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

SOLAR INDUSTRIES INDIA LTD Result Update (CONSOLIDATED BASIS): Q1 FY19 Index Details Stock Data Sector Specialty Chemicals BSE Code 532725 Face Value 2.00 52wk. High / Low (Rs.) 1320.00/891.00 Volume (2wk. Avg.) 2721 Market Cap (Rs. in mn.) 99459.50 Annual Estimated Results(A*: Actual / E*: Estimated) YEARS FY18A FY19E FY20E Net Sales 19514.70 22051.61 24256.77 EBITDA 4236.50 4763.16 5195.81 Net Profit 2205.50 2478.31 2764.23 EPS 24.37 27.38 30.54 P/E 45.10 40.13 35.98 Shareholding Pattern (%) As on Jun 2018 As on Mar 2018 Promoter 73.15 73.15 Public 26.85 26.85 Others - - 1 Year Comparative Graph CMP: 1099.00 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. 695.70 mn against Rs. 547.80 mn in Q1 FY18, an increase of 27.00%. Consolidated revenue for the quarter stood at Rs. 6147.20 mn from Rs. 5020.50 mn in the corresponding period of previous year, up by 22.44%. During the quarter, consolidated EBIDTA is Rs. 1358.80 mn as against Rs. 1034.60 mn in Q1 FY18, grew by 31.34%. During Q1 FY19, consolidated PBT stood at Rs. 1099.90 mn from Rs. 859.90 mn in Q1 FY18, an increase of 27.91%. EPS of the company stood at Rs. 7.69 a share during the quarter, as against Rs. 6.05 per share over previous year period. The company's order book currently stood at Rs 11537 mn, which includes Rs.8057 mn from Coal India, Rs. 2460 mn from defence business contracts and Bulk + Accessories valuing Rs. 1020 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 1099.00 99459.50 26.00 42.26 9.18 300.00 Premier Explosives Ltd 190.00 2021.10 6.80 27.94 1.03 25.00 Keltech Energies Ltd 1060.00 1060.00 70.40 15.04 2.01 25.00

QUARTERLY HIGHLIGHTS (CONSOLIDATED BASIS) Results updates- Q1 FY19, (Rs in mn) Jun-18 Jun-17 % Change Revenue 6147.20 5020.50 22.44% Net Profit 695.70 547.80 27.00% EPS 7.69 6.05 27.00% EBIDTA 1358.80 1034.60 31.34% The company s net profit stood at Rs. 695.70 million against Rs. 547.80 million in the corresponding quarter ending of previous year, an increase of 27.00%. Revenue for the quarter stood at Rs. 6147.20 million as against Rs. 5020.50 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 7.69 a share during the quarter, as against Rs. 6.05 per share over previous year period. Profit before interest, depreciation and tax is Rs. 1358.80 million as against Rs. 1034.60 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 3349.40 2813.40 19% Purchase of stock in trade 130.10 187.40-31% Employee benefits expense Depreciation & amortisation expense 440.60 358.10 23% 139.70 125.20 12% Other expenses 939.00 617.70 52%

Order Book Status: The company's order book currently stood at Rs 11537 million, which includes Rs.8057 millions from Coal India, Rs. 2460 million from defence business contracts and Bulk + Accessories valuing Rs. 1020 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.

