Solar Industries rebounds after a sharp weekly correction as Motilal Oswal highlights its transition from an explosives manufacturer to an integrated defence player and sees strong earnings growth through FY30
Solar Industries India shares recovered on Monday, rising as much as 4 per cent to ₹19,370 on the NSE and ending a five-session losing streak. The rebound came after a sharp correction in the stock, which had declined around 17 per cent over the previous week.
The stock had fallen about 18 per cent from its all-time high of ₹22,700 touched on September 15, 2026. Despite the recent correction, Solar Industries has delivered a strong performance in 2026, gaining around 59 per cent so far this year, according to the data cited in the report.
The recovery on Monday came as Motilal Oswal Financial Services (MOFSL) initiated coverage on the company with a 'BUY' rating and a target price of ₹23,000.
MOFSL sees a broader defence opportunity
MOFSL said Solar Industries has evolved beyond its traditional industrial explosives business and is increasingly positioning itself as an integrated defence manufacturer.
The company's product journey has expanded from high-melting explosives such as HMX into ammunition, rockets and counter-drone systems.
According to the brokerage, successful trials and commissioning of products such as Nagastra, Rudrastra and Bhargavastra could help diversify Solar Industries' defence revenue beyond its existing Pinaka and HMX-related opportunities.
This transition is important because defence products generally offer a different growth profile from the company's established industrial explosives business.
Omnia acquisition could expand global explosives footprint
A major part of Solar Industries' growth strategy is its proposed acquisition of Omnia Holdings.
The company has signed a definitive agreement to acquire a 100 per cent stake in Omnia Holdings for around ₹13,000 crore, according to the information cited in the report.
The acquisition would give Solar Industries access to an established international mining explosives and blasting platform, particularly strengthening its presence in South Africa and neighbouring markets.
MOFSL believes the acquisition could also support backward integration in ammonium nitrate, a key raw material for the explosives business.
The transaction therefore has strategic importance beyond simply increasing revenue. It could strengthen Solar Industries' international footprint and provide greater control over part of its supply chain.
Business mix expected to change
MOFSL expects the company's industrial explosives and defence businesses to account for approximately 78 per cent and 22 per cent of the business mix respectively by FY29 after completion of the Omnia acquisition.
The changing mix highlights the company's broader strategy of combining its established industrial explosives franchise with a rapidly expanding defence business.
While industrial explosives are expected to continue providing a significant revenue base, the defence segment is expected to grow at a faster pace, according to the brokerage.
Strong growth expectations through FY30
MOFSL expects Solar Industries to deliver a consolidated revenue CAGR of around 43 per cent and a PAT CAGR of approximately 34 per cent over FY26-FY30.
The brokerage expects industrial explosives growth to settle into the mid-teens after FY28, while the defence business is expected to sustain a higher growth rate.
The projected growth reflects multiple drivers, including the expansion of defence manufacturing, increasing ammunition requirements, international explosives operations and the potential contribution from the Omnia transaction.
Defence portfolio continues to expand
Solar Industries' transition into defence manufacturing has been accompanied by the development of products across several categories.
Its portfolio includes ammunition and rocket-related systems as well as counter-drone solutions.
The development of Nagastra, Rudrastra and Bhargavastra could create additional revenue streams if trials, approvals and commissioning progress as expected.
The company is therefore attempting to move further up the defence value chain, from supplying explosive materials towards supplying complete or more sophisticated defence systems.
Pinaka remains an important opportunity
The Pinaka programme remains an important part of Solar Industries' defence opportunity.
The company's exposure to rocket and ammunition systems provides a potential avenue for growth as India's defence procurement increasingly emphasises domestic manufacturing and indigenous capabilities.
However, defence revenues can depend on qualification procedures, government procurement cycles, contract awards, execution schedules and production ramp-ups. Therefore, the timing of revenue recognition can vary significantly between projects.
ICICI Securities maintains BUY view
ICICI Securities has also maintained a 'BUY' rating on Solar Industries with a target price of ₹23,500.
The brokerage highlighted the strategic significance of the Omnia acquisition and expects the combined entity to generate revenue of around ₹33,000-34,000 crore and EBITDA of approximately ₹6,500 crore in FY28, according to the report.
However, ICICI Securities has not incorporated the acquisition into its estimates because regulatory approvals are still pending.
Acquisition financing will increase leverage
The proposed Omnia acquisition is expected to be funded through a combination of debt and internal resources.
ICICI Securities expects Solar Industries' debt to peak at approximately ₹11,000-12,000 crore following the transaction.
Higher leverage is an important consideration because increased interest costs could absorb a significant portion of Omnia's earnings during the initial period.
The brokerage expects the transaction to become EPS-accretive from FY29 onwards, while the near-term impact could be limited by higher financing costs.
What could drive earnings
Solar Industries has several potential earnings drivers over the next few years.
Defence expansion: Increased production of ammunition, rockets and counter-drone systems could support the defence segment.
Industrial explosives: Mining and infrastructure activity could continue to support the company's core business.
Omnia acquisition: The proposed transaction could substantially increase the company's international presence and scale.
Backward integration: Greater control over ammonium nitrate supplies could improve supply-chain resilience.
Product diversification: Expansion into higher-value defence systems could increase the company's addressable market.
International expansion: Greater exposure to overseas mining markets could diversify the revenue base.
Key risks to monitor
Despite the strong growth outlook presented by brokerages, Solar Industries faces several risks.
The proposed Omnia transaction remains subject to regulatory approvals. Any delay could affect the expected timing of synergies and financial consolidation.
The acquisition will also significantly increase debt, making interest costs and balance-sheet management important considerations.
The defence business is dependent on successful product trials, government orders, production schedules and execution. Delays in qualification or procurement could affect revenue recognition.
The industrial explosives business is also exposed to mining activity, commodity cycles and demand from consuming industries.
In addition, after the sharp rise in the stock during 2026, valuation expectations have become an important factor for market participants.
Market Outlook
Solar Industries' Monday rebound comes after a sharp five-day correction and highlights renewed investor attention following the initiation of coverage by MOFSL.
The company's investment case, as outlined by the brokerages, is increasingly linked to its transformation into an integrated explosives and defence platform. The Omnia acquisition could expand its international mining-explosives presence, while the defence portfolio provides exposure to ammunition, rockets and counter-drone systems.
MOFSL has initiated coverage with a ₹23,000 target price, while ICICI Securities has maintained a ₹23,500 target. These are brokerage estimates based on their respective assumptions and should not be treated as assured outcomes.
Going forward, investors will closely track the regulatory progress of the Omnia acquisition, funding and leverage, defence order inflows, product approvals and commissioning, margins and the contribution from international operations.
The key question for the company will be how effectively it converts its expanding defence pipeline and international acquisition strategy into sustainable earnings growth while managing the higher financial leverage associated with the Omnia transaction.