1:5 Stock Split Charm: From Rs 650-To-8,800, Midcap Stock To Explode Further, Target Highest At Rs 10,950

Solar Industries India, engaged in Industrial Explosives, is recommended to buy by ICICI Securities for the highest target price of Rs 10,950. Solar Industries, a midcap, has come a long way. The stock which split into a 1:5 ratio in mid-2016 has journeyed from nearly Rs 650 to a whopping near Rs 8,800 levels by end of FY24. The stock has skyrocketed by over 1,250% in this period. And the stock is set to explode further.

Solar Industries Share Price:

On March 28, 2024, Solar Industries' share price ended at Rs 8,786.05 apiece, with a market cap of Rs 79,505.01 crore on BSE. The stock's 52-week high and low is at Rs 9,429.10 and Rs 3,456.95 apiece currently.

So far in 2024, the stock zoomed nearly 30%. While in a year, the stock gained by 133%. In a span of 5 years, the stock has advanced by nearly 718% on BSE.

The stock price has been adjusted after the stock split in July 2016, and yet Solar Industries has made impressive gains.

Solar Industries Stock Split Charm:

Solar Industries has turned ex-split only once. Its share price was split by a 1:5 ratio with effect from July 13, 2016. The face value of the stock was trimmed from Rs 10 each to Rs 2 each.

After adjusting to stock splits, on July 13, 2016, Solar Industries share price was at Rs 649.40 apiece. And since then, it has climbed by a breathtaking 1252.95% to date.

Apart from this, Solar has also delivered 27 dividends since September 2006.

Solar Industries New Target Price:

ICICI Securities believes that the defence segment is going to be a key driver for Solar Industries.

In its latest research note, ICICI Securities said, "In Q4FY24, SOIL has received cumulative export orders worth INR 14.3bn of short duration (2-3 years). As a result, we expect defence revenue at INR 17.8bn and INR 23.5bn in FY25E and FY26E, respectively."

Key points highlighted by the brokerage are --- 1) Media reports suggest SOIL is developing bombs for Su-30MKI; 2) our channel checks suggest Pinaka order is likely to be awarded soon; 3) global shortage of ammunition provides an opportunity; and 4) SOIL is well equipped to develop loitering munitions, counter drones and long-range rockets.

Also, the brokerage believes SOIL would be able to register volume growth of 15% p.a. over the next couple of years. Besides, efforts are afoot to expand capacity in Nagpur, Rajasthan Explosives & Chemicals and come up with greenfield plants in Western and Southern India.

"Combined with traction in overseas markets, as the company is venturing in new markets such as Kazakhstan (mining) and Saudi Arabia (Construction), we believe volume growth is likely to sustain in near to medium term," the brokerage's note said.

Finally, the brokerage added, "Considering the aforesaid, we raise our FY25/26E EPS by 4%/16%; however, we maintain multiple as 55x as we still see significant prospects in defence space, which have not yet been captured in our estimates. Our revised TP works out to INR 10,950 (earlier INR 9,050). Maintain BUY."

Taking into consideration the target price and latest price level, there is a potential of 24.6% in Solar Industries.

Solar Industries has extensive experience, expertise and potential founded on its years of experience in the Industrial Explosives segment. Also, the company has entered into Defence and set up one of the world's most integrated facilities for Ammunition.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.