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Shares of Premier Explosives hit a new high of Rs 909.35, as they rallied 10 per cent on the BSE in Friday’s intra-day trade in an otherwise weak market after the stock turned ex-date for 1:5 split. With today’s rally, the stock price of the smallcap explosives company has more than doubled or zoomed 109 per cent from a level of Rs 426.80 (adjusted to stock split) on June 5.
At 02:34 pm; Premier Explosives was trading 9 per cent higher at Rs 903, as compared to 0.57 per cent decline in BSE Sensex. A combined 2.1 million shares changed hands on the NSE and BSE.
Premier Explosives had fixed June 21, 2024 as the "Record Date" for determining entitlement of equity shareholders for the purpose of sub-division/split of existing equity shares of the company, such that 1 equity share having face value of Rs 10 each, will be subdivided into 5 equity shares having face value of Rs 2 each.
With a view to enhance the liquidity of company's equity shares at the stock market and to encourage participation of retail investors by making equity shares of the company more affordable, the board decided to sub-division of equity shares of the company, Premier Explosives said on its rationale behind the stock split.
Thus far in the calendar year 2024, the stock price of Premier Explosives has zoomed 181 per cent. In comparison, the BSE Sensex has gained 6.5 per cent. In the previous calendar year 2023, the market price of Premier Explosives had appreciated 277 per cent. It skyrocketed 7,776 per cent from the March 2020 low of Rs 11.30 on the BSE.
The company is a leading manufacturer of High Energy Materials. The company’s participation is in defence and space programs with Indigenous technology & technology transfer. It owns licenses for manufacturing & development products and provides High Entry barriers.
Premier Explosives manufactures a diverse range of commercial explosives for mining & infrastructure industries. Its product range includes bulk explosives, cartridge explosives, cast booster, detonators, detonating fuse, etc.
The company manufactures solid propellants for tactical missiles (Astra, Akash and LRSAM / MRSAM) strategic missiles (Agni), Veda Etc. It entered the Indian Space programme as an approved supplier of PSOM-XL Motor for use in Polar Satellite Launch Vehicle (PSLV) to Indian Space Research Organisation (ISRO).
Premier Explosives' current order book stands at Rs 965 crore, around 3.6x of FY24 revenue, out of which the defense segment forms the majority Rs 834 crore, which is 86 per cent of the total order book. The Explosive segment stands at Rs 19 crore and service segment, which is the operational maintenance, stands at Rs 111 crore.
Order Inflow in FY24 stood at ~Rs 711.5 crore (Excl GST). These included orders from BDL, L&T and MoD (IAF), Elbit, IAI to be executed over the next 9-18 months.
The company said it is working towards securing more orders in defense and explosive segments. Going forward, the inflow and execution of defense segment orders is expected to support the improvement in the company’s margins and overall cash generation.
India, one of the largest mining and industrial explosives markets and the second largest coal producer, offers tremendous opportunities to PEL. With a direct connection to the level of industrialisation activities and construction and infrastructure projects in the nation, the demand for explosives has been on the rise, which endows benefits to the company.
The company caters to the demand of end-user industries such as mining, infrastructure, defence and aerospace. The demand prospects for the company’s products are expected to increase with the government’s rising budgetary allocation towards defence.
Also, the government’s announcement of a negative list of imports to encourage domestic procurement and permitting the export of select products offer opportunity for the company in defence supplies. However, the tender-based bidding process and the long-drawn approval process may bring in lumpiness in revenues from this segment, ICRA said in its recent rating rationale.
