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Solar Industries slips on profit taking

·2-min read

In the past three months, the stock has gained 29.14% while the benchmark Sensex has added 9.66% during the same period.

Meanwhile, CRISIL has reaffirmed its ‘CRISIL AA+/Stable/CRISIL A1+' ratings on the bank facilities and commercial paper of Solar Industries India (SIIL; a part of the Solar group).

The ratings continue to reflect the Solar group's robust market position in the domestic, export & overseas markets in the explosives and detonators industry, strong operating efficiency, and strong financial risk profile. These strengths are partially offset by susceptibility to regulatory risks and to volatility in foreign exchange (forex) rates.

Revenues of Solar group are expected to grow by over 10% in fiscal 2021 while maintaining the operating margin over 20%. The growth is driven by healthy orders from coal mining, growing demand from exports and overseas business and strong growth expected in defense business. As on 31 December 2020, the group had order book of Rs 1,635 crore, including order book of Rs 678 crore for defense products.

The financial risk profile of the group remains strong driven by adequate accruals of over Rs 250 crore per annum against annual capex requirements of Rs 200-250 crore over next 2-3 fiscals. Further, the net gearing is expected to remain below 0.5 time over medium term driven by prudent funding of capex through mix of debt and internal accrual.

The Solar group is one of the largest domestic manufacturer and supplier of bulk and cartridge explosives, detonators, detonating cords, and components. It has manufacturing facilities in 25 locations in India, and plants in Nigeria, Zambia, South Africa, and Turkey.

The company's consolidated net profit rose 25.91% to Rs 78.04 crore on a 14.67% increase in net sales to Rs 645.85 crore in Q3 FY21 over Q3 FY20.



Source: Capitalmarket.com