38.1% are among the best in the industry.

Low Debt: Debt-to-equity of 0.22 ensures financial flexibility.

Consistent Profitability: PAT has grown steadily, with quarterly profits of ₹322 Cr.

PEG Ratio: 2.51 — high, but justified by strong earnings growth.

Promoter Holding: Stable at 73.15%, indicating long-term confidence.

Long-Term Returns

3-Year CAGR: +417%

5-Year CAGR: +1,384%

10-Year CAGR: +1,808%

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⚠️ Risks

Valuation: P/E of 104 is significantly above industry average (23.1), indicating overvaluation.

Dividend Yield: Very low at 0.07%, not suitable for income investors.

Technical Weakness: RSI at 24.3 and MACD negative suggest short-term bearish momentum.

Price Volatility: Recent correction from ₹17,820 to ₹14,471 may continue in near term

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💰 Ideal Entry Price Zone

Based on valuation models and technical support

Intrinsic Value Estimate

DCF Value: ₹3,472

Relative Value: ₹4,394

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Current Price: ₹14,471

Support Zone: ₹13,290–₹13,500

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Suggested Entry Zone: ₹13,000–₹13,500 This range offers a better margin of safety and aligns with technical support and demand clusters.

🧭 Exit Strategy & Holding Period

📈 Holding Strategy

Time Horizon: 5–10 years to benefit from defense contracts, infrastructure growth, and global expansion.

Growth Targets

2026: ₹18,863

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2027: ₹22,881–₹25,962

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2030: ₹31,424

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🚪 Exit Strategy

Partial Exit: If price exceeds ₹25,000 by 2027, consider booking profits.

Trailing Stop: Use a stop-loss below ₹13,000 to manage downside risk.

Re-evaluate: If ROE drops below 25% or PEG rises above 3.5, reassess holding.

Would you like a peer comparison with other defense or specialty chemical stocks like Linde India or Deepak Nitrite to see how Solar Industries stacks up?

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