Understanding the Current Rating
The 'Hold' rating assigned to Solar Industries India Ltd indicates a balanced outlook for investors. It suggests that while the stock has demonstrated strong qualities, certain valuation and technical factors advise caution. This rating encourages investors to maintain their current positions rather than aggressively buying or selling, reflecting a nuanced view of the company’s prospects.
Quality Assessment: Strong Fundamentals Backing the Stock
As of 07 February 2026, Solar Industries India Ltd exhibits an excellent quality grade, underpinned by robust long-term fundamentals. The company boasts an impressive average Return on Capital Employed (ROCE) of 29.52%, signalling efficient capital utilisation and profitability. Net sales have grown at a compounded annual rate of 31.56%, while operating profit has surged even faster at 43.45% annually, highlighting strong operational leverage and growth momentum.
Financial discipline is evident in the company’s low Debt to EBITDA ratio of 0.74 times, indicating manageable leverage and a solid capacity to service debt. Additionally, the debt-equity ratio stands at a conservative 0.17 times as per the latest half-year data, further reinforcing the company’s prudent capital structure. These factors collectively contribute to the company’s very positive financial grade.
Valuation: Premium Pricing Reflects Growth Expectations
Despite its strong fundamentals, Solar Industries India Ltd carries a very expensive valuation grade. The stock trades at a Price to Book (P/B) ratio of 23, which is significantly higher than typical market averages. This elevated valuation reflects high investor expectations for continued growth and profitability. The company’s Return on Equity (ROE) of 25.8% supports this premium, demonstrating effective utilisation of shareholder funds.
However, the stock’s Price/Earnings to Growth (PEG) ratio of 2.8 suggests that the price growth premium may be somewhat stretched relative to earnings growth. While the stock has generated a strong 42.61% return over the past year, profits have increased by 29.4% in the same period, indicating that the market price is factoring in substantial future growth. Investors should weigh this premium against the company’s growth prospects and sector peers.
Financial Trend: Consistent Positive Performance
The latest data shows that Solar Industries India Ltd has delivered very positive results in the December 2025 quarter, with net profit growth of 38.67%. This marks the seventh consecutive quarter of positive earnings, underscoring the company’s consistent operational performance. Quarterly Profit After Tax (PAT) reached a high of ₹446.25 crores, while operating profit to interest coverage ratio stands at a robust 20.60 times, indicating strong earnings relative to interest expenses.
Over the last three years, the stock has consistently outperformed the BSE500 index, reflecting steady returns and resilience in varying market conditions. The year-to-date return of 6.10% and one-month gain of 1.19% further demonstrate the stock’s ability to maintain positive momentum despite short-term volatility.
Technical Analysis: Mildly Bearish Signals Temper Optimism
From a technical perspective, the stock currently holds a mildly bearish grade. Recent price movements show a 2.8% decline on the latest trading day and a 3.48% drop over the past week, suggesting some short-term selling pressure. The three-month performance is down 2.75%, and the six-month return is negative at -13.38%, indicating a cautious technical outlook.
These technical signals may reflect profit-taking or broader market sentiment impacting the stock. Investors should monitor price trends closely, as technical factors can influence entry and exit timing despite strong fundamental support.
Shareholding and Market Position
Solar Industries India Ltd is classified as a large-cap company within the 'Other Chemical Products' sector. Promoters remain the majority shareholders, providing stability and aligned interests with minority investors. The company’s market capitalisation and sector positioning support its status as a significant player with strong growth potential.
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What This Rating Means for Investors
The 'Hold' rating for Solar Industries India Ltd suggests that investors should maintain their current holdings without initiating new positions or exiting existing ones aggressively. The company’s excellent quality and very positive financial trends provide a strong foundation, but the expensive valuation and mildly bearish technical outlook warrant caution.
Investors looking for steady, long-term growth may find the stock appealing due to its consistent earnings performance and strong capital efficiency. However, those seeking immediate price appreciation might consider the current premium valuation and recent technical softness before committing additional capital.
In summary, Solar Industries India Ltd represents a fundamentally sound investment with growth potential, but the current market pricing and technical signals advise a balanced approach. Monitoring future earnings releases and price movements will be key to reassessing the stock’s outlook.
Summary of Key Metrics as of 07 February 2026
- Mojo Score: 61.0 (Hold Grade)
- Market Cap: Large Cap
- Return on Capital Employed (ROCE): 29.52%
- Net Sales Growth (Annual): 31.56%
- Operating Profit Growth (Annual): 43.45%
- Debt to EBITDA Ratio: 0.74 times
- Debt-Equity Ratio (Half Year): 0.17 times
- Operating Profit to Interest Coverage (Quarterly): 20.60 times
- Quarterly PAT: ₹446.25 crores
- Price to Book Value: 23
- Return on Equity (ROE): 25.8%
- PEG Ratio: 2.8
- 1-Year Stock Return: +42.61%
- Year-to-Date Return: +6.10%
Investor Takeaway
Solar Industries India Ltd’s current 'Hold' rating reflects a stock with strong underlying fundamentals and consistent earnings growth, tempered by a high valuation and cautious technical signals. Investors should consider their risk tolerance and investment horizon carefully, balancing the company’s growth prospects against the premium price and recent market dynamics.
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