Solar Industries (I) Q4 FY26 earnings call
In brief
Solar Industries posted record Q4 sales of ₹3,053 cr, PAT ₹556 cr; targets FY27 revenue ₹14,000 cr with defense at ₹4,500 cr.
- Management's tone
- Confident
- What was said
- Leaned positive
- Guidance
- Guidance raised
- Analyst pushback
- Medium
- Stock, next session
- +3.89% (Nifty 50 −0.19%)
- Defense business grew 134% YoY in Q4 to ₹1,008 cr and 94% for FY26 to ₹2,634 cr; targets ₹4,500 cr in FY27.
- FY27 revenue targeted at ₹14,000 cr versus ₹9,838 cr in FY26, supported by ₹21,300 cr order book.
- EBITDA margins came in at 28.5% in Q4 and 27.95% for FY26; management plans to maintain current margins in FY27.
- FY27 capex planned at ₹2,050 cr, after ₹2,700 cr spent over the last 2 years on capacity expansion.
- Board proposed FY26-27 dividend of ₹11/share, up from ₹10/share in the prior year.
An AI read of the company's transcript · the filing
The numbers
The quarter, Q4 FY26
| This quarter | A year ago | Last quarter | Margin | |
|---|---|---|---|---|
| Revenue | ₹3,053 cr | +40.9% | +19.8% | |
| EBITDA (excl. other income) | ₹826 cr | +53.1% | +16.6% | 27.1% (24.9% a year ago) |
| Net profit | ₹548 cr | +70.0% | +22.7% | 17.9% (14.9% a year ago) |
| EPS (₹) | ₹60.52 | +70.0% | +22.7% |
From the company's filed results for the quarter ended 31 Mar 2026 (consolidated), not from the call. EBITDA here excludes other income, so it can differ from the figure management quotes.
Where management's figures differ from the filing
- EBITDA (Q4): said ₹870 cr (margin 28.5%) including other income; filed ₹825.97 cr excluding other income (margin 27.1%). Filed EBITDA is calculated excluding other income of ₹44 cr; management's stated EBITDA figure includes other income, explaining the gap.
What moved the numbers, as management explained it
- Defense revenue surged 134% in Q4 and 94% for FY, lifting its share of revenue basket to 27% from 18% and boosting blended EBITDA.
- International business grew 32% YoY from new geographies (Africa hubs, Turkey, Kazakhstan) and price-led value growth.
- Raw material cost jumped to ₹4,894 cr vs ₹3,979 cr on commodity inflation; only ~60% of increase recoverable under price-escalation clauses.
- Q4 EBITDA inflated by inventory gains as prices went up; inventory levels were higher than normal to mitigate geopolitical risks. (one-off)
- Employee cost jumped to ₹845 cr vs ₹600 cr and depreciation to ₹251 cr vs ₹182 cr as new capacity was capitalised.
The numbers management led with
- Order Book: INR21,300 crores total order book (defense INR18,000 crores, non-defense INR3,000 crores)
- Defense Revenue: Q4 FY26: INR1,008 crores (+134% YoY); FY26 full year: INR2,634 crores (+94% YoY)
- International Revenue: FY26 international revenue ~INR3,800 crores (+32% YoY); Q4 ~INR1,000 crores
- Capex: INR2,050 crores planned capex for FY27; INR2,700 crores invested over last 2 years
Guidance
Guidance on this call
| What | For | What management said |
|---|---|---|
| FY27 revenue target | FY27 | targeting to achieve a revenue of INR14,000 crores in FY '27 |
| FY27 defense revenue | FY27 | we should cross defense revenue of INR4,500 crores in FY '27 |
| FY27 annual capex | FY27 | planned annual capex of INR2,050 crores |
| FY27 EBITDA margin | FY27 | while maintaining current margins |
| FY27 international revenue growth | FY27 | next year also, we are expecting a growth of around 30% |
| FY27 domestic + international ex-defense growth | FY27 | domestic and international combined together, we should be able to grow plus 30% |
| FY26-27 dividend per share | FY27 | dividend of INR11 per share for FY '26-'27 |
Guided on earlier calls, and what was filed
| What | For | Guided | Filed |
|---|---|---|---|
| Total revenue target | FY26 | at least ₹10,000 cr (on the Q4 FY25 call) | ₹9,838 cr, below the range |
| Total revenue | FY26 | at least ₹10,000 cr (on the Q1 FY26 call) | ₹9,838 cr, below the range |
| EBITDA margin | FY26 | 27% (on the Q1 FY26 call) | 26.6%, below the figure guided |
| Consolidated revenue | FY26 | at least ₹10,000 cr (on the Q2 FY26 call) | ₹9,838 cr, below the range |
| EBITDA margin | FY26 | at least 27% (on the Q2 FY26 call) | 26.6%, below the range |
Filed figures are summed from the company's own quarterly results for the whole period (EBITDA excludes other income); where one sits against what was guided is arithmetic, not a judgement.
