Solar Industries (SOLARINDS)

FairStock Score: 63/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 2/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Exceptional capital efficiency with ROE of 33.11% and ROCE of 38.13%
• Very low debt-to-equity of 0.17 and a strong Piotroski F-Score of 8/9
• High promoter holding of 73.15% aligning interests with minority shareholders
• Consistent growth: 5-year revenue CAGR of 24.55%, latest quarter sales at ₹2,548 Cr and net profit at ₹467 Cr
• Positive free cash flow of ₹808 Cr despite significant growth-driven capex

Concerns

• Extreme valuation: P/E of 84.15, P/B of 32.49, and EV/EBITDA of 57.44
• No margin of safety: price is far above Graham Number of ₹1,322.94 and DCF intrinsic value of ₹4,779.08
• Profit growth of 16.18% trails sales growth of 18.40%, indicating possible margin compression
• Negligible dividend yield of 0.07%, so returns depend entirely on capital appreciation

AI Analysis

In my years of reading balance sheets, I've learned that a wonderful business can still be a terrible investment if the price is wrong. Solar Industries is a prime example. The business quality is unmistakable: a 33.11% return on equity, 38.13% return on capital employed, and a debt-to-equity ratio of just 0.17. The Piotroski score of 8 out of 9 and an Altman Z-score of 11.63 tell me this is a financially robust enterprise. The company has grown revenue at 24.55% compounded annually over five years, and still generates ₹808 crore in free cash flow. That's the kind of machine that makes me smile. But then I look at the price, and the smile fades. At ₹15,747, the stock trades at 84.15 times earnings and 32.49 times book value. Even if I use the most optimistic of my estimates, the DCF value is ₹4,779. That means I'd be paying more than three times what the cash flows justify. Graham's number, a simple sanity check, is ₹1,323. The margin of safety is not just absent; it is deeply negative. For this to work, the company must execute flawlessly for many years, and then some. The PEG ratio of 2.47 tells me the growth is already more than priced in. I respect the business. I am not willing to respect the price. As Benjamin Graham said, price is what you pay, value is what you get. Here, you are paying a fortune for a great company. I will watch from the sidelines and wait for Mr. Market to offer a more sensible entry.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer