Good morning, everyone. On behalf of Nirmal Bang Institutional Equities, I welcome you all to the quarter three FY26 earnings conference call with the management of Solar Industries Limited.

The management is represented by Mr. Manish Nuwal, MD and CEO, Mr.

Moneesh Agrawal, Joint CFO, Ms. Shalinee Mandhana, Joint CFO, Ms.

Aanchal Kewlani, SRM and IRM. Without further delay, I would now request Manish sir to start with his opening remarks, after which we can open the floor for question-and-answers.

Thank you, and over to you, sir.

Thank you, Jyoti. A very good morning to our dear stakeholders and well-wishers.

My name is Aanchal, and I would like to welcome you all to Solar Industries' third quarter and nine-monthly conference call of FY26. This call's recording, including the transcript, will be available on the site.

The financial statements, quarterly fact sheets, investor presentation, press releases are also available on our website and exchange. To begin with, I would like to remind you that during this call, we might make projections or other forward-looking statements regarding future events and about the future financial performance.

Please remember that such statements are only predictions. Actual events or results may differ materially, and our website will be updated with all relevant information timely.

Now, I would request Solar's CEO and MD, Mr. Manish ji Nuwal, for his opening remarks.

Over to you, sir.

Thank you, Aanchal. Good afternoon, ladies and gentlemen.

It is a privilege to welcome you to our Q3 and nine-month earnings call. Before outlining the quarterly and nine-month results, I would like to extend our heartfelt gratitude to all the stakeholders by sharing a milestone that brings a great joy to our company, the conferment of the Padma Shri, one of the India's highest civilian honours, upon our respected Chairman, Shri Satyanarayan ji Nuwal.

This award serves as a testament to his distinguished services and contribution to the nation and the defense industry. It is under his inspired leadership that we present a quarter defined by record-breaking milestones and relentless growth.

Turning to our financial performances, Q3 FY26 has been our strongest quarter to date. With rise in net revenue from ₹1,973 crores to ₹2,548 crores, which is year-on-year, we have registered a strongest quarter again with a growth in revenue by 29%.

We achieved highest ever quarterly EBITDA and profit after tax at ₹733 crores and ₹467 crores, registering a growth of 37% and 38% year-on-year respectively. Highest ever nine-monthly EBITDA and profit after tax at ₹1,879 crores and ₹1,181 crores, registering a growth of 27% and 25% respectively.

This strong momentum is driven by business initiatives in the explosives and defense sectors. Our international business has crossed ₹1,000-crore revenue in this quarter, which is a significant increase of 35% year-on-year.

The global economy is witnessing a steady rise in demand for key commodities and industrial metals. Our extensive and versatile product portfolio, supported by continued innovation in specialized explosives and technical services, firmly strengthens our competitive market position and help in growing the international business.

Solar's defense business showed a splendid growth of 72% by hitting a revenue of ₹700 crore plus in this quarter, evidenced by a record-breaking defense order book of ₹18,000 crores, which takes us to the highest ever total order book of ₹21,000 crores. This growth reflects our capabilities to convert aspirational goals into reality.

We are now entering in a new era of growth by strengthening our global and local manufacturing footprints. Our new facility at Dhule, Maharashtra and Dholpur, Rajasthan optimizes and reinforces Solar's positions as a dependable, long-term partner to the mining and infrastructure sectors within the country.

Our commitment to excellence is powered by continued research and development, investments in automation, modern manufacturing technologies, ensuring process consistency and safety at every level. Moving forward, our focus on innovation, operational discipline, and sustainable growth continues to guide our strategy.

With a strong foundation and a clear long-term vision, we are confident in our ability to deliver lasting value and drive a compelling future for the business. Thank you for your continued trust and support.

Now, I request Aanchal to share the detailed financial numbers.

Thank you, sir. The New Year definitely has opened with noteworthy and exceptional milestones for our company.