The business
By business
Defense
Defense business nearly doubled with Q4 revenue up 134% YoY to ₹1,008 cr and FY26 revenue up 94% to ₹2,634 cr; order pipeline and trials advancing.
Q4 revenue ₹1,008 cr (+134% YoY) · FY26 revenue ₹2,634 cr (+94% YoY) · Share of revenue basket rose to 27% from 18% · Defense order book ~₹18,000 cr
Outlook: Targets ₹4,500 cr in FY27; Bhargavastra trials targeted this calendar year; 155mm complete rounds in 3-4 months.
International
International business grew 32% YoY in FY26 to ~₹3,800 cr, driven by new facilities across Africa, Turkey, Kazakhstan and Southeast Asia.
FY26 growth 32% YoY · FY26 revenue ~₹3,800 cr · Share of FY basket 39% (vs 38%)
Outlook: Expecting ~30% growth in FY27 with 10% volume growth and 15% value growth, plus commodity price tailwind.
Domestic
Domestic mining market was flat in FY26 due to weak OB removal at Coal India, Singareni and private coal mines; mix shifted away from coal toward defense.
CIL basket down to 9% (from 13%) · Non-CIL/institutional 10% Q4 / 12% FY · Housing and infra 15% Q4 / 12% FY · Domestic value growth ~4% in FY26
Outlook: Expecting demand recovery in FY27 as OB removal rebounds and base normalises; growth aided by new plants in North and West.
Balance sheet, capex and funding
- FY27 capex planned at ₹2,050 cr after ₹2,700 cr spent over last 2 years on capacity expansion.
- Working capital days rose above 100 in Q4 from 90-100 earlier due to deliberate inventory build for geopolitical risks.
- Working capital expected to normalise within the next 2 quarters as geopolitical situation stabilises.
The industry, as management sees it
Management sees strong opportunity in international markets growing at 2-3% annually, with Solar targeting 10% volume and 15% value growth. Domestic coal mining sector expected to recover from FY26's flat/negative OB removal as energy transition pressures shift demand toward electricity, making FY27 a bottom-out year for OB removal. Some near-term demand contraction possible for a couple of months due to high commodity prices, but no significant annual demand impact expected.
Risks management named
- Working capital days increased to 90-100 due to deliberate inventory build for geopolitical risk mitigation; normalisation expected in next 2 quarters
- Commodity price inflation (crude, gas, ammonium nitrate) creates margin pressure; some contracts have lagged pass-through
- Potential demand contraction in domestic explosives for a couple of months due to high commodity prices
- International operations face currency volatility, payment delays, and higher input costs in certain geographies
Q&A
Q&A was dominated by defense business trajectory (Amit Dixit on Bhargavastra trials and 155mm ammunition timeline), international expansion strategy (Umesh Raut on geographic expansion and market share), and working capital dynamics (Bharat Shah on the INR2,400 crores cash flow swing). Management answered most questions directly, including sensitive product-specific queries on Bhargavastra (trials expected this calendar year) and 155mm qualification (~3-4 months). Deflections were limited to market share data (not available) and segment-level capex split (treated as one business). Management declined quarter-to-quarter guidance commentary but maintained full-year INR14,000 crores revenue and margin guidance with conviction.
