India’s defence industry is entering a new phase. The focus is no longer limited to reducing import dependence. India now not only builds but also designs, manufactures and exports complete defence systems. The scale of this shift is visible in the latest numbers.
The ₹1.78 Lakh Crore Macro Shift
Defence production reached ₹1.78 lakh crore in FY26, up 15.6% from ₹1.54 lakh crore a year earlier. Defence exports grew even faster, and surged 62.7% to ₹38,424 crore. The private sector also increased its contribution to 24% of total defence production.
Several factors are driving this expansion. India has steadily increased defence spending while pushing the armed forces towards greater domestic sourcing. The Positive Indigenisation Lists, the SRIJAN portal, Innovations for Defence Excellence, and defence corridors are helping shift more manufacturing and procurement toward Indian companies.
Nearly 65% of defence equipment is now produced domestically, compared with 65-70% import dependence earlier. The opportunity is also expanding beyond the domestic market. Indian defence products are now being exported to more than 80 countries.
Now, the opportunity is not limited to companies that manufacture complete weapon systems. Rocket and ammunition systems are becoming more relevant now, given their expanding role in warfare. For India, building these capabilities domestically is a key and strategic requirement.
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This is where the Pinaka programme becomes interesting
Developed by DRDO, the Pinaka Multi Barrel Rocket Launcher has evolved from an indigenous artillery system into a broader family of rocket systems. The programme is now moving towards longer-range and guided variants. The latest development came on July 8, 2026, when DRDO successfully tested the Pinaka Long Range Guided Rocket at a range of 60 km.
The launch was successful, hitting the target accurately. Significantly, the test used the existing Pinaka launcher, allowing different rocket variants to operate from a single platform. The test followed the successful flight test of the 120-km Pinaka Long Range Guided Rocket in December 2025.
The programme is also gaining international recognition. India has already begun exporting Pinaka systems, with Armenia becoming an important overseas customer. This adds an export opportunity to an already growing domestic requirement.
For Dalal Street, the Pinaka story is bigger. It sits at the intersection of rising defence spending, increasing indigenisation and India’s growing defence export ambitions. Against this backdrop, take a look at these two listed explosive players that are also involved in the value chain.
#1 Solar Industries: Pinaka’s Rocket Powerhouse
Solar Industries has shifted from a manufacturer of industrial explosives to a fast-growing defence player. The defence vertical is Solar’s highest-margin business and its growth engine. The share of defence business in the revenue mix increased to 26% in Q1FY27 from 19% in the same quarter last year.
Decoding the Q1FY27 Surge: Explosives vs Defence
Revenue from the defence business surged 123% year-over-year to ₹933 crore, while revenue from all other businesses, including domestic and international explosives, increased 57.5% to ₹2,735 crore. Revenue increased 70.3% to ₹3,668 crore. EBITDA rose 82% to ₹1,024 crore, while margins stood at 27.9%. Net profit grew by 89% to ₹666 crore.
Growth is driven by the scale-up of global subsidiaries, entry into new geographies, and average realisation rates rising by more than 30%. This increase is driven by commodity inflation and surging global demand for high-energy materials and ammunition replenishment.
Inside the ₹21,400 Crore Order Book and FY27 Targets
The company estimates its overall top-line for FY27 to increase from ₹9,838 crore to ₹14,000 crore. Defence revenue is expected to increase to ₹4,500 crore. If these targets are met, defence will represent 32.1% of Solar’s revenue for FY27, up from 26% in Q1FY27 and 19% in Q1FY26.
This defence backlog currently exceeds INR 18,000 crore, representing the majority of the company’s total order book of INR 21,400 crore. This provides high-quality revenue visibility for over two years. The Pinaka rocket system is a key component of Solar’s rapidly growing defence segment and ₹4,500 crore defence revenue in FY27.
The Pinaka Program: R&D, Validation, and Export Potential
Notably, Solar is actively involved in developing, integrating, and manufacturing advanced Pinaka rocket systems. It has undertaken its own extensive research, development, and testing to design and scale specific advanced variants. This includes the Pinaka Enhanced Range System, Guided Extended Range, Propellants and Integration.
Solar’s research and development for the Pinaka Enhanced Range System lasted eight years. Solar then tested them with approximately 100 rockets for operational validation. This made it the first Indian company to successfully test-fire the Pinaka multiple rocket launcher system.
Solar is also the first private-sector company in India to dispatch the Pinaka Enhanced Mk-I rocket system to the Indian Army. It also secured a ₹6,084 crore contract from the Ministry of Defence to supply Pinaka Enhanced Range rockets and Area Denial Munitions. A request for quotation has been issued for the Guided Pinaka Rocket System.
This is an advanced, high-value product that ensures a long-term revenue pipeline for the company in the coming years. Furthermore, the company has entered the international market, exporting its first batch of guided Pinaka rockets to Armenia.
#2 Apollo Micro Systems: The Electronics Behind Pinaka
Apollo Micro Systems has a diverse presence in defence technology. It is now fully integrated, spanning electronics design, manufacturing, weapon integration, and defence explosives. The company has multiple counter-drone and Anti-Drone Systems. It has completed trials for nine variants of aerial drop bombs, which have recently received acceptance from the forces.
In July 2026, the Indian Air Force awarded the company a Make-II prototype sanction order for a 500 kg Smart Bomb. The company has been building its own internal capabilities for unmanned aerial vehicles (UAVs). Apollo Micro Systems is actively in discussions to tie up with domestic and international partners that possess mature UAV platform technologies.
