Solar Industries (I) Q1 FY27 earnings call

The numbers management led with

• Acquisition value: $1.35 billion all-cash
• Combined FY28 revenue guidance: INR30,000-32,000 crores (Solar INR16,500 cr + Omnia INR15,000+ cr)
• Combined FY28 EBITDA guidance: INR6,800-7,000 crores (22-23% margin)
• Combined FY28 debt target: INR10,000-11,000 crores; net debt/EBITDA committed below 2x
• FY28 Africa mining revenue target: $900 million to $1 billion (up from ~$300 million currently)

Guidance on this call

What changed since the Fri 15 May 2026 call

Guided on earlier calls, and what was filed

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.

By business

Balance sheet, capex and funding

• Acquisition to be funded entirely via internal accruals and debt; no equity dilution planned at parent or subsidiary.
• Combined debt projected at ₹10,000-11,000 crores by FY28 (acquisition plus regular); debt/EBITDA committed below 2x.
• Acquisition debt to be raised primarily on Omnia's books leveraging its cash surplus; shortfall arranged at acquirer level.
• FY28 interest cost projected at ₹1,000-1,100 crores; FY28 PBT projected at ₹5,000 crores+.
• Defense capex program of ~₹12,000 crores continuing in parallel with acquisition debt; mgmt committed defense allocation will not reduce.

The industry, as management sees it

Management views the global commercial explosives and blasting solutions industry as supportive of long-term margin expansion, citing 18-19% global EBITDA margins versus BME's current 13-14%, with significant headroom through integration of ammonium nitrate supply, initiating systems and down-the-hole services. Africa mining is positioned as the principal growth geography for Solar, while new geographies such as Australia are not on the immediate strategic roadmap.

Risks management named

• Transaction remains subject to regulatory, shareholder and statutory approvals
• Management acknowledged people and country-risk management as ongoing challenges across multi-country footprint
• Dependence on regulatory and shareholder approvals for completion; structure of acquisition debt at Omnia vs Solar level yet to be finalised

Not answered directly

• Agri segment India expansion plans
• Final funding structure of acquisition debt at Omnia vs Solar level
• Market share specifics in South Africa, North America and Brazil

Asked for a number, answered without one

• Specific peak net debt to EBITDA number: Said debt will not cross 2x EBITDA in any situation; declined to commit to a specific peak figure beyond the 2x ceiling.
• Market share in South Africa, North America and Brazil: Said data not well published across the world; estimated Africa mining revenue to grow from $300 mn to ~$1 bn without giving market share.
• Agriculture expansion into India: Said too early to comment; no intention as of now to expand agriculture business into the Indian market.
• Timeframe to pay off acquisition debt: Depends on financial planning; mgmt comfortable below 2x EBITDA; did not provide a specific deleveraging timeline.

Every question, with its answer

1. 1. Value chain integration and funding

   Amit Dixit, Goldman Sachs

   Question. Two questions. First on value chain integration in the SADC region — how will Solar combine Problast, the existing South African facility and Omnia's upstream operations, and what synergies does it create? Second, since this is an all-cash deal likely involving debt, is there a peak net-debt-to-EBITDA number in mind, and how quickly can Solar deleverage?

   Answer, Manish Nuwal, Managing Director and CEO. On integration: Omnia brings state-of-the-art ammonium nitrate capacity plus large explosives capacities; Solar adds initiating systems which fill a vacuum at Omnia; combining these with down-the-hole services via Problast creates significant value. On funding: Omnia's FY26 cash generation (PAT plus depreciation) is ~$110M, projected to reach ~$180M EBITDA without synergies. Solar's current-year revenue is projected at ~INR14,000 cr with 28-29% EBITDA margin, scaling to ~INR16,500 cr in FY28 at 17-20% growth. Combined FY28 EBITDA target is INR6,800-7,000 cr; acquisition debt plus regular debt projected at INR10,000-11,000 cr by FY28. Net debt/EBITDA 'will always be lower than two' in any situation.

2. 2. Synergies, EBITDA margin range, exports

   Subhadip Mitta, Nuvama

   Question. Diving deeper on synergies — is there a potential EBITDA margin range for the consolidated entity? Could the deal drive higher benefits on the export piece, on margin or top line? And are there any additional levers on margins or exports not built into current projections?

   Answer, Manish Nuwal, Managing Director and CEO. Combined Solar plus Omnia FY28 revenue could be INR30,000 cr+ with EBITDA of INR6,800-7,000 cr, implying 22-23% EBITDA margin range. The real incremental advantage: Solar's standalone EBITDA of ~INR2,750 cr jumps to INR6,800-7,000 cr in two years; EBIT goes from INR2,500 cr (FY26) to INR6,000+ cr combined. Additional levers: combining Omnia's BME distribution with Solar's distribution takes presence to 100+ countries and manufacturing to 25+ countries; scale ammonium nitrate facility, agri-bio stimulants platform and global knowledge base; expected to drive higher exports from India to the region and other global markets.

3. 3. Agri vertical, equity dilution, defense focus

   Sanjaya Satapathy, Ampersand Capital

   Question. Question on the agriculture business, which seems unrelated to current operations — how should we think about it? Also, is there any possibility of equity issuance to fund the deal, and does this acquisition dilute focus on the new defense growth vertical?

   Answer, Manish Nuwal, Managing Director and CEO. On agri: not a pure agri play but a technology-driven, integrated crop nutrition, biological and biostimulant platform leveraging decades of soil study knowledge; positioned as a complementary vertical. On equity issuance: 'we are not planning to raise any equity through any kind of dilution in any of the parent company or subsidiary'; deal to be funded via internal accruals plus debt. On defense: Solar has built one of the most integrated defense facilities globally over 15 years; announced INR12,000 cr capex program two years back and is working on it aggressively; capital allocation for defense will not go down — 'rather, as we move forward, it is going to go up'.