Our beloved Chairman has been honored with prestigious Padma Shri. The visit of Honorable Rajnath Singh ji to our defense premises further helps us showcase our capabilities.

Capping it all, we achieved record-breaking quarterly performance across revenue, EBITDA, and PAT, surpassing all our previous milestones. We will begin with the quarterly financial update followed by nine-month update.

Highlights of quarters are: we achieved highest ever quarterly revenue at ₹2,548 crores, up by 29%; highest ever quarterly EBITDA at ₹733 crores, up by 37%; PAT at ₹467 crores, up by 38%; highest ever defense revenue crossing ₹700 crores; highest ever consolidated order book at ₹21,000 crores plus, including the defense order book of ₹18,000 crores plus. Now, the quarter in detail: the top line grew by 29%; the percentage raw material consumption is decreased from 53.5% to 48.71%; in absolute terms, the cost is around ₹1,241 crores versus ₹1,056 crores in the same quarter previous year; employee cost is around ₹214 versus ₹151 crores; other expenses is around ₹385 crores versus ₹240 crores; the interest cost is approximately same, which is at ₹34 crores versus ₹31; the depreciation cost is approximately ₹63 crores versus ₹47; coming to our customer's basket, CIL in the basket stands at 10% compared to 13%; revenue from non-CIL and institutional stands at 11% compared to 14%; revenue from housing and infra stands at 10% compared to 13%; international revenue stands at 40% compared to 38%, up by 35% year-on-year; defense revenue was quarterly highest till date at ₹702 crores versus ₹409, up by 72%, showing a wonderful pick in the defense business.

Coming to the highlights for nine months: we registered revenue to the tune of ₹6,785 crores versus ₹5,374, which is up by 26%; highest nine-month EBITDA at ₹1,879 crores versus ₹1,485, which is up by 27%; highest nine-month PAT at ₹1,181 crores versus ₹942, up by 25%. Now, we would be happy to take any questions, comments, or suggestions that you may have.

Over to you.

Hi, sir. Good morning and thanks for taking my question.

Sir, just to articulate on your defense piece going forward, first your take on your guidance, because this quarter has been very strong, was Pinaka a part of the execution? Are we still confident enough to achieve our guidance of ₹3,000 crores?

Just looking forward, because defense proportion in order book is increasing very significantly, beyond expectations, how are you thinking about, even if you can throw some light on articulation, that how FY27 looks to you? That's my first question.

Hello? Am I audible?

Hello?

Yes, sir, we can hear you, sir.

Should I repeat my question?

You can repeat again.

Oh, sure. Sir, this quarter execution on defense has been very strong.

Pinaka has started now moving? How do you think about your guidance of ₹3,000 crores this year, because Q4 is a very big number you have to achieve?

Just going forward, because every quarter you are increasing your defense order book, you're really exceeding the expectation for investors like us even. How do you think about FY27 growth on the defense side?

Just that's my first question.

If you look at our Q3 numbers in defense, we have crossed ₹700 crores, and we were expecting that Pinaka should have been part of these Q3 numbers, but some final trials are pending before we start the dispatches of Pinaka in Q3, and we are pretty sure that from Q4, Pinaka will be part of our total dispatches towards defense sector. Once it starts, the number will be much, much better.

We are expecting that from Q4, things will be quite moving towards our annual guidance number.

Sorry, sir, your voice was breaking. You're saying guidance we are maintaining of ₹3,000 crores?

Sorry, your voice was breaking in between.

Like I said that now Pinaka has started in Q4, numbers from defense will be much, much better, and we are moving towards our annual guidance.

Got it. Got it.

Sir, any color you want to give on FY27 execution, how qualitatively you are looking at the ramp-up on this strong order book?

Like we have said in our previous call that ramping up of defense takes little more time than the other sectors, and like we have been improving our defense revenue, and as we move forward in next quarter or next year, we will see a gradual improvements on every quarter basis. In FY27, we are likely to perform very good, and the total expectations we will share at the start of the financial year '27.