Not answered directly
- Market share data in key export geographies — not available
- Capex split between defense and non-defense segments — not disclosed, business treated as one
- Quarter-to-quarter margin trajectory — management declines to comment, refers to full-year guidance
Asked for a number, answered without one
- Market share in key export regions: Manish said as of now, we don't have that kind of visibility.
- FY27 capex split between defense and nondefense: Manish said for us our business is one; FY27 investing around INR2,050 cr channelised by priority and market opportunity.
- Program-wise status of new defense products: Manish said it is not wise on our part to share the program-wise progress and status of new defense products.
- Demand impact from high ammonium nitrate prices: Manish said too early to comment; could see demand contraction for a couple of months but not on annual basis.
Every question, with its answer
1. International Business Expansion
Amit Dixit, Goldman Sachs
Question. On international business: what are the new geographies entered in FY26 (e.g. Zimbabwe) and which other geographies are expected to see more traction in FY27?
Answer, Manish Nuwal, CEO & Managing Director. International business grew 32% YoY. Company is focusing on African continent as the primary expansion market. South Africa is the hub; facilities already set up in Zambia, Tanzania, Zimbabwe. West Africa: Nigeria as base with operations started in Ghana; Sierra Leone operations expected to start in FY27. Turkey has a strong base; Kazakhstan plant started. Southeast Asia: small facilities in Thailand and Indonesia; Australia operations starting soon.
Follow-up. Clarification on Bhargavastra (counter-drone system) — status of pending tests and order timeline; and progress on 155mm shells (tests and certifications).
Answer. Bhargavastra is a strategic product in final development stage; Solar will be one of very few companies globally developing such a system. All trials expected to be completed in this calendar year. For 155mm ammunition: raw material intermediates already being supplied; coupling facility to produce complete 155mm product expected to finish in next couple of quarters (~3-4 months), then supply of complete round will begin.
2. International Business Growth Trajectory
Umesh Raut, Nomura India
Question. Historical export trajectory: strong growth FY19-23 (3.5x), flat FY23-25, then 32% growth in FY26. How big is the opportunity 2-3 years out? Can exports see another 2-3x jump? What investments (capacity, client traction) are needed?
Answer, Manish Nuwal, CEO & Managing Director. Export growth trajectory: INR400 crores (2015) → INR800 crores (hovered 2018-21) → INR1,400 crores (2022) → INR3,800 crores (FY26). FY27 growth expected ~30%. Company believes international markets offer immense opportunity but declined to commit to specific growth multiples. Medium-term expectation: ~10% volume growth and ~15% value growth in international markets. FY27 will benefit from higher commodity prices boosting top line.
Follow-up. Can you provide market share in key export markets?
Answer. As of now, we don't have that kind of visibility on market share data.
Not answered directly.
3. Domestic Growth Outlook
Umesh Raut, Nomura India
Question. Domestic business implied growth of ~35% in FY27 (excluding defense/export). Is this due to low base impacted by monsoon in FY26, and higher traction in infra and coal volumes?
Answer, Manish Nuwal, CEO & Managing Director. FY27 revenue target INR14,000 crores; excluding defense (~INR4,500 crores), remaining ~INR9,500 crores. Domestic + international combined growth target of 30%+: 10-15% from volume growth, 18-20% from price rise (higher crude/gas prices). FY26 domestic market was flat with negative OB removal in Coal India/Singareni/private mines; FY26 value growth of ~4% was achieved despite this. FY27 expected to see demand pickup as coal mining sector benefits from energy transition and FY26 was a bottom-out year for OB removal.
