How Deepak Fertilisers is gearing to detonate Solar Industries dominance
A Blasting Solution is an end-to-end service providing the bulk explosives, initiation systems, and engineering expertise required to fragment rock safely and efficiently. In simple terms, it involves engaging a specialist to break rock using controlled explosive energy.
The solution comprises the following key components:
Bulk Explosives
- TAN (Technical Ammonium Nitrate): The primary oxidizer. It is used to make ANFO (TAN + Fuel Oil) or dissolved to create the Emulsion Matrix.
- Emulsion Matrix: A stable mixture of oxidizer solution (TAN + Water), fuel oil, and emulsifiers. The matrix is non-explosive during transport.
- Sensitiser / Gassing Agent: A specialty chemical added to the matrix at the blast site. It creates microscopic gas bubbles that sensitize the emulsion, allowing it to detonate.
- Fuel Phase: Diesel or oil. In ANFO, it is soaked into the TAN. In Emulsions, it is chemically part of the matrix.
The Initiation System
- Detonator (Electric, Non-Electric or Electronic): A device that produces a high-energy shock wave to start the sequence.
- Cast Booster: A high-explosive charge that amplifies the detonator’s energy. It is required to initiate the main bulk explosive, which is often too stable to be set off by a detonator alone.
- Detonating Cord: A flexible cord containing a high-velocity explosive core, used to transmit detonation between charges or holes and to tie the blast pattern together.
A specialized truck (often called a Mobile Manufacturing Unit or MMU) transports these components to the mine site. Depending on the geology and water conditions, these components are mixed on-site to create ANFO (for dry ground), Emulsion (for wet ground) or a hybrid blend known as Heavy ANFO to optimize cost and energy.
Solar Industries is the leading player in Blasting Solutions in India. Its blasting solutions segment is operating at an ARR of 6000 - 7000 Cr with an EBITDA margin of 20 - 24%. It’s split between ~52% domestic & ~48% export. Domestic clients are primarily Coal India & other coal miners. It’s difficult for a new player to enter the market because of following reasons:
- Manufacturing and storing explosives requires strict licenses from PESO (Petroleum & Explosives Safety Organization). Obtaining these is a complex, time consuming process that deters new entrants.
- Explosives are dangerous to transport and expensive to handle. Crucially, the final explosive product has a shelf life of zero once mixed, meaning it cannot be transported after sensitization. To solve this, Solar Industries operates 30+ manufacturing plants strategically located near major mines and owns one of the largest fleets of MMU (Mobile Manufacturing Unit) trucks in the world.
While Australia has historically been the hub for its full-service model via Platinum Blasting Services, Deepak Fertilisers has successfully transitioned to an integrated ‘Blast-to-Cast’ service model in India. As of Q2 FY26, blasting solutions accounted for 14% of Mining Chemicals revenue, with a 33% year-on-year volume growth, signaling a definitive shift away from its legacy as a commodity TAN supplier toward becoming a specialized mining partner.
Manufacturing capabilities comparison of Platinum Blasting Services Vs Solar Industries
| Component | Platinum Blasting Services | Solar Industries |
|---|---|---|
| TAN | Sourced (Buys from Deepak) | Sourced (Buys from Deepak + Imports) |
| Emulsion Matrix | In-House | In-House |
| Sensitizer / Gassing Agent | Sourced | In-House |
| Detonator | Sourced | In-House |
| Cast Booster | Sourced | In-House |
| Detonating Cord | Sourced | In-House |
Deepak in India too has similar capabilities with advantage of in-house TAN.
Now the interesting part, check following timeline of events:
- On 5th November 2025, Deepak Fertilizers announced it has acquired the remaining stake to make Platinum Blasting Services a 100% wholly owned subsidiary.
- On 24th December 2025, Deepak Fertilizers announced an 100% acquisition of an explosives manufacturer. (Confidential at the moment & subject to completion of conditions)
- Gopalpur TAN plant with a capacity of 377k MTPA is ~87% complete and is expected to go live by Q4 FY26.
- The government has increased the export quota for TAN to 50,000 metric tonnes per year, allotted to Deepak as it is the sole exporter.
My guess is that this unknown explosive manufacturer will complete the final piece of the puzzle and will bring in capabilities that Deepak Fertilizers & Platinum Blasting Services lack. Current debt stands at 3402 Cr and as per Q2FY26, management guided for peak debt to be ~4500 Cr. Assuming 500 Cr for remaining Capex & H2 CFO of 800 Cr. Total Acquisition budget could be 4500 - 3402 - 500 + 800 - 80 (To acquire remaining PBS stake) - 160 (Interest) i.e ~1160 Cr.
With ~1160 Cr of acquisition budget, my guess would be Regenesis Industries.
Regenesis is a fully integrated manufacturer of the “Initiating Systems” suite, filling all the gaps in Deepak’s current portfolio (TAN + Emulsion).
- Detonators: Manufactures Electric and Electronic Detonators (Brand: Indra E-Det, Indra Excel).
- Cast Boosters: Manufactures Cast Boosters in-house (Brand: Indra Booster / Quality Tested Cast Booster).
- Detonating Cord: Manufactures Detonating Fuse (Brand: Highly Durable Detonating Fuse).
- PESO Licenses: Holds valid licenses for manufacturing and storage of all Class 1, 2, 3, and 6 explosives.
The 25th December announcement mentioned exporting “differentiated products” to Australia.
