Detailed Narrative
Record Performance in Q4 FY26 and Full Year FY26
Solar Industries achieved its highest-ever quarterly sales of INR3,053 crores and annual sales of INR9,838 crores in FY26. The company also reported record quarterly EBITDA of INR870 crores, a 59% YoY increase, and PAT of INR556 crores, up 61% YoY. For the full fiscal year, EBITDA reached INR2,750 crores and PAT INR1,737 crores, both registering a 35% growth, with EBITDA margins maintained at 27.95%.
Strong Defense Business Growth and Outlook
The defense business demonstrated exceptional growth, nearly doubling its revenue. In Q4 FY26, defense revenue surged by 134% YoY to INR1,008 crores, and for the full year FY26, it increased by 94% to INR2,634 crores from INR1,355 crores. Management has set an ambitious target to achieve defense revenue of INR4,500 crores in FY27, supported by a strong order book of INR18,000 crores in defense.
International Expansion and Market Strategy
Solar Industries' international business grew 32% in FY26 and is projected to grow around 30% in FY27. The company is actively expanding its footprint in the African continent, with established facilities in Zambia, Tanzania, Zimbabwe, and Nigeria, and upcoming operations in Sierra Leone. Additionally, it has a strong base in Turkey and a new plant in Kazakhstan, with Australia also slated for expansion soon, aiming to capitalize on global opportunities.
FY27 Revenue and Margin Guidance
The company is targeting a total revenue of INR14,000 crores for FY27, aiming for a combined domestic and international growth (excluding defense) of over 30%. This growth is expected to comprise 10-15% from volume expansion and 18-20% from price increases, driven by higher crude/gas prices. Despite potential commodity price volatility, management is confident in maintaining current EBITDA margins through favorable product mix and contractual safeguards.
Strategic Capex and Product Development Pipeline
Solar Industries invested INR2,700 crores in capex over the past two years and plans an additional INR2,050 crores for FY27 to support its growth initiatives. Key defense product developments, such as the Bhargavastra counter-drone system, are in the final trial stages and expected to complete this calendar year. The 155mm complete round ammunition is also progressing, with supply expected to commence within the next 3-4 months after the coupling facility is finalized.
Working Capital Management and Inventory Strategy
Working capital days increased in Q4 FY26, primarily due to higher inventory levels. This was a deliberate strategic decision to mitigate risks arising from geopolitical uncertainties and ensure supply chain continuity. Management anticipates a normalization of working capital limits over the next two quarters as the geopolitical situation stabilizes, indicating a proactive approach to risk management.