SOLAR INDUSTRIES INDIA LTD Result Update (CONSOLIDATED BASIS): Q1 FY19

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1 SOLAR INDUSTRIES INDIA LTD Result Update (CONSOLIDATED BASIS): Q1 FY19 Index Details Stock Data Sector Specialty Chemicals BSE Code Face Value wk. High / Low (Rs.) / Volume (2wk. Avg.) 2721 Market Cap (Rs. in mn.) Annual Estimated Results(A*: Actual / E*: Estimated) YEARS FY18A FY19E FY20E Net Sales EBITDA Net Profit EPS P/E Shareholding Pattern (%) As on Jun 2018 As on Mar 2018 Promoter Public Others Year Comparative Graph CMP: SEP 24 th, 2018 Overweight SYNOPSIS ISIN: INE343H01029 Solar Industries India Ltd (SIIL) is India s largest manufacturer and exporter of Explosive and Initiating System providing complete range of Industrial Explosives. During Q1 FY19, consolidated net profit stood at Rs mn against Rs mn in Q1 FY18, an increase of 27.00%. Consolidated revenue for the quarter stood at Rs mn from Rs mn in the corresponding period of previous year, up by 22.44%. During the quarter, consolidated EBIDTA is Rs mn as against Rs mn in Q1 FY18, grew by 31.34%. During Q1 FY19, consolidated PBT stood at Rs mn from Rs mn in Q1 FY18, an increase of 27.91%. EPS of the company stood at Rs a share during the quarter, as against Rs per share over previous year period. The company's order book currently stood at Rs mn, which includes Rs.8057 mn from Coal India, Rs mn from defence business contracts and Bulk + Accessories valuing Rs mn from SCCL s. SOLAR INDUSTRIES INDIA LTD S&P BSE SENSEX Nets sales and PAT of the company are expected to grow at a CAGR of 11% and 13% over 2017 to 2020E, respectively. PEER GROUPS CMP MARKET CAP EPS(TTM) P/E (X)(TTM) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Solar Industries India Ltd Premier Explosives Ltd Keltech Energies Ltd

2 QUARTERLY HIGHLIGHTS (CONSOLIDATED BASIS) Results updates- Q1 FY19, (Rs in mn) Jun-18 Jun-17 % Change Revenue % Net Profit % EPS % EBIDTA % The company s net profit stood at Rs million against Rs million in the corresponding quarter ending of previous year, an increase of 27.00%. Revenue for the quarter stood at Rs million as against Rs million, when compared with the prior year period. Reported earnings per share of the company stood at Rs a share during the quarter, as against Rs per share over previous year period. Profit before interest, depreciation and tax is Rs million as against Rs million in the corresponding period of the previous year, an increase of 31.34%. Break up of Expenditure Break up of Expenditure Cost of materials consumed Q1 FY19 Value in Rs. Million Q1 FY18 % Change % Purchase of stock in trade % Employee benefits expense Depreciation & amortisation expense % % Other expenses %

3 Order Book Status: The company's order book currently stood at Rs million, which includes Rs.8057 millions from Coal India, Rs million from defence business contracts and Bulk + Accessories valuing Rs millions from SCCL s. COMPANY PROFILE Solar Industries India Ltd Founded in 1995, by its founder Shri Satyanarayan Industrial Explosives to produce cartridge explosives. Today, under the name solar industries India Ltd. (SIIL), the company has grown to become India s largest manufacturer of industrial explosives and Explosive initiating systems and spreading its presence to Global markets. Solar headquartered at Nagpur offers high- quality and services that are backed by stringent safety standards, a robust infrastructure, and a proven quality management system. The company supports major mining & infrastructure companies including the recognized names like coal Inida limited, singareni collieries, Vedanta, Reliance, Jindal, and many more.

4 FINANCIAL HIGHLIGHT (CONSOLIDATED BASIS) Balance Sheet as of March 31, E (A*- Actual, E* -Estimations & Rs. In Millions) FY17A FY18A FY19E FY20E ASSETS 1) Non-Current Assets a)property, Plant And Equipment b)capital Work In Progress c) Intangible Assets d) Intangible assets under development e) Goodwill f) Financial Assets i) Investments ii) Loans iii) Other Financial Assets g) Deferred Tax Assets(Net) h) Current Tax Assets i) Other Non-Current Assets Sub - Total Non- Current Assets ) Current Assets a) Inventories b) Financial Assets i) Investments ii) Trade Receivables iii) Cash and bank equivalents iv) bank loans v) Loans vi) Other financial assets c) Other Current Assets Sub - Total Current Assets ) Non current - assets held for sale Total Assets (1+2+3) EQUITY AND LIABILITIES 1) EQUITY a) Equity Share Capital b) Other Equity Total Equity ) Minority interest ) Non Current Liabilities a) Financial liabilities i) Borrowings ii) Other Financial Liabilities b) Provisions c) Deferred Tax Liabilities (Net) d) Other Non -Current Liabilities Sub - Total Non Current Liabilities ) Current Liabilities a) Financial liabilities i) Borrowings ii) Trade Payables iii) Other Financial Liabilities b) Provisions c) Current Tax Liabilities d) Other Current Liabilities Sub - Total Current Liabilities Total Equity and Liabilities ( )