- Regenesis has a strategic agreement with Vikram Sarabhai Space Centre (VSSC) to manufacture detonators using NHN (Nickel Hydrazine Nitrate) technology. This is a Green Detonator technology (lead-free), which is a highly differentiated and value-added product suitable for strict environmental markets like Australia and Europe.
- This specific IP (Green Detonators) gives Deepak Mining a unique competitive advantage to supply its Australian subsidiary (Platinum Blasting Services) against giants like Solar Industries & Orica.
Regenesis is a mid-sized private entity (FY24 revenue of 703 Crore). Likely operates at 6-8% EBITDA margins (approx 42-46 Cr EBITDA) because it has to buy its raw material (TAN) from the market, likely from Deepak Fertilisers or imports. Deepak paid 6.7x EBITDA for Platinum Blasting Services. They can easily acquire Regenesis assuming 7x EBITDA multiple for 294 Cr - 322 Cr. Once Deepak integrates its own TAN supply, margins should expand from 6-8% to 18-20%.
Other candidates:
- SBL Energy: Having raised ~340 Cr in Series B funding in 2024 from marquee investors like Synergy Capital and Mukul Agrawal, they are likely on an IPO track. [Unlikely]
- IDL Explosives: This is a subsidiary of GOCL Corporation (Hinduja Group); it is unlikely the Hindujas would divest a core explosives asset to a competitor like Deepak unless it was a distressed sale, which the 13% CAGR does not suggest. [Unlikely]
- CDET Explosives: They have highest EBITDA Margins of all because they only focus on selling high tech detonators. They lack the complete initiation suite (Cast Boosters, Detonator Cord). On the contrary they fit in the acquisition budget and detonators are of much more value than cast boosters. So could be another potential candidate. [Likely]
- Special Blast: With revenue nearing 900-1000 Cr, they might be too expensive for a 100% buyout within Deepak’s current budget. Also they have limited footprint in Electronic Detonators. [Unlikely]
- Salvo Explosives: Similar to CDET, they specialize in detonators (Non Electric) but lack capabilities for cast boosters. They fit the acquisition budget too so could be another possible candidate. [Likely]
While CDET and Salvo offer attractive entry points into the high-margin detonator market, they are specialized component manufacturers. Regenesis Industries stands out as the most logical target for two critical reasons:
- Portfolio Completeness: It is the only mid-sized private player with an in-house “Initiation Suite” (Detonators, Cast Boosters, and Detonating Cords). This allows Deepak to provide a complete backward integrated blasting solution to Indian & Australian clients.
- The Green Advantage: Regenesis’s ties to NHN (Nickel Hydrazine Nitrate) technology provide a “differentiated product” that is essential for the Australian market’s strict environmental standards, a specific detail highlighted in Deepak’s December 24, 2025, disclosure.
Future Manufacturing capabilities comparison of Deepak Fertilizers (Platinum Blasting Services + Regenesis Industries) Vs Solar Industries
| Component | Deepak Fertilizers | Solar Industries |
|---|---|---|
| TAN | In-House | Sourced (Buys from Deepak + Imports) |
| Emulsion Matrix | In-House | In-House |
| Sensitizer / Gassing Agent | Sourced | In-House |
| Detonator | In-House | In-House |
| Cast Booster | In-House | In-House |
| Detonating Cord | In-House | In-House |
Based on my findings, TAN is 60% - 70% of the cost of providing blasting solutions. And Sensitizer / Gassing Agent which Deepak Fertilizer lacks is only ~2% of the cost. As they have the advantage of in-house TAN manufacturing over Solar Industries, they should be able to out bid Solar Industries or at least compete head on with them while maintaining high margins.
The Gopalpur TAN Plant is strategically located on India’s East Coast, serving as a high-speed maritime gateway to the Asia-Pacific. It reduces transit times to Australia by ~40% compared to traditional Black Sea supply routes. The plant’s location, coupled with a dedicated 4.8 km ammonia pipeline from Gopalpur Port, eliminates the logistics tax of inland transport. This allows Deepak to move TAN seamlessly to its Australian subsidiary (PBS) at a lower landed cost, creating a competitive moat against peers who lack such plant to port integration.
Market size estimate for Blasting Solutions:
- Indian market is estimated at 11,500 Cr - 13,500 Cr. Solar Industries is the market leader with approximately 25-30% market share. The remaining share is split between other organized players (like GOCL, IDL) and a significant unorganized sector.
- Australian market is estimated at 23,000 Cr - 27,000 Cr. It is an oligopoly dominated by two major players Orica and Dyno Nobel, who control over 80% of the market. Solar Industries has entered the Australian market as a challenger brand to compete on cost.
If Deepak Fertilizers is able to capture 25% of the Indian Market and 10% of the Australian Market, they can do an ARR of (2875 Cr - 3375 Cr) + (2300 Cr - 2700 Cr) = 5175 Cr - 6075 Cr.
Valuations:
We can use Solar Industries as reference. Current Market Cap: 115,000 Cr. FY26E revenue estimate from blasting solutions: 6500 Cr, Margin 22%, EBITDA 1430 Cr.
At EBITDA multiple of 20x, the blasting solutions business of Solar Industries is valued at 28,600 Cr.
Deepak Fertilizers current market cap for entire business: 15,697 Cr.
Disclaimer: Invested, biased and possibly daydreaming.