Solar Industries: Elara lifts target to ₹21,290

What changed after Q4FY26

Elara Securities retained its ‘Buy’ rating on Solar Industries India after the company’s Q4FY26 results and raised its target price. The brokerage described the defence-focused growth story as strong, backed by execution in defence and international businesses. Elara increased its target price to ₹21,290 from ₹15,450 earlier. The note also changed its valuation approach, valuing the stock at 65x March FY28E earnings, compared with 55x earlier. The revision follows what the brokerage called a strong quarter and clearer visibility from management guidance.

Why the defence positioning matters

Elara’s thesis rests heavily on Solar Industries’ presence across key defence categories. The brokerage said the company is present in all four categories, with proven capability in three out of four segments, positioning it as a potential beneficiary of global defence spending. The report also laid out longer-term expectations for profitability and returns. Elara expects an earnings CAGR of 30% for FY26–29E. It also expects average ROE of 30% and ROCE of 36% in FY27–29E.

Q4FY26 business mix highlighted by Elara

The brokerage pointed to two operating drivers in Q4: defence and international business. International business contributed 33% to revenue and rose 32% to ₹1,060 crore in the quarter. Defence revenue also contributed 33% and surged 134% year-on-year to ₹1,000 crore. Elara attributed the quarter’s strength to “robust execution” in these segments. The reported mix underscores how defence and overseas markets are increasingly central in Solar Industries’ growth narrative.

Defence revenue surge and what it signals

Elara flagged defence as the key growth driver for Solar Industries. Defence revenue rose 134% YoY to ₹1,000 crore in Q4 and accounted for 33% of Q4 revenue. Management has guided for FY27 defence revenue of ₹4,500 crore. The guidance, in Elara’s view, is supported by existing orders and ongoing defence programmes. The brokerage’s commentary suggests that execution capacity and delivery timelines will remain critical for sustaining the higher base.

Order book: size, defence share, and key programmes

Solar Industries reported an order book of ₹21,300 crore. Of this, around ₹18,000 crore is defence-related, as per Elara’s note. The brokerage said defence orders are mainly driven by Pinaka orders, with upcoming opportunities in similar systems. The order book split is central to the FY27 revenue and defence guidance that management provided. It also indicates the growing share of defence in the company’s near-term visibility.

FY27 guidance: revenue, margins, and capex

Management guided for FY27 revenue of ₹14,000 crore, backed by the ₹21,300 crore order book, while maintaining current margins. Elara reiterated this guidance in its report and linked it to ongoing execution strength. The company has also earmarked capex of ₹2,050 crore for FY27 to support expansion plans. The capex number is important because the defence business often requires capacity buildout, qualification, and supply-chain readiness. Elara did not indicate a margin reset, instead highlighting management’s intent to maintain existing levels.

Product pipeline: Bhargavastra and ammunition readiness

Elara noted that the Bhargavastra counter-drone system is in the final stage of development. The brokerage said all trials are expected to be completed within CY26. Elara also wrote that the company is nearing readiness for full-scale 155mm ammunition round supplies in the near term. These references add to the broader defence narrative by combining order book visibility with product milestones. However, the timeline cited is limited to trial completion expectations within CY26.

What Elara changed in estimates

Alongside the target price revision, Elara raised its earnings assumptions for the company. The brokerage raised its FY27 and FY28 EPS estimates by 14% and 17%, respectively. This change is consistent with the brokerage’s view of stronger execution and a higher contribution from defence. The revised valuation multiple and higher EPS assumptions together drove the target price increase. The note did not provide a new downside case, focusing instead on guidance-led visibility.

Broader defence stock context mentioned in reports

The broader defence segment remains in focus across brokerages, with multiple firms issuing targets on sector names. A Livemint report cited projections of exports of over ₹172,000 crore over the next five fiscals for five firms: HAL, BEL, BDL, Mazagon Dock Shipbuilders, and L&T’s Precision Engineering & Systems division. Separately, DAM Capital’s sector picks included Solar Industries with a stated price target of ₹17,060, among other listed names. ICICI Securities also listed Solar Industries among its private defence picks with a target price of ₹17,200.

Key numbers at a glance

Market impact and why investors tracked the update

The most immediate market-relevant change in the coverage was the sharp increase in Elara’s target price and the higher valuation multiple applied. For investors, the key data points were the FY27 revenue guidance of ₹14,000 crore, the scale of the order book at ₹21,300 crore, and the defence order book portion of ~₹18,000 crore. The Q4 mix, where both defence and international businesses contributed 33% each, also helps explain why Elara sees multiple growth levers. The increase in EPS estimates for FY27 and FY28 by 14% and 17% is another signal that the brokerage expects earnings upgrades to track execution.

Conclusion

Elara’s updated view on Solar Industries is anchored in Q4FY26 performance, defence-led growth, and management’s FY27 guidance on revenue, defence sales, and capex. The brokerage raised its target to ₹21,290 and maintained a Buy rating, supported by a higher valuation multiple and higher EPS estimates. Over the next year, investors are likely to focus on progress against the ₹14,000 crore FY27 revenue guidance, execution of the ₹18,000 crore defence order book, and milestones such as Bhargavastra trials expected to complete within CY26.