Solar Industries India Limited
Q1 FY26
Call date · August 08, 2025

1 · Management Commentary

Key Positives

  • Achieved highest ever quarterly EBITDA (INR564 crores) and PAT (INR353 crores).
  • Revenue grew 28% YoY to INR2,154 crores, driven by robust international (43% YoY growth to INR826 crores) and defense (115% YoY growth to INR418 crores) segments.
  • Strong defense order book of ~INR15,000 crores; commercialization of Pinaka orders expected this year.
  • Successful testing of Bhargavastra and Rudrastra; repeat orders for UAVs and multi-mode hand grenades.
  • Global footprint with manufacturing in 9 countries and distribution in 90 countries.

Key Negatives

  • Domestic explosives market impacted by early monsoon and milder heatwaves, leading to lower mining demand.
  • Employee and other expenses as a percentage of sales increased YoY.
  • Currency fluctuations and hyperinflation (notably in Turkey) adversely impacted EBITDA margin by ~1.5%.

Forward Guidance

  • Capex of INR2,500 crores planned for FY26; ongoing strategic expansion of facilities.
  • Commercial production of 155mm shells to start soon; Pinaka rocket series to commence from end-Q2/start-Q3.
  • Continued focus on higher-category drones (Nagastra 2 & 3, new ZAL tie-up); commercialization timelines depend on qualification and trials.
  • FY26 revenue guidance reaffirmed at INR10,000 crores (INR3,000 crores from defense, INR7,000 crores non-defense); international revenue expected at INR3,500–4,000 crores.
  • Kazakhstan plant expected to start by October 2025; ongoing expansion in South Africa and other geographies.
  • Margin expectation maintained at ~27% despite higher costs.

2 · Q&A Highlights

Q 1 (Composite): What is the medium-term revenue outlook, especially regarding defense and international opportunities, and does it include new segments like Europe and higher-category drones?
A (Management):
• Stand by previously shared 4–5 year guidance; refer to last annual/quarterly calls for specifics.
• Defense and international segments are key growth drivers; new products and geographies included in long-term plans.

Q 2 (Composite): Update on commercialization and order visibility for Bhargavastra, Rudrastra, and other new defense products.
A (Management):
• Successful trials ongoing; final qualification expected in a couple of quarters.
• Commercialization to follow qualification, with improved defense numbers expected from Q2/Q3.

Q 3 (Composite): International business performance and outlook, including new plants in Kazakhstan and Saudi Arabia.
A (Management):
• South Africa performing strongly; Kazakhstan plant to start by October 2025.
• International revenue expected at INR3,500–4,000 crores for FY26.

Q 4 (Composite): Capex plans and potential for further expansion given strong demand in defense and exports.
A (Management):
• INR2,500 crores capex planned for FY26; ongoing strategic expansion.
• No immediate change to capex guidance since last update.

Q 5 (Composite): Drone segment strategy, competition, and opportunity size for higher-category drones.
A (Management):
• Expanding into higher-range drones (Nagastra 2 & 3, ZAL tie-up); opportunity size difficult to quantify at this stage.
• Confident in technical capabilities; commercial details to be shared post-qualification.

Q 6 (Composite): Domestic explosives business volumes and revenue guidance for FY26.
A (Management):
• No volume disclosure; targeting ~15% volume growth, but impacted by weather.
• FY26 revenue guidance reaffirmed at INR10,000 crores (INR3,000 crores defense).

Q 7 (Composite): Impact of hyperinflation and currency fluctuations on margins; margin outlook for FY26.
A (Management):
• Hyperinflation (mainly Turkey) and forex impacted EBITDA margin by ~1.5% in Q1.
• Margin expectation for FY26 remains at ~27%.

Q 8 (Composite): Order book trends and tendering process in defense segment.
A (Management):
• Order inflows vary by quarter; no fixed trend.
• Tender sharing depends on end-user requirements (e.g., 60-40, 70-30, or winner-takes-all).

3 · Other Key Numbers

  • Q1 FY26 Revenue: INR2,154 crores (vs INR1,685 crores YoY)
  • Q1 FY26 EBITDA: INR564 crores (vs INR474 crores YoY)
  • Q1 FY26 PAT: INR353 crores (vs INR301 crores YoY)
  • International revenue: INR826 crores (vs INR579 crores YoY)
  • Defense revenue: INR418 crores (vs INR194 crores YoY)
  • Coal India revenue: INR238 crores (vs INR246 crores YoY)
  • Non-CIL institutional revenue: INR348 crores (vs INR304 crores YoY)
  • Housing & Infra revenue: INR312 crores (vs INR353 crores YoY)
  • Raw material cost: 50.8% of sales (vs 51.65% YoY)
  • Employee cost: 8.53% of sales (vs 7.78% YoY)
  • Other expenses: 15.85% of sales (vs 13.90% YoY)
  • Test cost: 1.27% of sales (vs 1.63% YoY)
  • Depreciation: 2.6% of sales (vs 2.37% YoY)
  • PBT: INR481 crores (vs INR408 crores YoY)
  • Defense order book: ~INR15,000 crores (international portion ~INR8,000 crores)
  • Capex planned for FY26: INR2,500 crores
  • Net cash position as of June 30, 2025: INR50 crores (vs INR100+ crores as of March 31, 2025)
  • Hyperinflationary loss (Turkey): INR18 crores (Q1 FY26), INR9 crores in reserves
  • EBITDA margin impact from currency/hyperinflation: ~1.5% adverse in Q1 FY26
  • International revenue as % of total: 37–38%
  • FY26 revenue guidance: INR10,000 crores (INR3,000 crores defense, INR7,000 crores non-defense)
  • Expected international revenue FY26: INR3,500–4,000 crores

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