Solar Industries is into making explosives and initiating devices used by infrastructure, mining and construction companies. If you look at the Q1 performance of the company, it indicates a growth of about 33% and the company has about 16 plants in the country with presence in 8 states where mining activities are carried out in a very big way. Apart from that, they have moved into Africa and Europe and that is showing considerable progress. With the kind of requirement which we see for mining in Africa, I think this is going to be a big kicker for the stock in terms of increase in top-line and bottom-line. Taking that into account, I am expecting that FY12 could have a top-line of close to Rs 1000 crore with EPS of Rs 60 per share.
If I go by the shareholding pattern, it is quite comforting - 75% promoter stake, 15% held by three-four well-known mutual funds and about 7% is held by HNIs who are associates and close to the management. There is a very low public float of about 3%.
Solar is a debt free company and has been recording very good performance. The share is available at a PE multiple of 10.5-11 times on FY12 estimated earnings, which is expected to take the share price to about Rs 1000 in the next to 6 to 8 months time.
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