4. 4. Agri India expansion, funding structure, leverage target

   Pinakin Parekh, HSBC

   Question. Would the agriculture segment remain only in South Africa or is there a plan to expand into India's agri-fertiliser market? Second, with the $1.35B all-cash acquisition, would the debt sit at the acquired entity level or entirely at Solar standalone? And is there a target net-debt-to-EBITDA number that Solar will not cross over the next two years?

   Answer, Manish Nuwal, Managing Director and CEO. Agri India: 'too early to comment'; Omnia's agri is technology-driven crop nutrition and biostimulants, growth has been promising, knowledge-based products to be leveraged across geographies where Solar is present; 'no intention as of now to expand agriculture business into the Indian market'. Funding structure: Solar plans to utilise Omnia's existing cash-surplus balance sheet and take debt on Omnia's books; any shortfall to be arranged through the acquiring company; final structure pending shareholder and statutory approvals. Net debt/EBITDA: 'by the end of FY28 the EBITDA should be INR6,800-7,000 cr' and 'in any situation, the debt will not cross the two times of EBITDA generation'.

5. 5. FY28 math, debt pay-off, mining rationale, risks

   Bharat Shah, BCS Capital Ideas

   Question. Congratulations on choosing borrowing over equity — shows skin in the game. INR30,000 cr consolidated FY28 turnover seems conservative versus INR34,000-35,000 cr expectations. Please reconcile. Also reconcile INR7,000 cr EBITDA against depreciation of ~INR700 cr for the EBIT math. In what timeframe will debt be paid off? Could mining alone (higher margin) have justified the deal without agri? And what watch points or concerns bother you?

   Answer, Manish Nuwal, Managing Director and CEO. Topline: Solar INR14,000 cr in current year, growing 17-20% to INR16,500 cr in FY27-28; Omnia did INR13,300 cr last year and should do INR15,000+ cr in FY27-28; combined INR31,000-32,000 cr rather than INR33,000-34,000 cr. EBITDA INR6,800-7,000 cr minus depreciation ~INR700 cr = EBIT INR6,300 cr. Debt pay-off: depends on financial planning; EBIT ~INR6,200-6,300 cr in FY27-28, interest cost INR1,000-1,100 cr, PBT INR5,000+ cr; plan is not to be debt-free but to grow explosives and defense aggressively while staying below 2x EBITDA. Mining-only justification: this is a 'strategic decision combining all the dots'; Omnia mining alone should do INR7,000+ cr in a couple of years, matching Solar's 28-year Industrial build of INR7,500 cr; clean balance sheet, strong management and 70-year market penetration drove the call. Watch points: people management and country risk across geographies — Solar has handled these for 15-20 years; opportunities are the focus, risks acknowledged but not dwelt on.

6. 6. Vertical integration, geographic expansion, stake structure

   Chirag Muchhala, Centrum Broking

   Question. Congratulations. First, elaborate on the strategic benefit of Omnia's nitric acid and ammonium nitrate facilities in the current global context — supply chain and pricing implications. Second, given Omnia's presence in USA, Canada, Brazil where Solar is not present, does this immediately add export potential for Solar's initiating systems and packaged explosives? Does Omnia have a wide packaged explosives portfolio? Finally, since Omnia is JSE-listed, does the acquisition result in 100% stake and delisting, or could we end up with 60-80% if some shareholders don't tender?

   Answer, Manish Nuwal, Managing Director and CEO. AN/nitric acid: Omnia has 'a high-quality asset, a very large manufacturing facility' for nitrate-based products; combined with Solar's initiating systems and Problast down-the-hole services, creates significant synergy. New geographies: entering a new geography takes 4-5 years; BME has built presence in Canada, Australia, Indonesia, US over 6-7 years while turning around from a stressed balance sheet; combined distribution goes from 90 to ~110 countries, manufacturing from 11 to 25+ countries, helping exports and defense. Packaged explosives: 'Solar is the largest producer of packaged explosives in the world' and can leverage BME distribution to expand; that is an added advantage. Stake: agreement signed for 100% stake, subject to shareholder and government approvals.

7. 7. Market share, non-mining strategy, margin headroom, white spaces

   Bhavin Vithlani, SBI Mutual Fund

   Question. Congratulations. Post-acquisition, what would Solar's market share be in South Africa, North America and Brazil? On Omnia's non-mining business, is there a strategy to divest or continue and grow it? Solar's margins are considerably higher than Omnia — is there significant headroom to take margins to mid-teens levels over the next 3-4 years? And are there white spaces such as Australia where Solar is under-indexed and which it will now expand into organically or inorganically?

   Answer, Manish Nuwal, Managing Director and CEO. Market share: 'data's are not well published across the world'; Africa mining revenue to scale from ~$300M to $900M-$1B; specific share data not provided. Non-mining strategy: agri is a strategic complementary asset with ammonium nitrate, nitric acid and SADC presence; technology-driven crop nutrition and agri-bio solutions add value; 'as long as it is adding value for our shareholders, we will be continuing with this business'. Margin headroom: global explosives margins are 18-19%; BME is 13-14%; synergy via ammonium nitrate supply, initiating system sales and Problast down-the-hole services should enhance margins of BME and Solar combined in the region; significant headroom seen. White spaces: strategic focus is India and Africa as a continent; 'Australia is not in our immediate strategic roadmap where we will be spending a lot to expand our market presence'; will leverage Solar/BME strength opportunistically elsewhere.

   Not answered directly.

Topic by topic, in the order it was spoken

In their words