Solar Industries India Limited — Q3 FY25 earnings call

Call held 6 Feb 2025

Management summary

Solar Industries delivered a blowout Q3 FY25 with 38% revenue growth driven by a massive 578% surge in defense revenue to INR 409 crores. Pinaka CCS clearance was the quarter's highlight, expected to add ~INR 6,000 crores to the order book. International business continued strong at INR 758 crores. Domestic explosive demand remained subdued due to elections and heavy monsoon. Management guided for FY25 defense revenue of INR 1,400-1,500 crores and expects 7-10 years of strong global ammunition demand.

Highlights

  • Highest ever quarterly revenue of INR 1,973 crores, up 38% YoY

  • Highest ever quarterly EBITDA of INR 536 crores, up 46% YoY

  • Highest ever quarterly PAT of INR 338 crores, up 52% YoY

  • Defense revenue at INR 409 crores in Q3, up 578% YoY - highest ever quarterly defense

  • 9M revenue at INR 5,374 crores, up 21% YoY; 9M EBITDA INR 1,485 crores, up 43%

  • Defense order book at INR 4,971 crores; Pinaka CCS cleared, order ~INR 6,000 crores expected

  • International revenue at INR 758 crores in Q3, up 21% YoY - highest Q3 ever

  • INR 12,700 crores MoU with Maharashtra for defense/aerospace over 10 years

Key financials

3 periods

Headline

  • Defense Order Book
    ₹4,971 Cr

Q3

  • Revenue
    ₹1,973 Cr
    YoY +38%
  • EBITDA
    ₹536 Cr
    YoY +46%
  • PAT
    ₹338 Cr
    YoY +52%
  • Defense Revenue
    ₹409 Cr
    YoY +578%
  • International Revenue
    ₹758 Cr
    YoY +21%

9M

  • Revenue
    ₹5,374 Cr
    YoY +21%
  • EBITDA
    ₹1,485 Cr
    YoY +43%
  • PAT
    ₹942 Cr
    YoY +49%

What they filed

Q1 FY27: revenue up 70.3%, net profit up 88.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,716 1,973 2,167 2,154 2,082 +21%2,548 +29%3,053 +41%3,668 +70%
EBITDA445 527 537 535 552 +24%708 +34%826 +54%1,015 +90%
Net profit304 338 346 353 361 +19%467 +38%556 +61%666 +89%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Q3 Revenue Breakdown
    ₹259 Cr CIL₹278 Cr Non-CIL₹257 Cr H&I₹758 Cr International₹409 Cr Defense

Guidance & targets

Defense

  • FY25 Defense Revenue Defense · FY25 · High confidence INR 1,400-1,500 crores

    From INR 1,500 crores today

    annual guidance is sustainable. There may be some 5%-10% plus minus

    — Aanchal Kewlani

Growth

  • FY25 Revenue Growth Growth · FY25 · High confidence Below 30% guided

    Previously 30% → Below 30% guided

    definitely we are falling short of 30%... EBITDA margin and PAT margins are reaching to even a better level

    — Manish Nuwal

Domestic

  • FY25 Domestic Volume Growth Domestic · FY25 · High confidence 8-10%

    Previously 15% → 8-10%

    instead of 15% guidance, we should do around 8% to 10%

    — Manish Nuwal

Risks & concerns

  • FY25 revenue growth guidance cut from 30% due to domestic demand weakness

    medium

    Domestic volume growth revised to 8-10% from 15% due to elections, heavy monsoon impacting mining; margins compensating

    Management acknowledged

  • Ammonium nitrate price stability may limit pricing power

    low

    Prices expected stable with +/-5% variation; no significant increase expected

    Analyst acknowledged

  • Geopolitical uncertainty affecting international business sentiment

    low

    NATO 5% defense spend target and global ammunition shortage create more opportunity than risk for Solar

    Analyst downplayed

Areas of evasion (4)

  • Cash flow from operations
  • Extended Pinaka order details
  • Country-specific revenue
  • Specific defense product inquiries

Q&A highlights

3 direct
Global Ammunition Demand Outlook Direct
NATO countries should increase the defense budget to 5%... world's ammunition has almost wiped out... next seven years to ten years should not be a big change in demand

Provides strong long-term visibility for defense business with 7-10 year demand tailwind from global ammunition shortage

Asked by Pratik Mukasdar

Bhargavastra Development Progress Direct
within two years of development, we have reached to this stage... in two years' time we should be able to start commercialization

Counter-drone hard-kill system approaching commercialization represents significant new revenue stream

Asked by Amit Dixit

Pinaka Order and Defense Order Book Direct
total order book of defense is Rs. 4,971 crores. And once Pinaka comes in, it will be around Rs. 11,000 crore plus

Pinaka CCS clearance doubles the defense order book, providing multi-year revenue visibility

Asked by Amit Dixit

1 min read 5 chapters

Detailed narrative

Blowout Q3 Performance

Q3 FY25 was the strongest quarter in Solar Industries history with 38% revenue growth to INR 1,973 crores. EBITDA surged 46% to INR 536 crores and PAT grew 52% to INR 338 crores. Defense was the star with 578% growth to INR 409 crores, driven by international energetic materials orders.

Pinaka CCS Clearance - Landmark Moment

CCS cleared procurement of Pinaka enhanced rockets and area denial rockets. Expected order value ~INR 6,000 crores over 10 years (INR 500-600 crores annually). Combined with existing INR 4,971 crores defense order book, total defense orders to exceed INR 11,000 crores. This establishes Solar as a major defense supplier.

International Business Trajectory

International revenue at INR 758 crores in Q3 (21% YoY growth), highest Q3 ever. 9M international at INR 2,136 crores vs INR 1,869 crores. All regions contributing with mix of existing market growth and new territory expansion. Momentum expected to continue.

Bhargavastra and Defense Product Pipeline

Bhargavastra anti-drone hard-kill system had successful trials at Balasore. Commercialization expected within 2 years. 100% domestic content (80%+ domestic content ratio). Soft-kill capability also being developed. Nagastra already in commercial production with repeat orders.

Domestic Market Softness

Domestic explosive volume growth revised to 8-10% from 15% guidance due to elections, above-normal monsoon impacting mining. Coal mining and infrastructure demand subdued in H1. Recovery noted from January 2025 onwards. Ammonium nitrate prices expected stable. Management compensating with higher margins and defense/international growth.

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