Sure, sir. Sir, my second question is related to one article in India Today, where the article spoke about you putting up a facility in US regarding drones and the MALE part, as well as it talked about Solar Industry going into making humanoids, involving a lot of scientists from Europe and all.

Can you throw some aspect—I'm just referring to a India Today article—can you throw some aspect, what are we doing here, what's the TAM size, because you spoke about this earlier about these MALE and everything, we want to do it, but if you can throw some light on that?

Like we have been sharing that we are working a lot on enhancing our product, especially the loitering munitions, and then we have started work on the MALE category of drones also, and it is going to take some time before we really comment on the total targeted market and what we can get out of that. As far as our futuristic programs on humanoid robots and all those are concerned, we are very much interested in taking those initiatives forward for our country's security program.

Once these things fructify, we will definitely can share more details on this.

All right, sir. Thank you and all the best.

I'll come back in the queue. Thank you, sir.

Hello, am I audible?

Congratulations, sir, on a very strong set of numbers. Two questions from my side.

First is, as per some report, EU is in big shortage of 155 shells, and I think in Q4 we are also starting commercial production of 155. After this FTA, are we planning to cater that demand or are we getting any inquiry from their side?

Like I said in the previous quarterly call that we are planning to start manufacturing of 155 caliber ammunition, we're still working on that, and commercial production definitely should start in the Q4.

Second question is also on UAV. Currently, where do we stand when it comes to the progress of MALE and HALE UAV?

We are working on these programs, and these program takes longer time to develop, we will wait for the final outcome. Let's assume that in a year's time, once anything concrete happens, we will definitely share with our stakeholders.

Perfect. Perfect.

Thank you, sir. This is all from my side.

Hi. Good morning, everyone, and congratulations for a great set of numbers and conferment of the fourth highest civilian award on the Chairman.

Two questions from my side. The first one is just extrapolating a bit on the shell part, we were already supplying 30 shells to Indian Navy, and now Defense Minister had inaugurated the medium-carbine shell factory, and you spoke about 155.

Just from an industry perspective, how you are seeing the demand shaping up? We have been reading that there is a very firm demand for next six, seven years based on replenishment, and Solar is nicely dovetailing itself to this demand.

Just wanted to get an industrial perspective from your side. How do you see this demand for exports as well as within the country?

Definitely it was a big achievement on the part of our company to develop these products like 23, 30, and for which the inauguration has been there in the last month. The demand for this product is quite good, and we have participated in the long-term RFP from Indian Ministry of Defence, and we are expecting orders to come out because we are still participating in the final trials where they will do the technical analysis, and once those round is over, then it will enter into the commercial stage.

It's going to take some more time, but in this coming year, we should see the orders coming for 23 and 30 programs. Definitely that will help us to ramp up the production.

At the moment, we are only manufacturing for naval requirement, and once the Army requirement starts, this can become a good portion of our total defense order book or defense revenue. Sir,

some color on export market?

It is difficult for me to give any color on export market, but as and when we receive orders, we will definitely discuss. Because international market is so huge that it is very difficult to digest the numbers, but like in every country, they have their own players, and once you have to say if you think that we should be part of those programs, it takes little more time.

We are trying to enter into those markets, and once we start getting orders, we will share with all the people.

Great, sir. The second question is essentially on international non-defense business.

We have seen revenue picking up sharply and for the first time, we have achieved 1,000-plus crores in revenue. I know you give this numbers in your annual report every year on the subsidiaries' performance, but just wanted to get a little bit of color on which geographies actually contributed to this kind of growth and whether we have ramped up operations in some of the newly started subsidiaries or you're seeing more exploration essentially in mining business, particularly because of the high base metal prices that we are seeing, so that is contributing to this growth?

Just wanted to get a bit sense on the drivers for this international mining business, because this has performed exceedingly well.

