Solar Industries: Elara lifts target to ₹21,290 post Q4FY26

Elara retains ‘Buy’ and raises valuation multiple

Elara Securities retained its ‘Buy’ rating on Solar Industries India after the company’s Q4FY26 results and raised its target price sharply. The brokerage lifted the target to ₹21,290 from ₹15,450 earlier. Elara also increased its valuation multiple to 65x March FY28E earnings from 55x previously. In its note, the brokerage described the defence-focused company as “firing on all cylinders,” pointing to execution strength and a stronger medium-term earnings profile. The report positioned Solar Industries as a beneficiary of rising defence spending, supported by its participation across multiple categories.

Stock reaction and the immediate market read

Solar Industries shares were trading higher after the note, reflecting the supportive brokerage stance. At 10:31 AM, the stock was at ₹17,555, up 1.39% from the previous close. The move followed a quarter that was described as strong by the brokerage, with execution in defence and international businesses highlighted as key drivers. The market focus, however, was not limited to the reported quarter. Guidance for FY27 revenue, defence segment growth, and the scale of the order book were central to how investors assessed the update.

Q4FY26 revenue rises 41% on defence and exports

Solar Industries reported Q4FY26 revenue of ₹3,050 crore, up 41% year-on-year, supported by strong execution in defence and international segments. International business, which contributed 33% of quarterly revenue, rose 32% year-on-year to ₹1,060 crore. Defence revenue, also contributing 33% of Q4 revenue, surged 134% year-on-year to ₹1,000 crore. The segment mix in the quarter was repeatedly flagged in the provided commentary as an important element behind both growth and profitability.

EBITDA grows 53% and margins expand 210 bps

Profitability improved alongside the revenue expansion. EBITDA in Q4FY26 stood at ₹820 crore, up 53% year-on-year. EBITDA margin expanded 210 basis points year-on-year to 27.1%. Elara attributed the margin improvement to better gross margins and the execution of defence and international business orders. The brokerage added that the company is targeting to maintain EBITDA margins at current levels in FY27, based on management commentary.

Net profit beats estimates; Q4 profit at ₹550 crore

Along with operating performance, Q4FY26 net profit was reported at ₹550 crore versus ₹322 crore in the year-ago period, a jump of about 71% year-on-year. The profit number also beat the consensus estimate of ₹477 crore by 15.3%, as cited in the provided market snapshot. The combination of faster growth in defence revenue, sustained international contribution, and margin expansion formed the core of the quarter’s beat versus expectations.

FY27 guidance: ₹14,000 crore revenue and ₹4,500 crore defence

Management guided for FY27 revenue of ₹14,000 crore, supported by what was described as a healthy order book of ₹21,300 crore, while maintaining current margins. Within that outlook, the company guided for FY27 defence revenue of ₹4,500 crore. Multiple sections of the provided text also framed this as a meaningful step-up from an earlier FY26 defence guidance of ₹3,000 crore. Separately, another excerpt presented the defence target as moving from ₹3,000 crore to ₹4,500 crore for FY27, describing it as faster project execution and a clearer ramp-up.

Order book strength: defence dominates at about ₹18,000 crore

The company’s order book was stated at ₹21,300 crore, of which around ₹18,000 crore is defence-related. The defence order book was described as mainly driven by Pinaka orders and upcoming opportunities in similar systems. In another excerpt, defence order backlog was also referenced at around ₹18,000 crore, reinforcing the centrality of defence visibility to the FY27 narrative. The order book figures were repeatedly presented as the main support for the higher revenue and segment guidance.

Capex plan: ₹2,050 crore earmarked for FY27

To back the expansion plans implied by the guidance, the company earmarked capex of ₹2,050 crore for FY27. The provided summary described this as a 32% increase. The capex plan was positioned as part of the company’s push to scale capacity and execution for defence and export opportunities. While the inputs do not provide a detailed breakdown of spending, the magnitude was linked to the broader growth roadmap.

Elara’s medium-term view: 30% earnings CAGR and strong returns

Elara’s report included longer-term estimates beyond FY27 guidance. The brokerage wrote that it expects an earnings CAGR of 30% in FY26 to FY29E. It also projected average ROE and ROCE of 30% and 36%, respectively, for FY27 to FY29E. Elara added that Solar Industries is present in all four categories and has proven capability in three out of four segments, which it believes positions the company to benefit from global defence spending.

Key numbers at a glance

Why the guidance and order book matter for investors

The FY27 guidance and order book help explain why the brokerage increased its target price and valuation multiple. A ₹14,000 crore revenue guide, alongside an order book of ₹21,300 crore, indicates strong near-term visibility based on the information shared. The defence share of the order book, at around ₹18,000 crore, also aligns with the company’s FY27 defence revenue guidance of ₹4,500 crore. In the reported quarter, defence and international each contributed 33% of revenue, which was cited as supportive of margin expansion. The company’s stated intent to maintain EBITDA margins at current levels in FY27 adds another data point for investors tracking execution and mix.

Conclusion

Solar Industries’ Q4FY26 performance, margin expansion, and raised FY27 guidance formed the basis for Elara’s decision to retain a ‘Buy’ and lift the target price to ₹21,290. The key near-term markers remain FY27 revenue of ₹14,000 crore, defence revenue guidance of ₹4,500 crore, an order book of ₹21,300 crore, and a capex plan of ₹2,050 crore. Investors are likely to track how defence-led execution, particularly orders linked to systems like Pinaka, converts into reported revenue while margins are maintained at current levels.