FINANCIAL HIGHLIGHT (CONSOLIDATED BASIS) Balance Sheet as of March 31, 2017-2020E (A*- Actual, E* -Estimations & Rs. In Millions) FY17A FY18A FY19E FY20E ASSETS 1) Non-Current Assets a)property, Plant And Equipment 7617.30 8936.70 10277.21 11613.24 b)capital Work In Progress 909.30 968.40 1055.56 1118.89 c) Intangible Assets 69.00 214.70 362.84 406.38 d) Intangible assets under development 0.00 105.60 118.27 127.73 e) Goodwill 81.40 81.40 91.17 99.83 f) Financial Assets i) Investments 35.00 30.40 34.96 39.33 ii) Loans 763.00 798.00 849.87 892.36 iii) Other Financial Assets 259.50 305.10 353.92 398.16 g) Deferred Tax Assets(Net) 55.70 71.40 84.25 94.78 h) Current Tax Assets 22.00 39.70 50.02 56.27 i) Other Non-Current Assets 141.70 211.00 246.03 278.01 Sub - Total Non- Current Assets 9953.90 11762.40 13278.06 14846.99 2) Current Assets a) Inventories 1810.70 2324.20 2684.45 3060.27 b) Financial Assets i) Investments 497.50 140.10 147.11 153.72 ii) Trade Receivables 3190.60 3635.80 4072.10 4458.95 iii) Cash and bank equivalents 259.30 524.90 576.64 628.54 iv) bank loans 134.60 169.70 197.70 229.73 v) Loans 257.60 117.00 131.04 144.14 vi) Other financial assets 585.00 534.40 579.82 628.53 c) Other Current Assets 584.00 726.60 893.72 1057.81 Sub - Total Current Assets 7319.30 8172.70 9282.57 10361.69 3) Non current - assets held for sale 0.00 16.00 0.00 0.00 Total Assets (1+2+3) 17273.20 19951.10 22560.64 25208.68 EQUITY AND LIABILITIES 1) EQUITY a) Equity Share Capital 181.00 181.00 181.00 181.00 b) Other Equity 9104.90 10657.60 12682.54 14786.58 Total Equity 9285.90 10838.60 12863.54 14967.58 2) Minority interest 402.60 473.80 530.66 589.03 3) Non Current Liabilities a) Financial liabilities i) Borrowings 1479.60 1632.70 1763.32 1869.11 ii) Other Financial Liabilities 0.00 328.30 256.07 233.03 b) Provisions 0.00 1.80 2.03 2.25 c) Deferred Tax Liabilities (Net) 840.10 1010.70 1126.93 1222.72 d) Other Non -Current Liabilities 0.00 5.40 4.94 4.69 Sub - Total Non Current Liabilities 2319.70 2978.90 3153.29 3331.80 4) Current Liabilities a) Financial liabilities i) Borrowings 2609.90 2245.80 2037.73 1892.77 ii) Trade Payables 893.20 1271.60 1583.14 1861.28 iii) Other Financial Liabilities 1233.90 1330.60 1417.09 1466.69 b) Provisions 27.50 43.20 51.19 58.87 c) Current Tax Liabilities 14.00 16.20 17.17 18.29 d) Other Current Liabilities 486.50 752.40 906.83 1022.37 Sub - Total Current Liabilities 5265.00 5659.80 6013.15 6320.27 Total Equity and Liabilities (1+2+3+4) 17273.20 19951.10 22560.64 25208.68

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 17112.80 19514.70 22051.61 24256.77 Other Income 132.10 121.00 136.73 150.40 Total Income 17244.90 19635.70 22188.34 24407.18 Expenditure -13873.90-15399.20-17425.18-19211.36 Operating Profit 3371.00 4236.50 4763.16 5195.81 Interest -387.40-327.20-304.30-289.08 Gross profit 2983.60 3909.30 4458.86 4906.73 Depreciation -268.90-512.90-594.96-678.26 Profit Before Tax 2714.70 3396.40 3863.90 4228.47 Tax -767.40-1060.50-1249.97-1340.43 Profit After Tax 1947.30 2335.90 2613.93 2888.05 Minority Interest -81.90-130.40-135.62-123.82 Net Profit 1865.40 2205.50 2478.31 2764.23 Equity capital 181.00 181.00 181.00 181.00 Reserves 9104.90 10657.60 12682.54 14786.58 Face value 2.00 2.00 2.00 2.00 EPS 20.61 24.37 27.38 30.54 Quarterly Profit & Loss Statement for the period of 31 st Dec, 2017 to 30 th Sep, 2018E Value(Rs.in.mn) 31-Dec-17 31-Mar-18 30-Jun-18 31-Sep-18E Description 3m 3m 3m 3m Net sales 4656.80 5753.40 6147.20 5089.88 Other income 26.20 37.60 76.60 59.75 Total Income 4683.00 5791.00 6223.80 5149.63 Expenditure -3613.70-4572.00-4865.00-4006.25 Operating profit 1069.30 1219.00 1358.80 1143.38 Interest -106.40-83.80-119.20-126.35 Gross profit 962.90 1135.20 1239.60 1017.03 Depreciation -137.10-123.00-139.70-148.08 Profit Before Tax 825.80 1012.20 1099.90 868.95 Tax -249.00-334.40-370.70-278.15 Profit After Tax 576.80 677.80 729.20 590.80 Minority Interest -35.30-19.00-33.50-35.18 Net Profit 541.50 658.80 695.70 555.62 Equity capital 181.00 181.00 181.00 181.00 Face value 2.00 2.00 2.00 2.00 EPS 5.98 7.28 7.69 6.14

Ratio Analysis Particulars FY17A FY18A FY19E FY20E EPS (Rs.) 20.61 24.37 27.38 30.54 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) 53.32 45.10 40.13 35.98 ROE (%) 20.97% 21.55% 20.32% 19.30% ROCE (%) 27.21% 32.27% 32.15% 31.36% Debt Equity Ratio 0.44 0.36 0.30 0.25 EV/EBITDA (x) 30.45 24.20 21.49 19.67 Book Value (Rs.) 102.61 119.76 142.14 165.39 P/BV 10.71 9.18 7.73 6.64 Charts

OUTLOOK AND CONCLUSION At the current market price of Rs.1099.00, the stock P/E ratio is at 40.13 x FY19E and 35.98 x FY20E respectively. Earning per share (EPS) of the company for the earnings for FY19E and FY20E is seen at Rs. 27.38 and Rs. 30.54 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 21.49 x for FY19E and 19.67 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 2018-19 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.

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 2018-19. 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 2020. 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 25000 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 2047. 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.

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 2020. 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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