Solar Industries India Ltd Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Amit Dixit - ICICI Securities Ltd. - Analyst : I want to congratulate the management for an excellent set of numbers. I have two questions. The first one is essentially on the Defense side. So we have developed the new explosives which are, I would say, cutting edge in technology. Now, there were media reports that we have been approved or inspected by Navy. So just wanted to understand the further developments in this regard. Are we also going ahead with the development -- sorry, with the approval from Army, Air Force? What would be the total market opportunity for this? And when we are going to commercialize it? So this is the first question.

Question: Amit Dixit - ICICI Securities Ltd. - Analyst : Understandable, sir. The second question is, again, on Defense. So recently, there were media articles that there was -- written by the Deputy Chief of Air Staff to your recently commissioned chaff factory. Now, chaff is something, which I understand is very interesting because in the 5th Positive Indigenisation List, there are mentions also of chaff. So how do we see this? Because we have seen some sizable orders in the past also. So how do we see these shaping up? When will the factory be ready for commercial production?

Question: Amit Dixit - ICICI Securities Ltd. - Analyst : Sir, one last one and the bookkeeping question. The other expenses have declined quite meaningfully. So is it due to some of the provisions that we might have rolled back? Or is it purely because of the operational performance?

Question: Dipen Vakil - PhillipCapital (India) Pvt Ltd. - Analyst : Congratulations on great margin. Sir, my first question is, sir, in this quarter, what were your major new order wins? And how was the split between Defense and other explosives? And that leading to, can you also give us a split between -- in the order book between Coal India, SCCL and Defense?

Question: Dipen Vakil - PhillipCapital (India) Pvt Ltd. - Analyst : My second question is on the prices for ammonium nitrate. So how has been the prices for ammonium nitrate in the first quarter? And how the trend has been going ahead up since the first quarter ended?

Question: Dipen Vakil - PhillipCapital (India) Pvt Ltd. - Analyst : And going ahead, do we expect them to rise or stay in the similar level?

Question: Dipen Vakil - PhillipCapital (India) Pvt Ltd. - Analyst : Just last one, further clarification on your order book. You mentioned that you have a Defense order book of INR2500 crores. So is it possible to give a slightly better split as to which are the major orders in Defense?

Question: CA Garvit Goyal - Nvest Analytics Advisory LLP - Analyst : Just one question on the Defense sector. In your annual report, you mentioned and you are anticipating a decent order inflows from the Defense sector in the next two to three years, which will drive our significant growth in this segment. So given that our existing order book is INR2,500 crores, of which I think we are expecting INR1,300 crores to be executed this year itself. So could you please elaborate on what are the major products constituted in the existing order book and the specific products that we expect to receive in the future orders? And additionally, can you also quantify the size of the order inflows that we are expecting in, say, next two to three years?

Question: CA Garvit Goyal - Nvest Analytics Advisory LLP - Analyst : Understood, sir. And sir, what are the orders that are in currently pipeline for R&D purpose in the Defense sector that we are currently working on? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2024 / 5:00AM, SLIN.NS - Q1 2025 Solar Industries India Ltd Earnings Call

Question: Nitin Arora - Axis Mutual Fund - Analyst : Sir, just one on your margin, the way you said, look, last year, we did about 23% and we will do better than this in this year. Can you help us understand what is driving this? The margin. Because every year, we are somewhat increasing margins every year now. Can you help us? And generally, you used to say that 22% plus is what our guidance is. So directionally, how one should look your EBITDA margin? Given your operational leverage will be at play, you are still very confident on your Defense revenues plus new order wins that you talked about. But directionally, when we look at for next one to two years or two years plus, what EBITDA margin range one should look at it?

Question: Nitin Arora - Axis Mutual Fund - Analyst : This is very helpful, sir. Just on your Defense side, and you said that we will provide the guidance closer to this year-end for the next year. But again, a directional question because now, the products are getting approved across what you have developed. Even -- I think one participant talked about the new explosive part, which also looks very -- in technology wise, very high upgrade you have done. In next two to three years, do you have anything in mind that this is something will be my Defense revenue? Because now, it looks like ordering has happened -- started happening. And as far as the approval is very behind now, what three, four years, we were looking at it, that approval is not coming. Now, everything you have passed. So any directional guidance, sir? That would be helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2024 / 5:00AM, SLIN.NS - Q1 2025 Solar Industries India Ltd Earnings Call

Question: Rabi Shaw - Ratnabali Securities Pvt. Limited - Analyst : I have questions from chaffs and flares. Sir, currently, you said that you just have inaugurated the facility. So when from this -- the operations from this facility will start? This is number one. And number two is, you said that you will be the first company which will have 100% indigenous chaffs and flares. But I guess in this field, Premier Explosives are already -- is already supplying this to Air Force. So is it right, what you have said just to, if you can clarify, sir?

