ICRA has reaffirmed the rating of [ICRA]A1+ for Solar Industries India Limited and its subsidiary, Solar Defence and Aerospace Limited. The rating applies to the commercial paper programme, with the rated amount enhanced to ₹500 crore from ₹250 crore. This rating reflects the company’s strong market position in explosives and growing presence in the defence sector, with a robust order book.
Rating Reaffirmation and Enhancement
Solar Industries India Limited (SIIL) has received a reaffirmation of its [ICRA]A1+ rating from ICRA. The rating applies to the commercial paper programme. Furthermore, the rated amount has been increased from ₹250 crore to ₹500 crore, showcasing confidence in the company’s financial strength and future prospects.
Key Strengths and Growth Factors
The rating reflects SIIL’s strong position in the commercial explosives sector. The company also has an increasing presence in the defence sector. A significant factor is the company’s substantial defence order book, which stood at ₹16,000 crore as of September 30, 2025, including a ₹6,084 crore order for Pinaka rockets. The company is also focused on expanding its defence exports.
Financial Performance and Outlook
SIIL has demonstrated healthy revenue growth, with a CAGR of approximately 30% from FY2021 to FY2025. A similar growth rate is expected in FY2026. The company’s operating profit margin (OPM) improved to around 24-26% in FY2024 and FY2025. This was supported by moderate ammonium nitrate prices. Also important were the rising share of defence and export orders, which typically yield higher margins.
Robust Credit Profile
The company maintains a robust credit profile, with a total debt/OPBDITA ratio of around 0.5x in FY2025 and 0.4x in H1 FY2026. The interest coverage ratio remains strong, standing at 17.2x in FY2025 and 18.6x in H1 FY2026. The company’s expanding operating profits and cash accruals are expected to support healthy debt coverage metrics, even with planned capital expenditure and growing working capital needs.
Potential Challenges
The company’s profitability remains susceptible to fluctuations in the prices of ammonium nitrate and foreign currency exchange rates. However, the company mitigates these risks through price escalation clauses in contracts with key customers and partial natural hedges.
Source: BSE