Follow-up. Any concerns about Kalyani Group entering explosives business? How do you see competitive intensity increasing, especially in defense?
Answer. Solar competes with world number 1 and 2 in the market and has grown from a small player in 1996. The company is not afraid of anyone. Market opportunities are immense and Solar is not a hardware company but a developer of energetic products and advanced technology solutions for border security. Solar is expanding technology footprints beyond just products.
4. EBITDA Margin Outlook
Vikas Singh, ICICI Securities
Question. With defense mix improving in overall sales, but margin guidance implying some impact vs last year — is the margin pressure due to difficulty in passing on cost inflation, or is this a conservative estimate?
Answer, Manish Nuwal, CEO & Managing Director. Commodity prices have risen and passing on increases is sometimes difficult, but prices have been increased and rise/fall calculations in contracts will take care of actual price increases. Overall EBITDA margin will see some impact, but with defense and international business picking up, the company should be able to maintain current EBITDA margins.
Follow-up. Domestic explosives market share gain strategy — is it through new products or same segments with limited growth? How is the capacity expansion helping?
Answer. Market share gain is not a direct strategy. Over 10-12 years, capacity was expanded at Nagpur core plant (package explosives, initiating systems). As Solar became a global player, capacity utilization increased and logistics costs drove expansion outside Nagpur. Acquired company in Northern India, mega expansion in Western India almost complete, and expansion into Orissa, Telangana, Andhra Pradesh. Near-customer presence helps service and grow in those markets.
5. Inventory Gains in Q4
Vikas Singh, ICICI Securities
Question. Did Q4 have any inventory gains in the numbers, or are these natural margins?
Answer, Manish Nuwal, CEO & Managing Director. Inventory was higher than normal in Q4 due to a variety of reasons. Inventory gains will be realised in coming quarters. When commodity prices rise by $200, escalation clauses cover only ~60% of the increase; some contracts allow pass-through after a quarter. This inventory level positions the company well to absorb price shocks.
Follow-up. Can you split the INR2,050 crores capex between defense and non-defense explosives for FY27?
Answer. The business is treated as one; capex of INR2,050 crores is channelised based on priority and market opportunity, not split by segment.
Not answered directly.
6. Order Book Breakdown
Dipen Vakil, PhillipCapital
Question. Can you provide the order book breakup between defense and non-defense for the INR21,300 crores order book? What major orders are expected in the near future?
Answer, Manish Nuwal, CEO & Managing Director. Order book of INR21,300 crores: defense ~INR18,000 crores, non-defense ~INR3,000 crores. Largest defense order is from Pinaka; other defense orders are small raw material intermediate orders for the Indian market. International markets have also generated many orders. New orders expected: similar products in final stages; Pinaka series follow-on orders in discussion/negotiation stage.
Follow-up. What new products are in advanced stages of finalisation vs early development stages?
Answer. Products in final stages: Bhargavastra (counter-drone, trials expected to complete this calendar year) and multiple loitering ammunition options. 155mm complete round: propellants already being made, coupling facility to be completed in ~3-4 months for qualification supply. DRDO partnership products in design/development stage. Full program-wise status not shared for competitive reasons.
7. Medium Caliber Ammunition Facility
Dipen Vakil, PhillipCapital
Question. Medium caliber ammunition facility — is it operational now or awaiting certification?
Answer, Manish Nuwal, CEO & Managing Director. Medium caliber ammunition facility is already commissioned and products are being supplied for qualification. Orders expected once qualification is completed.
8. Working Capital Management
Bharat Shah, BCS Capital Ideas
Question. Working capital: in FY26, working capital sucked away ~INR1,600 crores (vs INR800 crores released in FY25). What explains this ~INR2,400 crores swing in operational cash flow?
