Re: Premier Explosives


(Nitin) #1

Hi All,

I've participated in other threads but this is going to be my first thread on a new stock research:

The stock is Premier Explosives. It has four business divisions:

1)Civil applications - Mining & Non Mining (Mining -Detonator, cartridge explosives, detonator fuse, Non Mining - Cloud harvesting, Riot Control devices)

2) Defence & Space (Propellant, Pyros, Explosives, rocket motors)

3) Business divisions â Service contract

4) Wind Energy (very small)

Defence and explosive contribute 90% of the revenues.

Revenues (INR mn) FY10 FY11 FY12 FY13 FY14
Explosives 738.8 731.4 849.7 805 1026
Defence 52.4 89.9 89.1 136.1 267.9
Services 97.2 117.6 129.2 141.7 146.5
Windpower 0.5 4.9 5.4 5.5 6.7
Total 888.9 943.8 1073.5 1088.4 1447.1

Growth in business Divisions:

Revenues Q4FY14 Q4FY13 YoY % Q3FY14 QoQ%
Explosives 279.4 269.1 3.80% 225.6 23.80%
Defence 97.5 51.1 90.80% 62.3 56.50%
Services 34.2 37.9 -9.70% 43.9 -22.10%
Wind 0.5 0.4 20.00% 0.7 -23.70%
Total 411.6 358.5 14.80% 332.5 23.80%


Mcap- 142 Cr

  1. PEL is the only Indian private entity in the niche market of Solid propellants for defence use
  2. PEL has been manufacturer-partner in various missile programs with: Advanced Systems Laboratory, DRDO | Bharat Dynamics Ltd | Research Centre Imarat for various missile such as Akash, Astra and several Surface-to-Air Missiles
  3. Defence allocation this budget is- Rs2,03,672 crore

Positives for this company
  1. Govt opened the sector for private players
  2. Missile program is till in testing phase, missiles are still to be inducted in the army (in testing phase, required missiles are less but when they will be inducted in army number will be huge), this company makespropellant, rocket motorsfor the missiles
  3. Govt has made mandatory for foreign players to source 30% material from Indian companies, so even even foreign companies set up their business in India this company will be benfited
  4. Company has the first mover advantage
  5. Defence is a high margin business (mentioned by them in AR) and for thiscompanyit is growing at a rate of 38% CAGR for past 3 years. Last year growth was 90%
  6. Defence indeginisation- 12thFive-year plan: To increase domestic procurement from 30% to 75%- Raise FDI limit â currently at 26%
Please have a look at this ppt for more details
http://www.pelgel.com/InvestorsPresentation.htm
There was an accident in their plant last year, because of that all their detonators got exploded and they incurred losses. This is the reason for the plunge in profitability in FY2013.
The company can be included in the watchlist atleast as the potential looks huge.
Views are invited :)
Posting some of the ratios below
Particulars Mar2013 Mar2012 Mar2011 Mar2010 Mar2009
Operational & Financial Ratios
Earnings Per Share (Rs) 6.57 14.69 12.33 7.32 3.52
CEPS(Rs) 9.21 16.99 14.50 9.13 5.01
DPS(Rs) 2.50 2.50 2.00 2.00 1.50
Book NAV/Share(Rs) 59.62 55.98 44.20 34.20 29.22
Tax Rate(%) 28.20 28.04 33.45 54.23 53.27
Margin Ratios
Core EBITDA Margin(%) 6.71 13.34 14.66 22.82 18.67
EBIT Margin(%) 7.76 15.18 16.03 15.29 11.57
Pre Tax Margin(%) 6.20 14.22 14.67 13.68 7.95
PAT Margin (%) 4.45 10.24 9.76 6.26 3.71
Cash Profit Margin (%) 6.24 11.84 11.48 7.81 5.28
Performance Ratios
ROA(%) 6.36 14.83 14.13 10.65 5.05
ROE(%) 11.37 29.34 31.45 23.07 12.43
ROCE(%) 16.74 39.32 42.66 41.34 23.76
Asset Turnover(x) 1.43 1.45 1.45 1.70 1.36
Sales/Fixed Asset(x) 2.44 2.67 2.64 2.87 2.67
Working Capital/Sales(x) 11.07 10.12 13.46 7.92 5.87
Efficiency Ratios
Fixed Capital/Sales(x) 0.41 0.37 0.38 0.35 0.37
Receivable days 50.14 48.29 44.95 36.95 64.07
Inventory Days 43.51 33.20 35.79 34.62 34.40
Payable days 23.49 19.18 34.18 54.33 66.63
Valuation Parameters
PER(x) 8.05 4.90 5.25 15.23 5.31
PCE(x) 5.74 4.24 4.47 12.20 3.73
Price/Book(x) 0.89 1.29 1.46 3.26 0.64
Yield(%) 4.73 3.47 3.09 1.80 8.02
EV/Net Sales(x) 0.49 0.54 0.56 1.10 0.32
EV/Core EBITDA(x) 4.52 3.06 2.94 4.18 1.44
EV/EBIT(x) 5.74 3.32 3.25 6.74 2.50
EV/CE(x) 0.59 0.75 0.65 1.66 0.42
M Cap / Sales 0.39 0.54 0.55 1.02 0.22
Growth Ratio
Net Sales Growth(%) 1.00 13.86 7.02 27.60 21.65
Core EBITDA Growth(%) -38.33 5.31 -22.16 51.09 80.82
EBIT Growth(%) -47.40 7.65 13.33 62.90 -21.88
PAT Growth(%) -55.29 19.23 68.52 107.76 -50.92
EPS Growth(%) -55.29 19.21 68.48 107.73 -50.93
Financial Stability Ratios
Total Debt/Equity(x) 0.26 0.10 0.11 0.34 0.39
Current Ratio(x) 1.36 1.49 1.19 1.70 1.80
Quick Ratio(x) 0.80 0.99 0.95 1.08 1.35
Interest Cover(x) 4.96 15.88 11.73 9.47 3.19
Total Debt/Mcap(x) 0.30 0.08 0.08 0.10 0.61

(Nitin) #2

Sorry looks like it got posted in a wrong thread.


(Nitin) #3

Admin please delete the thread, I’m not able to delete this thread, I’ve created a new thread in Untested-but worth a look. Apologize for the mistake :frowning:


(Nitin) #4

Admin please delete the thread, I’m not able to delete this thread, I’ve created a new thread in Untested-but worth a look. Apologize for the mistake :frowning: