Synopsis: Solar Industries, even after a steep 28% drawback from its valuation peak, is already boasting strong growth, a huge order book from defence, and unique strategic strengths. With execution intact and no sectoral shocks, the stock remains a compelling comeback candidate to watch closely.
This company, which is one of the largest domestic manufacturers of bulk and cartridge explosives, detonators, detonating cords, and components that find applications in the mining, infrastructure, and construction industries, is trading at a discount from its peak, even after strong fundamentals and operational strength. Considering these factors, the stock has become a must-watch, as it holds the potential to deliver returns in the future.
With the market cap of Rs 1,18,000The crore, the shares of Solar Industries India Ltd has closed at Rs 13,000 per share; they are trading at a PE of 88, whereas their industry is at 23.3, and have given a return of over 1,000% in the last 5 years.
Solar Industries India Ltd is involved in the business of manufacturing explosives and detonators, as well as other initiation systems required in the mining, infrastructure, and construction sectors, in which controlled blasting is an important part of efficient execution. Over the years, the company has also ventured into the business of defence products, including ammunition as well as high-energy materials.
Share performance and discount
The shares of Solar Industries India Ltd were listed on 3rd April 2006 and have given a return of 26,500% plus since then, with a 5-year return being 1,000% plus, but this rally did not last long, as it made a high at Rs 17,820 in the month of June 2025 and since then has fallen more than 28%, showcasing a steep fall since its high.
Why the share price fall?
Simply put, the reason is primarily due to profit booking and heavy selling; the shares had given a heavy return, which in turn had put them into the overbought zone. The company is majorly involved in the defense segment, and as a result, it slightly mimicked the performance of defense shares. The Nifty India Defence Index was also at its high, giving a similar price movement pattern between the share movement and the Nifty India Defence segment. Even in the Nifty India Defence Index, the company holds 10.71 percent weight, coming in the top 4 constituents by weightage.
The company’s presence in the defence segment
The defence segment in Solar Group has turned out to be an effective engine for growth with a focus on indigenous production in areas like explosives, ammunition, rockets, drones, and propulsion systems. Through subsidiaries like Solar Defence & Aerospace and Economic Explosives Limited, the company provides important hardware requirements to the defence forces in areas like Pinaka rocket ammunition, multi-mode hand grenades, loitering munitions, and military explosives.
There is a significant strength in Solar’s ability to produce BrahMos Supersonic Cruise Missile booster explosives, which is a highly sensitive and critical part of India’s missiles that proves Solar’s expertise and reputation with India’s best missiles. However, Solar’s Defence segment gets an added push from long-term contracts with governments, export orders, and entering the aerospace and drone business areas. However, considering the niche that Solar Defence fits in with respect to Atmanirbhar Bharat, there is a high barrier to entry in this case.
Financial highlights
The revenue from operations for the company stood at Rs 2,082 crores in Q2 FY26 compared to Q2 FY25 revenue of Rs 1,716 crores, up by about 21 per cent YoY. Similarly, the net profit stood at Rs 361 crore in Q2 FY26, up from Rs 304 crore in Q2 FY25. The order book for the company stood at more than Rs 17,100, out of which around Rs 1,600 crore is from CIL and SCCL and Rs 15,500 crore is from defence.
Can the share bounce back?
If Solar Industries continues on its execution and sustains positive order inflows and bottom-line performances without any setbacks to the industry or policies, the stocks will have the potential to bounce back. The company’s model is strengthened by the fact that they have a robust outlook and industry barriers to entry, which will naturally ensure that consistent performers are rewarded. If there are no setbacks through regulations or a reduction in spending on the defence side, consistency will eventually help the markets regain their confidence.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post Fundamentally strong defence stock trading at a discount of 28%: Do you own it? appeared first on Trade Brains.