Answer, Shalinee Mandhana, Joint Chief Financial Officer. Working capital days had been ~90-100 till Q3. In Q4, working capital days increased primarily due to higher inventory levels built deliberately to mitigate geopolitical risk and maintain supply chain continuity. This was a strategic decision (not accidental) and inventory levels will support future revenues and margins. Geopolitical situation stabilisation expected, with working capital normalisation over the next 2 quarters.
Follow-up. Was this inventory build a deliberate and strategic decision?
Answer. Yes, sir. Correct. Confirmed deliberate and strategic.
9. Subsidiary Earnings Contribution
Bharat Shah, BCS Capital Ideas
Question. Subsidiary contribution to consolidated earnings: subsidiaries contributed INR50 crores in FY26 vs INR45 crores in FY25, despite significant export and international presence. Why so muted? Q4 was dramatically better (INR19 vs INR11 in Q4 FY25).
Answer, Manish Nuwal, CEO & Managing Director. In H1 FY26, defense and international subsidiaries had subdued margins, which improved from Q3 and particularly Q4. Going forward, all subsidiaries (India and overseas) will deliver better performance. Currency volatility and payment/operational uncertainties in overseas geographies affected results in H1. Despite high raw material prices expected in FY27, management is confident of maintaining current EBITDA margins with improved defense and international business. Historical context: when raw material prices rose 50-70%, EBITDA margins declined only 2-3%.
10. International Business Sequential Flatness
Sanjeev Zarbade, Antique Stock Broking
Question. Exports business remained sequentially flat Q4 (~INR1,000 crores vs previous quarter). Any headwinds from West Asia freight/logistics? Will this impact Q1 FY27 growth?
Answer, Manish Nuwal, CEO & Managing Director. Q4 international revenue was ~INR1,000 crores, similar to Q3. The company expects improved performance above these levels in coming quarters.
Follow-up. Will the lagged benefit of price increases cause margin impact in Q1 before recoup in Q2?
Answer. Management does not comment on quarter-to-quarter basis. Confident of achieving full-year guidance given.
Not answered directly.
11. Ammonium Nitrate Price Impact on Demand
Sanjeev Zarbade, Antique Stock Broking
Question. With ammonium nitrate prices rising, will buyers wait for prices to cool off, causing demand impact?
Answer, Manish Nuwal, CEO & Managing Director. Too early to comment definitively. Impact of very high commodity prices killing demand needs more time for clarity and market response. Some demand contraction possible for a couple of months, but on an annual basis, no significant demand impact is expected.
Partly answered.
What was said
Topic by topic, in the order it was spoken
Q4 & FY26 Financial Performance · Manish Nuwal (CEO & MD)
- Q4 revenue INR3,053 crores (+41% YoY); FY26 revenue INR9,838 crores (+30% YoY) — highest-ever quarterly and annual sales
- Q4 EBITDA INR870 crores (+59% YoY), PAT INR556 crores (+61% YoY); FY26 EBITDA INR2,750 crores (+35% YoY), PAT INR1,737 crores (+35% YoY)
- EBITDA margins: ~28.5% in Q4 and ~27.95% for full year FY26, propelled by international and defense business and operational efficiencies
- Dividend proposed at INR11/share for FY26-27, up from INR10/share, reflecting confidence in financial health
Defense Business Performance & Outlook · Manish Nuwal (CEO & MD)
- Defense revenue surged 134% YoY in Q4 to INR1,008 crores; FY26 INR2,634 crores (+94% YoY), nearly doubling from INR1,355 crores
- Defense share of revenue: 33% in Q4 (up from 20% YoY) and 27% for FY26 (up from 18% YoY)
- Targeting defense revenue to cross INR4,500 crores in FY27, sustaining momentum from robust sales pipeline and strong execution
- Defense business maturing into a stand-alone platform driving deep-tech innovations with significant future growth potential
International Business Performance & Expansion · Manish Nuwal (CEO & MD)