You are very right on the observation that we are doing quite good in international business, and like I have shared in my press note that across the world, we have seen that there is a good demand for commodities like gold, copper, and related industrial metals, and those are helping us to increase our international business. In last 7 to 10 years, we were trying to set up the facilities across the world, and we have seen that business from international market is going up year-on-year.

There were some turbulent years in between while we were setting up those things, but now things are shaping up quite well. In this quarter, like I said, we have crossed 1,000 crores, which is a growth of almost 35%, and we believe that it is all because of our efforts in last so many years.

Specifically on your question on which geography, definitely demand in African market is quite good. We are getting good traction in some of the Southeast Asian market also.

We are doing quite good in Turkey and nearby market also. By and large, most of our geographies wherever we are present is doing quite well, and we expect the momentum to continue.

By and large on annual basis or business as a whole, like we say that sometime India is very good, international is little low, sometime international is quite good and India is low. It's a combination of various factors.

Business as a whole, we still believe that growing at 15% should not be a big problem for a company like Solar. I hope I have answered your questions.

Yes, sir, very much. Thank you so much and all the best.

Thank you.

Good afternoon, Manish ji.

Good afternoon, Bhavin.

Yeah. Sir, at the outset, congratulations for the award to our Chairman.

The the question actually for me is to understand if I were to break the defense order book into the domestic and international, if you give us can you help us with more color on the international piece of the defense order book, what it is currently, what's the kind of projects that are there in the defense order book on the international side, and what's the gestation of the execution for these projects?

If you look at our total order book from defense is around ₹18,000 crores, and out of that, around ₹6.5 to ₹7,000 crore is from Indian market, and balance, which is around say ₹11,000 crores, is from the international market. As far as gestation time is concerned, we are continuously ramping up our facilities.

Products are already well-qualified, we don't see much challenge on converting these orders into the numbers. You can see that from Q3, we have improved our defense business significantly, although Pinaka is not part of the Q3 numbers.

Once Pinaka will also start in Q4, defense will grow up, and these international orders will also keep converting at a larger level. From Q4 onwards, I think you can see better numbers from India as well as overseas markets.

Right, sir. Just help me understand if my understanding is correct that a bulk of the international order book is on the HMX side of our business, and out here the contractual delivery timelines would vary between 3 to 4 years?

Is this understanding correct?

You have asked two question on the product specific, for which our company policy is very clear, and you are aware of that. As far as conversion of orders are concerned, like I said, whatever orders we have received, against each order we have mentioned the timeline, and like I said that we are confident that we can convert these orders into the numbers because our products are well-qualified, and we have been successfully supplying these products.

Ramping up is not a problem. Right, sir.

Over the incremental margins that we have seen over the last couple of years, would you attribute to the change in the mix towards the defense where the underlying investments which was dragging down the margins is now actually bearing the fruit, where the margins that we are seeing currently could be sustained over at least the next 3-, 4-year period?

I think since two factors which were definitely impacting our EBITDA margin in, say, couple of years back, one was international and second was defense. Since international has started performing quite well, and we are expanding in more geographies and expanding the capacities in those markets, definitely up and down will keep going.

It's a part of business. Defense has been shaping quite well because of all the geopolitical tensions and the vacuum across the world for these products.

We are confident that we should be able to maintain the EBITDA margins around 27%, 28% as we move forward also.

Great. Those were my questions.

Thank you so much.

Thank you, Bhavin.

Thanks for taking my question. Congratulations to the Chairman for being awarded with Padma Shri, much deserved, sir.

Sir, my question was on the Pinaka rockets. Is there any seasonality associated with delivery of these rockets, maybe in FY27 because FY26 was just a part year, in FY27 onwards?

No, I think from Q4 we will start supplying Pinaka rockets, and as we move forwards, things will be better and better, and the programs are of long tenure, 7 to 10 years. We will see that every year we will keep supplying the product consistently, and like you might have read that there will be new variants of Pinaka, and once those will also become part of our kitty, overall basket of Pinaka series products, we will see more business from this product kitty.