Question: Dipen Vakil - PhillipCapital (India) Pvt Ltd. - Analyst : My next question was on CapEx. Any CapEx that you have done in first quarter? And what are your CapEx plan for FY25?

Question: Dipen Vakil - PhillipCapital (India) Pvt Ltd. - Analyst : Got it, sir. Sir, next question is on your ammunition side of business. So what demand scenario we are witnessing, especially from a domestic defense, and also the export opportunities?

Question: Ravi Naredi - Naredi Investment Pvt. Ltd. - Analyst : Mr. Manishji, you and your team did miracle, top line increased 1% while profit after tax rises 49% due to enhanced of margin. It seems we are in perfect monopoly business. This happens due to your fantastic management under your leadership and leadership of Mr. Manish Nuwal. We salute you on this performance. Now, my question is, these higher margins sustainable in financial year '25? And can you tell margin in Defense segments separately, if possible?

Question: Ravi Naredi - Naredi Investment Pvt. Ltd. - Analyst : Nice. And this loitering munition system, what work it does? Can you tell in this matter?

Question: Ravi Naredi - Naredi Investment Pvt. Ltd. - Analyst : And what will be total CapEx, including Kazakhstan and Thailand in financial year '25 and '26? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2024 / 5:00AM, SLIN.NS - Q1 2025 Solar Industries India Ltd Earnings Call

Question: Nirav Vasa - ASK Investment Managers Limited - Analyst : My question pertains to our planned entry in export markets, that is Thailand and Kazakhstan. So just wanted to check, will we have to set up our manufacturing units across these locations? Or is it like we will be manufacturing from India and we will be exporting?

Question: Nirav Vasa - ASK Investment Managers Limited - Analyst : Sorry, I didn't get you. It's manufacturing in India and exports from India. Is that right?

Question: Nirav Vasa - ASK Investment Managers Limited - Analyst : Okay. That -- got your point. And sir, this INR800 crores of CapEx that you are planning in FY25, would it be possible for you to give a more granular breakup of it? How much of it will be in India? How much of it will be in Thailand and Kazakhstan? And in India, which are the areas where we are expanding our capacity?

Question: Pratik Talvatkar - Trivikram Consultancy - Analyst : Congrats on good set of numbers. Sir, my first question was on ForEx. So what was the ForEx gain or loss for this quarter and for the last quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2024 / 5:00AM, SLIN.NS - Q1 2025 Solar Industries India Ltd Earnings Call

Question: Pratik Talvatkar - Trivikram Consultancy - Analyst : And my second question on Defense. Now, the Defense is now causing a major chunk in the revenue. So can you throw some color on bills receivable side to get more clarity on cash flows from that Defense orders?

Question: Pratik Talvatkar - Trivikram Consultancy - Analyst : Sir, my second question was on Defense book. So now, Defense is now causing a major chunk in your revenues. So can you throw some color on bills receivable side of the Defense part to get more clarity on cash flows from the Defense orders?

Question: Tanay Rasal - Nomura Financial Advisory & Securities (India) Private Limited - Analyst : Congratulations on the great set of numbers. (inaudible)

Question: Tanay Rasal - Nomura Financial Advisory & Securities (India) Private Limited - Analyst : Is it better now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 07, 2024 / 5:00AM, SLIN.NS - Q1 2025 Solar Industries India Ltd Earnings Call

Question: Tanay Rasal - Nomura Financial Advisory & Securities (India) Private Limited - Analyst : So I had a question on exports. So it has been relatively softer for the last two quarters. So can you give me the color on how the different geographies are performing in this quarter?

Question: Tanay Rasal - Nomura Financial Advisory & Securities (India) Private Limited - Analyst : Okay. Ma'am, but any qualitative aspects on the geographies that you have been in? Any qualitative (inaudible)?

Question: Tanay Rasal - Nomura Financial Advisory & Securities (India) Private Limited - Analyst : Okay. Okay. Ma'am, and for this particular year, you're guiding Defense revenues at around INR1,500 crores. So -- and going forward, there will be some incremental revenues on this. So is there incremental CapEx that you're planning especially for the Defense, for the current base that will be suffice for this revenue growth that you're targeting?

Question: Tanay Rasal - Nomura Financial Advisory & Securities (India) Private Limited - Analyst : Okay. Ma'am, and what is the total that the -- amount that you invested in the Defense business until date?

Question: Amit Vijay - Vision A One Investment Services Private Limited - Analyst : Congratulations Manishji, for wonderful performance. Other questions being answered, only question remained is capacity utilization of plants, specifically for Defense products.