Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Solar Industries - Improves operational performance - ICICI Securities

Posted On: 2020-11-18 02:18:09

Solar Industries' (SOIL) delivered a beat on standalone as well as consolidated revenue and EBITDA estimates for Q2FY21. EBITDA margins were ~200bps higher than expected in standalone as well as overseas operations. Standalone gross margins continue to expand (up 300bps QoQ in Q2FY21) following a 400bps expansion witnessed in Q1FY21. Standalone revenues are up 6% YoY despite a muted housing and infra segment growth. Large part of the operational beat can be explained by 32% YoY increase in overseas and export operations (catering to overseas). Two contracts in the current quarter - i) multimodal hand grenade (Rs4.1bn) and ii) with Singareni collieries (SCCL) worth Rs4.5bn - helped replenish the defence and mining orderbooks respectively. Upgrade to HOLD from REDUCE with a revised target price of Rs1,006 (previously: Rs 924/share).

- Standalone revenues take support of exports, margins continue to surprise. Gross margins at 41% were at 5-6-year high. This is despite no significant tailwind from the trade and infra segments, the traditional margin contributors. Higher exports would have driven margin trends in the standalone segment. Buildup in trade receivables (Rs550mn) and working capital investment in H1FY21 (Rs840mn) comes as a negative surprise.

- Overseas business turnaround aided topline/margins. Consolidated revenues increased 16% YoY. This has been helped by 35% YoY growth in subsidiary revenues. We would continue to highlight the significant triggers towards profitability improvement that overseas operations exercise. What stands out from FY20 annual report analysis is PAT loss of ~Rs800mn in South Africa and Australia combined. Excluding these two locations, overseas business PAT was almost flat YoY at Rs1.3bn. Despite business turbulence in Turkey (further impacted by currency depreciation), the turnaround across new locations amidst global business tailwinds augurs well for SOIL profitability. The translation losses continue to get recorded as a part of Other Comprehensive Income (OCI) - Rs 167mn of OCI losses were seen in Q2FY21. Also, despite improvement in revenue and profitability, the operations continues to draw working capital support.

- Multimodal hand grenade order helped defence orderbook. The defence orderbook expanded to Rs7bn from Rs3bn QoQ. Defence revenues are also seen to be getting back into growth trajectory with ~Rs804mn of execution in H1FY21. Higher defence execution can lead to margins exceeding our expectations. SOIL has been highlighting: i) successful test of Pinaka rockets (integrated by SOIL) by Indian Army, and ii) prospective order inflow form multimodal hand grenade.

- Upgrades to HOLD from Reduce. As we factor-in higher margin possibility from overseas business, the key execution challenge for the company will be to offset the weakness in coal (structural) and trade and infra (GoI budget-driven) segments. We value SOIL at 26x FY22E P/E.

Shares of SOLAR INDUSTRIES INDIA LTD. was last trading in BSE at Rs.978.05 as compared to the previous close of Rs. 1003.1. The total number of shares traded during the day was 1486 in over 282 trades.

The stock hit an intraday high of Rs. 1005.75 and intraday low of 978.05. The net turnover during the day was Rs. 1472672.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

What do brokerages say on Burger King India Limited's IPO?

The Phoenix Mills - Potential fund infusion may usher in growth - ICICI Securities

Godrej Agrovet - Beneficiary of 60% increase in palm oil prices - ICICI Securities

Automobiles (wholesale) - Wholesale dispatches rise amidst modest retail trends - ICICI Securities

Oil & Gas - Sector Update - Dec 2020 - ICICI Direct

Phoenix Mills (Buy): Asset monetisation at favourable terms... - ICICI Direct

Aditya Makharia's views on November Auto Sales Number for November 2020 - HDFC Securities

Burger King India - IPO Review - ICICI Direct

Quant Pick - LIC Housing Finance - ICICI Direct

Tech Mahindra - Analyst Meet Update - ICICI Direct

Gladiator Stocks - Crompton Greaves Consumer Electricals - ICICI Direct

Derivatives Monthly Outlook - Nifty support at 12800 for ongoing momentum...

Quant Pick - Sun Pharmaceuticals - ICICI Direct

Monetary Policy - Expectation from YES Securities

Sector Update on Asset Management Companies - Subdued but improvement expected - HDFC Securities

Pre Monetary Policy View - Dec, 2020 - Lakshmi Iyer, President and CIO (Debt) & Head Products, Kotak Mutual Fund

Maintain REDUCE on Siemens - Smart recovery priced in - HDFC Securities

Banking Sector Credit Trends - Growth continues to moderate - HDFC Securities

Q2 FY21 GDP: Light at the end of the tunnel - YES Securities

Siemens - Q4 FY20 Result Update - YES Securities

Super action in Home Loans - SBIN, ICICIBC, AXSB, HDFC and LICHF gaining share - YES Securities

Polymer price tracker - Dec 1, 2020 - PVC prices continue to tread higher - ICICI Securities

Bajaj Finance - Company Update - Dec 2020 - ICICI Direct

Siemens Ltd - Healthy revival in orders and margins - ICICI Securities

Covid Recovery Pulse - Nov 30, 2020 - Festive positivity continues in auto retails, e-way bill generation improves...

Derivatives Weekly View (November 27): Momentum expected to continue in broader markets with Nifty support at 12800...

Derivatives Strategy - Positional Option - ICICI Direct

Preview on RBI Monetary Policy - December 2020 - Shanti Ekambaram, Group President - Consumer Banking, Kotak Mahindra Bank

10 things you should know about Burger King India Limited

Views of HDFC Securities and Acuité Ratings & Research on Q2FY21 GDP Numbers

Rollover Report for November 2020 - December 2020: Angel Broking

Initiating Coverage on Godrej Properties - The housing factory - HDFC Securities

Burger King IPO - Angel Broking

Rollover Analysis - Record foreign inflows pushes Nifty to 13k - YES Securities

Ceramic tiles industry - Market share gains sustain for top branded players - ICICI Securities

Gas sector - CGD: Competition to hit margins, volumes and lead to derating - ICICI Securities

Cement - Prices resilient in Q3; consensus upgrades to continue - ICICI Securities

Specialty chemicals - Price trend in Sep-20 - ICICI Securities

Timken India - Q2FY21 Company Update - ICICI Direct

Upgrade in target price of IDFC First Bank - Angel Broking

Laurus Labs stake acquisition in Richore Lifesciences - Angel Broking

Shares of Lakshmi Vilas Bank (LVB) suspended from trading - Angel Broking

Initiating Coverage on Sundram Fasteners - Fastening growth - HDFC Securities

Astral Poly Technik - Scalability to further improve with storage tanks foray - ICICI Securities

Vardhman Special Steel - Q2FY21 Company Update - ICICI Direct

Initiating Coverage - Advanced Enzyme Technologies - ICICI Direct

L&T - Secures Large Contract - Nov 25, 2020 - Angel Broking

Alembic Pharmaceuticals - Tentative Approval for JV - Angel Broking

Drug launch by Lupin - Tacrolimus Capsules - Angel Broking

Gujarat Gas - Nov 25, 2020 - Angel Broking

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019