Sir, on the gross margin expansion we've seen in the standalone side, what could be the main drivers?

Main drivers are basically increasing defense business and increasing international business, which is well supported by exporting out of the country, and there are various initiatives which we have taken to improve the efficiencies across the facilities. That is helping us.

Sir, lastly, the non-defense and export business hasn't contributed much in terms of growth in the first nine months. What outlook you have for the next 2 years?

Do you expect a rebound in terms of growth for the other segment?

If you look at India business, definitely in the first nine months, the demand was greatly impacted due to heavy monsoon and some slowdown in the economy, and we can correlate these sentiments with the fact that demand from coal and overburden, which is mainly Coal India, Singareni Collieries, and private coal mines, there has been practically no growth in this financial year. If you look at the demand for electricity, which is also quite flat.

These are the dull periods, and in every economy, we can see such kind of periods. We are a firm believer that the demand for these things or the mining products and the related products for generating electricity should keep growing at 6% to 7% on annualized basis, and we should grow at around 10% to 12% on volume terms, and which will help us to grow our business even in India on 15% on annualized basis.

There can be up and down on some quarter or a year, but if you look at a long-term trajectory, we are quite confident of growing the business around 15%.

Okay. Great, sir, and all the best.

Thank you.

Thank you.

Hi, sir. Good morning.

Thank you for the opportunity. The first question is if you could highlight what else is part of a defense pipeline for this year and next year?

Can you repeat the question, please?

Hi, I hope I'm audible?

Yeah.

Yes. Sir, what is our defense pipeline looking like for this year and next year, specifically for the domestic market?

Defense pipeline as of now is around ₹18,000 crores as of now, and we will be definitely doing lot of sales out of these orders, and we expect more orders to come in as we move forward, because we are developing plenty of products for India and international markets. We expect lot of orders to keep coming in our kitty.

As of now, it is very difficult to give a firm number on the product pipeline for the next year.

Okay. The Pinaka execution from Q4, you said that it is delayed because some trials are pending.

Is that complete, or there could be some further delays to the execution of Pinaka from Q4 to Q1?

No, I don't see any more delay in this side.

Have the trials been complete?

Like I said, you will see the numbers from Q4 for Pinaka rockets, let us stick to that.

Sure. Last question is on the 155 shells.

If you could just re-highlight what is the capacity, when is it coming on stream, and what is the kind of ramp-up or contribution we're looking from that for FY26 or '27?

We have started working on 155 shells in last year, and we have started production as well, and we are waiting for the final round of qualification. Once we finish with that, then we can share more details on this product.

As a policy, we don't share such kind of details on product-wise like you have asked for capacity for 155 and all that. More or less, we believe that we should focus on the overall guidance for defense product as such, and the results we are delivering.

Sir. Thank you.

Good morning, sir. Thank you so much for the opportunity, and congratulations for Padma Shri award to the Chairman.

He was well recognized for his significant contributions, specifically in strengthening India indigenous defense manufacturing capabilities, which including development of ammunition and rockets. Sir, my first question: I think earlier we have faced entry restrictions and currency availability issues, especially in African markets, and nearly around 40% of sales is coming from international markets.

Just want to understand how much of business is coming from African markets and how the situation currently is improving and how much is our forex exposure in those regions? That's my first question.

As far as the forex exposure is concerned, it is basically normal expense cost for our business. It is the routine expense which is incurred because we are operating in multiple currencies in multiple geographies.

This is one which is a very normal cost of the business, and approximately it is in the range which we expect, it's approximately around 20-odd crores, which is very, very normal cost for the

business. Madam.

Another thing, we have a guidance nearly ₹2,500 crores kind of capex. As of nine months, how much we have achieved, and what percentage of allocation goes to defense capacity expansion versus international or new business segment?