5 Annual Profit & Loss Statement for the period of 2017 to 2020E Value(Rs.in.mn) FY17A FY18A FY19E FY20E Description 12m 12m 12m 12m Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross profit Depreciation Profit Before Tax Tax Profit After Tax Minority Interest Net Profit Equity capital Reserves Face value EPS Quarterly Profit & Loss Statement for the period of 31 st Dec, 2017 to 30 th Sep, 2018E Value(Rs.in.mn) 31-Dec Mar Jun Sep-18E Description 3m 3m 3m 3m Net sales Other income Total Income Expenditure Operating profit Interest Gross profit Depreciation Profit Before Tax Tax Profit After Tax Minority Interest Net Profit Equity capital Face value EPS

6 Ratio Analysis Particulars FY17A FY18A FY19E FY20E EPS (Rs.) EBITDA Margin (%) 19.70% 21.71% 21.60% 21.42% PBT Margin (%) 15.86% 17.40% 17.52% 17.43% PAT Margin (%) 11.38% 11.97% 11.85% 11.91% P/E Ratio (x) ROE (%) 20.97% 21.55% 20.32% 19.30% ROCE (%) 27.21% 32.27% 32.15% 31.36% Debt Equity Ratio EV/EBITDA (x) Book Value (Rs.) P/BV Charts

7 OUTLOOK AND CONCLUSION At the current market price of Rs , the stock P/E ratio is at x FY19E and x FY20E respectively. Earning per share (EPS) of the company for the earnings for FY19E and FY20E is seen at Rs and Rs respectively. Nets sales and PAT of the company are expected to grow at a CAGR of 11% and 13% over 2017 to 2020E respectively. On the basis of EV/EBITDA, the stock trades at x for FY19E and x for FY20E. Price to Book Value of the stock is expected to be at 7.73 x and 6.64 x for FY19E and FY20E respectively. Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment. INDUSTRY OVERVIEW Increase in housing and infrastructure projects, and improvement in the public transportation facilities including railways and roadways, is expected to give a boost to the demand of the Industrial Explosives industry. Also, a steady growth in the coal production is expected to lead the growth path of the industrial explosives market. Moreover, India is anticipated to be one of the most important country for the industrial explosives amongst the APAC region. The global economy is expected to grow at 3.7% in 2018 with European Central Bank and Bank of Japan likely to move towards quantitative tightening. Also, the growth rate is in line with the global growth momentum, and is influenced by positive impact of recently approved US tax policy changes. The Indian economy is expected to grow at a rate of 7.2% in mainly due to improvements in world growth, stability in GST, recovery in investment levels, and various structural reforms. India is expected to be the second largest economy of world by 2050 and the world s most populous country by 2024.

8 Key Growth Drivers: Road & Infrastructure: Infrastructure sector is one of the key drivers of Indian economy. Indian infrastructure industry is one of the main consumers of Indian explosives. The growth in the number of various infrastructure projects, such as highways, roads, houses and tunnels will give a boost to the industrial explosives industry. The pace of road construction is expected to achieve 30 KMs a day by end of this fiscal and the Ministry of Road, Highways and Shipping have targeted to do 40 KMs a day in The government is also implementing 1470 highway projects requiring an investment of Rs 4.32 lakhs Crores across the country. These highways have an ongoing length of 44,108 km, out of which 343 highway projects are pending. The projects are expected to be completed by the end of Housing: The Housing sector is one of the biggest demand driver for the cement and quarrying stone industry. Housing sector accounts for over 67% of total cement industry. Government of India has launched various programmes to provide the poor with good living habitat. Some of the government s missions include, Pradhan Mantri Awas Yojana (PMAY), Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and Smart City Project. The government plans to introduce an Affordable Housing Fund of Crores under National Housing Bank. Mining: India has a huge potential for mining with leases provided for 20 to 30 years. India is a producer of 88 minerals, where, 4 are fuel related, 10 metallic minerals, 50 non-metallic minerals and 24 minor minerals. India is the third largest producer of coal. Explosives are used in the mining industry for the purpose of blasting. The Mining Sector in India is the largest consumer of Explosives and accounts for 80% of the total explosives consumed. Coal mining is most dominant consumer of explosives accounting for 70% of the total explosives produced in India. The Indian coal sector is expected to be at the center stage with coal s share in energy mix not decreasing below 46% in Opportunities: 1. The Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in the mining sector and exploration of metal and non-metal ores under the automatic route, which will propel growth in the sector. 2. Moreover, allowing 100 per cent FDI in commercial coal mining is likely to open the doors for global coal miners to invest in India, which can benefit the sector in the long run through increased technology adoption and mechanization in mining operations. 3. The end of petroleum cars will impact a significant part of platinum demand: almost half of global platinum production is used in catalytic converters to remove diesel pollution.

9 4. Opportunities abound both for India Inc. in meeting Government of India s defence requirements, and for the Government in achieving its aspiration of autonomy in defence supply through the development of a home market defence industry. Future Outlook: The Company is well placed in the Industry to take advantage of the growth in demand for explosives in the Country. The Company expects strong demand to come from increased mining activity and enormous emphasis on infrastructure development particularly sectors like road, housing, ports, canals and tunnels by Govt. of India which would give a boost to the demand of explosives. The Company expects 8-10% increase in the demand of explosives in the coming years and with its complete product range and geographic spread in the Country. The Management is working in expanding its footprint to 10 countries globally and to cross Rs 1000 Crores turnover from exports and overseas operations by The Management visualizes enormous opportunities coming up in the Defence sector and is well positioned to take advantage of the huge demand that could arise in the defence sector and the Govt. of India s policy to encourage Make in India.

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