Premier Explosives

Stock Opportunities
42

Invested Here.

2 Things to keep in mind with defence adjacent companies.

  1. Order Delay/Cancellation happens routinely. Confirmed Orders are just that. Only Delivery and acceptance by end user are a reality.
  2. Be ready for Long WC / delayed payments.

Apart from this company seems to be pursuing multiple opportunities across adjacent spaces. Execution will be key. CP seems overextended and can be range bound and even fall with broader markets.

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43

The Pinaka opportunity is 2800cr (all incl, not for PEL only), which appears sizeable.

Will brahmos be similarā€¦?

Could someone help on the size of NIPUN mines oppurtunity?

Regarding Chaffs and flares, in the previous concall, it was indicated that the subsequent orders may max upto 20% of the current order, on an annual basis, to cover for IAF expenditure on trg and replacement of expired invā€¦current indication of rs 300cr per year is really stretched IMHO

Export potentialā€¦further development in this would be interesting (we are importing niche def products from israel, supplying to them is an achievement, and indication of increasing queries, incl from Europe, if results in orders, would be a kicker)ā€¦and could bring exciting legs for the biz

They dont require any capex for exec of the current and future orderbookā€¦should keep expenses in check.

Invested and biasedā€¦looking at the next 6 qtr

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Nipun Mines:

  • The DRDO refers to Nipun minesā€”anti-personnel mines created and built locallyā€”as ā€œsoft target blast munition.ā€ The purpose of anti-personnel mines is the same as that of anti-tank mines, which are intended to target heavy vehicles.
  • These mines are meant to act as the first line of defense against infiltrators and enemy infantry.
  • They are smaller in size and can be deployed in large numbers.

As per recent concall, Nipun mines is premier explosives product (Refer to concall dated 31.10.2023) and company had an order of Rs 40 cr. Bulk production of Nipun mines has started, and the first instalment of these will be offered from pre-dispatch inspection in the fourth quarter of FYā€™24

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Thanksā€¦thats really helpful
This is one big bulk reqmt and 40Cr should be just a start. May be a recurring annual reqmtā€¦or rather will certainly be.

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A little bit of correction here.

  • FY24 revenue will be 300cr +/- 10%. So 270-330cr as per management.
  • Order book might be 100cr less as there might be some mismatch due to GST even though mentioned in presentation that order book is excluding GST
  • FY25 600 cr is a possibility not a guidance

Other points to add:

  • Tax to be 25%.
  • Industrial explosives prices are decreasing each year
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48

The management has proposed a plan to raise funds. What can be the requirement for such fund raise, given that the company has enough capacity?
There was also an earlier notification for an in-principle approval for capex in Orissa of 864 crores.

Can someone share their thoughts on these actions of the company?

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The Rs 864cr capex plan is spread into three stages and is a ten-year plan, as directed by the MD.
High defense explosives would be the focus of the first phase (Investment required Rs 200cr approx.), with ammunition and propellants taking up the next two. Phase 1 will begin right away and is anticipated to be completed by the end of FY25.

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51

Is this information published somehwere by the management?

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Here is the link:

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Stock Split 1:5
Fund Raise: Rs 400cr

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