We will share the total capex update on the Q4 numbers, please.

Sir. Thank you.

Hi, Manish. Hearty, hearty congratulations to you and the entire Solar team.

Not only just having very healthy growth rates, but improving the quality of the growth rate even more and more. That really deserves huge amount of praise.

I had two questions, starting with the first one. On a long-term basis, say, 3 to 5 years, clearly our defense as well as international business will continue to drive growth rate ahead of our domestic CIL or non-CIL or infra business, or at least that's what I assume.

If that is the case, I am aware that you mentioned during discussion just now 15% plus growth rate, but I would have assumed that given the fact that domestic business you just now mentioned about 18-odd percent growth rate, 11%, 12% volume, and 18% value, and if defense and international business will continue to deliver given the healthy order book and opportunity at a much higher rate, would we say over next 3 to 5 years of an earlier picture of 20% plus kind of a compounded growth over the 5-year period is a realistic assumption?

Thank you, Bharat bhai. Basically, if you look at my update, I have said that on volume terms, we should grow at 10% to 12% per annum, and that will help us to grow our business, especially in mining side, by around 15% per annum.

We believe that this is quite very much possible to grow at around 15% on annualized basis. If you look at a defense potential, like I have shared that we are getting lot of orders, and we are participating in many of the long-term defense programs like MPATGM and Kusha program apart from the Pinaka series of products.

Potential is quite good, and we are getting lot of orders as well. If you combine the mining and defense together, definitely growing at 20% plus is not at all difficult for Solar at this stage for next 3 to 5 years down the line.

Fantastic. Presumably, given the fact that defense is a higher margin business, is international and exports, our margins have a reason to be protected or improve over a period of time.

Like we have demonstrated that since international business has no much baggage leftover which will impact the margin improvements or sustaining the margin, as defense keep growing, definitely margin should keep improving, but as a prudent practice or conservative policy of our company, we try to maintain at a subdued level, and based on those things, I expect that getting 27% on next 3 to 5 years should not be big problem for us.

Fantastic. The second and last question, we've come a long way over a period of time that I've interacted with you and the firm.

5, 6 years back, we had non-existent defense business, but we were building for it. We had very small but a difficult international business.

Like you just now described, lot of baggage and challenges were constantly causing confusion over a period of time. From there, these two businesses have now become 70% of our total turnover roughly, and among the healthy growth bulwarks.

We've developed a lot of products, we've earned respect of the products that we are supplying, getting into more complex programs, more geographies, more opportunities, better products, technology. Keeping in mind all of these, when you view next 5 years, what are in your mind key strategic challenges and key strategic priorities for you?

For us, looking at these kind of opportunities, our key priorities is to focus on the new technologies which we should be able to adapt and keep on developing the products for our security solutions or providing security solutions not only for our country, but outside the country as well. As we are expanding in defense in various zones or areas, it will be a challenge for us to maintain the relationship and the strong connect with all our stakeholders.

That is I believe is a key priority or challenge as well. As far as the focus is concerned, like I said that adopting new technologies, developing new products is our focus.

Fantastic. Once again, hearty congratulations, not just getting healthy growth rate, but very superior quality of the growth.

Your numbers make it look as if it is very easy to get these kind of results, but I'm sure there is a remarkable work going on. Congratulations to you and your team for this performance and for the future.

Thank you very much, Bharat.

Heartiest congratulations, sir, on being honored with the Padma Shri. This is well-deserved recognition truly reflects your visionary leadership, unwavering commitment, and significant contribution to India's industrial progress.

Wishing you continued success, good health, and many more milestones as you continue to inspire future generations and common people like us. Thank you so much.

On behalf of Nirmal Bang Institutional Equities, we would like to thank the management of Solar Industries Limited for the call and also many thanks to the participants for joining the call. Thank you very much, sir.

Thank you, Aanchal. We will now conclude the call.

Thank you.