Solar Industries Shares Rise Over 2% as Jefferies Starts Coverage With Buy Rating

Solar Industries India was trading higher in the morning session on September 8, with the stock touching ₹22,460. It was up 2.3% at that level from the previous close of ₹21,950.

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The move came after Jefferies began coverage of the defence and explosives company with a ‘Buy’ rating. Solar Industries has risen about 84% so far this year, while the Nifty 50 has fallen roughly 9% over the same period. Its market capitalisation was above ₹2 lakh crore. 

Jefferies has placed a target of ₹28,160 on the stock. The target represents an upside of about 28% from Monday's closing price. 

The brokerage sees India's defence spending growing at a double-digit compound annual rate over the medium term. A larger role for domestic manufacturers is also expected to support private defence companies, with the segment seen growing by more than 20%. 

The outlook comes as the government continues to increase defence procurement while directing a larger share of orders towards domestic manufacturers. 

On September 7, the Defence Acquisition Council approved defence procurement proposals worth about ₹1.10 lakh crore for the Army, Navy and Air Force. Defence Minister Rajnath Singh chaired the meeting. Nearly 98% of the procurement is set to come from Indian industry. 

The approved proposals cover several categories of defence equipment, including Advanced Light Helicopters, high-mobility vehicles, mechanical mine layers, radars, marine gas turbines and ground-based multi-purpose jammers. 

Defence acquisition approvals in FY27 so far have reached ₹1.62 lakh crore, while approvals from FY25 through FY27 year-to-date stand at around ₹13 lakh crore. The scale of these approvals adds to the potential market available to domestic defence manufacturers. 

The government's move to open missile production to private-sector companies is another development that could broaden opportunities for defence manufacturers outside the public sector. 

For Solar Industries, the combination of higher defence procurement, a greater focus on domestic sourcing and increased participation of private companies forms the backdrop to Jefferies’ positive view on the stock. The brokerage’s ₹28,160 target price compares with the stock’s previous close of ₹21,950.