Stock to Buy: Global brokerage turns bullish on this defence stock after Q2 results, sees up to 36% upside
Defence Stock to Buy: Shares of Solar Industries India Ltd were trading higher on Tuesday after the company reported a strong numbers for the September quarter (Q2FY26). Global brokerage Goldman Sachs reiterated its ‘Buy’ rating on the stock and set a target price of Rs 18,215, implying a potential 36 per cent upside from current levels.
Record revenue from defence and international segments
The company reported its highest-ever revenue from the defence and international divisions during the quarter.
International business revenue crossed Rs 960 crore, up 21 per cent year-on-year.
Defence segment revenue exceeded Rs 500 crore, marking a 57 per cent YoY growth.
Analysts attributed the strong growth to the government’s ‘Atmanirbhar Bharat’ initiative and India’s increasing focus on defence exports.
Profitability improves on margin expansion
Solar Industries’ EBITDA rose 24 per cent YoY to Rs 550 crore, while margins expanded by 172 basis points to 26.5 per cent.
The company said its improved profitability was driven by operational efficiencies, a favourable product mix, and high-margin defence contracts.
Robust order book ensures revenue visibility
The company’s order book rose to Rs 17,100 crore, with nearly Rs 15,500 crore contributed by the defence business.
Analysts noted that this provides strong visibility for future revenue growth, supported by long-term contracts in both domestic and international markets.
Capex and working capital trends remain steady
Solar Industries’ capex during H1FY26 stood at Rs 760 crore, compared to Rs 1,010 crore in FY25. The company continues to invest in expanding capacity and modernising its production facilities.
Working capital days increased slightly from 85.2 days in Q2FY25 to 97.5 days as of September 2025, largely due to execution of larger international and defence contracts.
Should you buy, sell or hold: Goldman Sachs retains positive view
In its latest research note, Goldman Sachs said Solar Industries remains a key beneficiary of India’s defence manufacturing and export push.
The brokerage highlighted the company’s growing portfolio in advanced systems like the Pinaka multi-barrel rocket launcher and export-linked projects as major growth drivers.
“Solar Industries continues to demonstrate strong execution and margin stability, positioning it well for sustained earnings growth,” Goldman Sachs said, maintaining a ‘Buy’ rating on the stock.
Stock performance snapshot
Solar Industries’ shares were trading 3.85 per cent higher at Rs 13,927 at 12 pm on Tuesday following the results. The stock has declined 9 per cent in the past three months, but remains up 37 per cent so far in 2025.
Over the longer term, the stock has delivered 121 per cent returns in two years and 226 per cent in three years. Its 52-week range stands between Rs 8,479.30 and Rs 17,805.