MOSL: SOLAR INDUSTRIES (Neutral)-Results exceed expectations led by robust overseas performance
Solar Industries: Results exceed expectations led by robust overseas performance
(SOIL IN, Mkt Cap USD1.5b, CMP INR1065, TP INR1100, 3% Upside, Neutral)
- Operational performance ahead of expectations: Consol. revenue rose 30% YoY to INR5.8b (est. of INR5.0b) in 4QFY18. EBIDTA grew 28.5% YoY to INR1.2b (est. of INR951m), with the EBIDTA margin of 20.5% (-30bps YoY) ahead of our estimate of 19.1%. Adj. net profit rose 21.1% YoY to INR678m (est. of INR547m). Performance beat was driven by a better-than-expected performance from the overseas and exports business segment. For FY18, revenue stood at INR19.2b (+21.3% YoY), operating profit at INR4.1b (+27.1% YoY) and adj. PAT at INR2.3b (+17.3% YoY).
- Overseas and exports segment drives revenue performance: Consol. revenue was driven by a robust performance of the overseas and export segment (+81% YoY). On the domestic front, 4Q saw robust demand from the infra and housing space (+29.3% YoY), whereas revenue from CIL remained muted (+3.2% YoY) due to weak realization on account of soft AN prices (-5% YoY). Realization fell (-2% YoY) in the bulk segments, as lower raw material cost (ammonium nitrate) was passed on to consumers.
- Defence business to witness traction in FY19: Revenue from the Defence business stood at INR187m (v/s INR29m in 4QFY17), driven by a pick-up in execution of orders in hand. SOIL expects revenue contribution to reach INR2b in FY19 from INR378m in FY18. Defence order backlog stands at INR2.6b, and SOIL has participated in RFP for three new products tenders, which it expects to materialize in FY19.
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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