Decoding the Q1FY27 Surge: Why Record Revenues Masked a Margin Drop
Apollo Micro Systems delivered its best-ever quarter performance in Q1FY27. Revenue grew by 88.1% year-on-year to ₹251.3 crore. EBITDA surged by 31.3% to ₹53.7 crore while margins compressed 920 bps to 21.4%. Despite that, net profit surged by 42.6% to ₹25.2 crore. The consolidation of the recently acquired low-margin bulk explosives business, Ideal Explosives, dragged margins.
Ideal Explosives was a loss-making entity at the time of acquisition. It is currently undergoing post-acquisition operational restructuring. Management expects it will take 3 to 4 quarters to fully optimise overheads and operations and reach its targeted profitability level. This may be true as Apollo’s standalone margin expanded 331 bps to 17.9%.
Inside the ₹1,704 Crore Order Book and the 12x Capacity Expansion
The company’s consolidated order book stood at ₹1,704 crore, which included ₹480 crore from Ideal Explosives. The company expects to receive a single order worth ₹2,500 to ₹3,000 crore by the end of FY27. If successful, this could lift the group order book to ₹3,500 to ₹4,000+ crore.
Management has maintained a continued revenue growth guidance of 40% to 45%. To achieve the targeted growth, Apollo Micro Systems is scaling its operational capacity by 12x. The facility is expected to be fully ready by March 2027.
Once completed, Apollo Micro Systems will begin mass production and will soon receive large-scale export orders, which it is currently fulfilling slowly due to capacity constraints. To further deepen its involvement, the company signed an agreement to purchase a 41.3% stake in Premier Explosives from the promoters. This acquisition will allow Apollo Micro Systems to manufacture all weapons in-house.
The Execution Pipeline: Monetising QRSAM, Akash-NG, and Pinaka Programs
For Apollo Micro Systems, several matured proprietary technologies are entering the bulk production phase. While bidding/negotiation is complete, execution and revenue recognition will start in FY28. The Multi-Influence Ground Mines are transitioning into production. Management expects to secure 70% of the contract value (₹3,500 crore) due to development cum product partner.
The Ministry of Defence is placing a phase-1 order for 1,000 Quick Reaction Surface-to-Air Missiles (QRSAMs). The component value for Apollo Micro Systems is more than ₹1 crore per QRSAM missile. This translates to an addressable pipeline of ₹1,000+ crore.
The 1,000 Pinaka Rocket Catalyst
The Ministry of Defence has approved 1,000 Akash-NG missiles. Apollo Micro Systems component value is ₹1+ crore per missile. The Indian Army has completed negotiations for the 2,000-unit Pinaka rocket program. Apollo Micro Systems component could be worth ₹85 lakh per rocket, translating to an opportunity of ₹1,700 crore.
For the Pinaka Rocket, the company designs, develops, and manufactures the critical onboard electronics and subsystems. This includes both the standard artillery rocket and its guided variant (Guided Pinaka). It expects to receive these orders during the current fiscal year, adding a substantial pipeline to its order book.
Comparing the Q1FY27 Financials of Both Companies
| Particulars | Solar Industries | Apollo Micro Systems |
| Q1FY27 Revenue | ₹3,668 crore | ₹251.3 crore |
| Revenue Growth YoY | 70.3% | 88.1% |
| Q1FY27 EBITDA | ₹1,024 crore | ₹53.7 crore |
| EBITDA Growth YoY | 82% | 31.3% |
| Net Profit | 666 | ₹25.2 |
| Net Profit Growth YoY | 89% | 42.6% |
| Order Book | ₹21,400 crore | 1,704 crore |
| Source: Investor Presentations | ||
Solar Industries has a substantial lead in revenue, profitability and order-book strength, while Apollo Micro Systems is growing from a much smaller base.
Decoding the Valuation Premium: High Growth at a Steep Price
With faster, stronger profit growth, Solar Industries has a higher return on capital employed (ROCE) and return on equity (ROE) than Apollo Micro. Apollo Micro Systems has also experienced rapid growth, but recent fundraising has caused its return ratios to decline.
From a valuation perspective, Apollo Micro Systems is now trading at a significant premium not only to the industry median but also to the 3-year historical median. Solar Industries, by contrast, trades at a premium to the industry but at a slight discount to the historical median. Valuations are undoubtedly high, making order book execution essential.
| Peer Comparison (X) | |||||
Company | Price-to-Earnings Multiple | Return Ratios | |||
| Company | 3Y Median | Industry | ROCE (%) | ROE (%) | |
| Solar Industries | 90.7 | 95.4 | 53.8 | 38.1 | 32.6 |
| Apollo Micro Systems | 121.0 | 94.0 | 67.4 | 14.5 | 11.8 |
| Source: Screener.in (Data as of 14 August 2026) | |||||
Pinaka is becoming more than an indigenous rocket system. It is becoming a meaningful growth opportunity for companies supplying critical parts of the ecosystem. Solar already has a ₹6,084 crore Pinaka order and is targeting ₹4,500 crore in defence revenue in FY27.
Apollo Micro Systems, meanwhile, has completed negotiations for a 2,000-rocket programme, with an estimated component value of ₹85 lakh per rocket. The opportunity is large but execution will be key. That said, you could keep these names on your watchlist to track execution.
Disclaimer:
Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. We used an alternative, widely used, and accepted source of information only when the data was unavailable.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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