- International business grew 32% YoY; Q4 revenue ~INR1,000 crores, FY26 ~INR3,800 crores (39% of revenue mix)
- Geographic expansion: South Africa as hub; facilities in Zambia, Tanzania, Zimbabwe; Nigeria base for West Africa with Ghana operations; Kazakhstan plant started; Thailand, Indonesia, Australia (starting soon)
- Export growth trajectory: INR400 crores (2015) → INR800 crores → INR1,400 crores (2022) → INR3,800 crores (FY26); expect ~30% growth in FY27
- International market volume growth expected at ~10% and value growth at ~15% in the medium term
Domestic Market & Capacity Expansion · Manish Nuwal (CEO & MD)
- Domestic mining markets were flat in FY26; OB removal in Coal India, Singareni, and private coal mines was negative; yet managed ~4% value growth
- New domestic plants in East (Orissa) and South India (Telangana, Andhra Pradesh) to strengthen footprint; mega expansion in Western India almost complete
- Capacity expansion near Nagpur (core plant for package explosives and initiating systems) driven by logistics cost optimisation and near-customer servicing
- Domestic growth expected to pick up in FY27 as coal mining sector benefits from energy transition pressure shifting from diesel/petrol to electricity
FY27 Guidance & Order Book · Manish Nuwal (CEO & MD)
- FY27 revenue target: INR14,000 crores (+42% YoY) while maintaining current EBITDA margins; defense to cross INR4,500 crores
- Order book of INR21,300 crores (defense INR18,000 crores, non-defense INR3,000 crores); Pinaka is the largest defense order; other orders are raw material intermediates
- Planned annual capex of INR2,050 crores for FY27; INR2,700 crores invested over the last 2 years
- Combined domestic + international growth target of 30%+ (10-15% volume, 18-20% price rise from commodity cost pass-through)
Working Capital & Cost Management · Shalinee Mandhana (Joint CFO)
- Working capital days increased to 90-100 in Q4 (from ~90 days in Q1-Q3) due to deliberate higher inventory build for geopolitical risk mitigation
- Inventory build strategic and intentional to maintain supply chain continuity; not accidental; normalisation expected in next 2 quarters
- Raw material consumption Q4: INR1,522 crores (+29% YoY); employee cost Q4: INR253 crores (+45% YoY); other expenses Q4: INR453 crores (+65% YoY)
- Interest and finance cost Q4: INR41 crores; depreciation Q4: INR71 crores; PBT Q4: INR759 crores (+64% YoY)
In their words
Our defense business has nearly doubled. Delivering outstanding growth with revenue surging 134% in Q4 and 94% for the full year to reach a record high of INR1,008 crores and INR2,634 crores, respectively.
Backed up by a strong order book of INR21,300 crores and robust opportunities across all verticals, we are targeting to achieve a revenue of INR14,000 crores in FY '27, while maintaining current margins.
So from competition side, we are not afraid from anyone. But market opportunities are immense, where everybody will have its own pie. We cannot say that we will have 100% market share, and that is not our target also.
To check next time
What management committed to on this call, or the dates they gave.
- FY27 revenue progress vs ₹14,000 cr target.
- Defense revenue run-rate vs ₹4,500 cr FY27 target.
- Bhargavastra counter-drone trial completion in CY26.
- 155mm complete round commissioning in next 3-4 months.
- Working capital normalisation within next 2 quarters.
- EBITDA margin trajectory against commodity-led cost inflation.
Transcript
We have not transcribed this call's recording. Read the company's transcript (PDF).
The stock after the call
| After the call | Close | Stock | Nifty 50 |
|---|---|---|---|
| Next session Fri 15 May 2026 | ₹17,314.00 | +3.89% | −0.19% |
| 5 sessions Thu 21 May 2026 | ₹18,392.00 | +10.36% | −0.15% |
| 20 sessions Fri 12 Jun 2026 | ₹17,143.00 | +2.87% | −0.28% |
From the close of Thu 14 May 2026, ₹16,665.00: the close before the call day (the call's time is not on file). Adjusted daily closes; the move includes everything else that happened in those sessions.