MOSL: SOLAR INDUSTRIES (Neutral)-In-line operational performance led by overseas business
​Solar Industries: In-line operational performance led by overseas business
(SOIL IN, Mkt Cap USD1.3b, CMP INR896, TP INR900, 1% Upside, Neutral)
- Operational performance in line with estimates: Consol. revenue increased 16% YoY to INR4.6b (est. of INR4.8b) in 1QFY18. EBIDTA grew 15% YoY to INR1.0b (est. of INR980m), with margin stable YoY at 22.1%, supported by strong growth in the overseas business. Adj. net profit rose 16% YoY to INR548m (est. of INR545m).
- Revenue aided by strong growth in overseas segment: Consol. revenue was driven by strong growth in the overseas segment (+48% YoY). On the domestic front, institutional sales grew 13% YoY. However, the quarter saw declining demand from CIL (sales down 18%), which faced realization pressure and lower production. Realization was down in Bulk (-3% YoY) and Cartridge (-4% YoY) segments, as the decline in raw material cost (ammonium nitrate) was passed on to consumers.
- Operating margin stable YoY at 22.1%: Operating margin stood stable at 22.1% driven by better overseas performance. Operating margin in the overseas segment stood at 25.4% whereas Standalone operating margin also improved 190bp YoY to 20.4%.
- Overseas & exports business growth led by currency stabilization: Revenue from the overseas & exports business grew 67% YoY, as the currency in the key markets of Nigeria and Turkey stabilized and also as the new facility at South Africa started contributing to revenue from 1QFY18.
Solar Industries India Limited is an explosives manufacturing company. The Company manufactures, supplies and exports industrial explosives and initiating systems. It manufactures various explosives products, such as Slurry and emulsion base explosives, bulk explosives, detonators, pentaerythritol tetranitrate (PETN) and accessories. The Company's products include Large Dia slurry Explosives, Small Dia Emulsion, Small Dia Slurry Explosives, Solar Detonators, Supreme Detonators, Supreme Electric Detonators, Economic Sod, Eco Det, Cord Relay, Cast Booster and Detonating Fuse. Its products are used across mining and infrastructure sectors. It also offers high melting explosive (HMX) and HMX Compounded products to the defense sector. The Company has 25 manufacturing plants eight states in India and three in overseas locations. The Company offers its products to 42 countries across the globe. The Company has manufacturing facilities at Zambia, Nigeria and Turkey.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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