The Pinaka opportunity is 2800cr (all incl, not for PEL only), which appears sizeable.
Will brahmos be similar…?
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 inv…current indication of rs 300cr per year is really stretched IMHO
Export potential…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)…and could bring exciting legs for the biz
They dont require any capex for exec of the current and future orderbook…should keep expenses in check.
The DRDO refers to Nipun mines—anti-personnel mines created and built locally—as “soft target blast munition.” 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 FY’24
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?
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.
Management always gives very high order book projections but it doesn’t seem to reflect in the revenues. Did anyone notice this? Below I have copied promoter’s statement from the last conference call.
‘’‘In terms of order inflow and backlogs, we started financial year ‘24 with
an order book of almost Rs 521 Crores and as it peaks, the new orders of Rs 760 Crores in the year till end of March 2024. Our current outstanding order
book stands at approximately Rs 964 Crores, a strong growth of 85% year-on-
year and translates into 3.6x of our Financial Year 2024 revenue.’’’
If they had an order book of 521 crores last year, and still it translates to only 272 Crores of revenue then it doesn’t make sense to make any use of the order book projections. Even if we remove the GST part from the 521 Crores number still a lot of the orders have spilled over to next year taking the order book to 964 Crores.
Now why 964 Crores number is insignificant is because the company hasn’t told us by when these orders need to or will be executed, if these will get executed in 3 years’ time then it doesn’t translate to a significant revenue growth which can lead to P/E re-rating. If someone has any idea by when is the management aiming to execute these orders and by when the customers will be billed and the amount will translate to revenue, it would be very helpful if they could share these details.
They have specified the timeline during earnings calls. During Q4, they have mentioned its to be executed over 2 years. Earlier during Q2 call too, they had specified the timeline for various key orders.
Going forward will receive regular orders from the Ministry of Defense of similar quantity as received in last quarter
Current order book stands at Rs 900 crore translating to 3x of last year revenues
The company has received clearance from Odisha government to setup a facility with a total investment of Rs 864 crores over next 10 years in three phases
The company has entered into manufacturing of mines and ammunition which is now to be manufactured in the domestic sector instead of being imported
The improved cash flows will be utilized to strengthen the balance sheet
Participants
White Pine Investment Management
Arihant Capital Markets
Mount Intra Finance Pvt.
ICICI Sec
Systematix Group
RN Associates
Fairvalue Capital
QnA
The delivery of shafts got delayed due to the Red Sea crisis which led to delivery in raw material coming to the company and delivery should happen by September
The execution has been good in the last three months and there was no significant order inflow in last three months leading to run down of unexecuted order book
The annualized EBITDA margins should stay in the range of 18%
For Brahmos Missile government is going to look at export and the company has also supplied material to Bharat Dynamics for Aakash missile which too is being looked at export market
The company has absorbed DRDO technology for mines and ammunition grenades and this will reflect post one year into the revenues of the company
The asset turnover from the Odisha facility should be 3-4 times
In the coming five years the annualized revenue run rate should be Rs 1000 crores
The Odisha facility should add revenues of close to Rs 500-600 crores over the next 4-5 years
The SSLV program needs a lot of capital investments and the returns on these investments also need to be looked at. Though the company is qualified it will be looked at in the future
There is no consistency in the business, as revenues cannot be predicted on a quarterly basis. As per RFP the company participates and on winning the orders the company gets revenue
Untill last year the company was coming under MAT which will no longer be the case as all the carry forward losses have finished and taxes will range at 23% going forward
The export revenues contribute around 25% of the total revenues and going forward this run rate and atleast around 20% of revenues should be maintained from exports. There is no dilution of margins in the export business. It is similar to domestic business
The management stated that, “The 100% requirement of propellants and energetics flows to Premier Explosives because as on date, we are the only qualified source.”
As per company:
The outstanding order book stands at Rs. 750 crores forming 1.8x of Financial Year 2025 revenue.
During the quarter, execution of old orders has paved the way for bidding and securing larger high value orders from the Ministry of Defense, the Indian defense industry and international defense entities.
They have also stated that In Q4Financial Year '25, they received orders from various entities such as BrahMos Aerospace Private Limited for propellant casting and assembly of BrahMos Ramos boosters and various overseas clients for design and development of rocket motors and supply of defense explosives which are under different stages of execution.
Coming to future outlook, Premier is the only Indian Company qualified to manufacture countermeasures and specializes in exporting fully assembled rocket motors. Along with rocket motors, it also manufactures and exports warheads, mines and ammunition under the Atmanirbhar Bharat initiative. With the Ministry of Defense promoting domestic production and reducing imports, this policy supports Premier’s growth by driving local manufacturing.The revenue from operations for Q4 FY ‘25 stands at Rs. 74.1 crores as compared to 86.8 crores in Q4 FY ’24which shows a de-growth of 14.6% year-on-year. Our operating profit for Q4, '25 stands at Rs. 9.6 crores as compared to Rs. 15.1 crores in Q4, FY '24. The operating margins for the quarter stand at 12.9%. We reported a net profit of Rs. 3.7 crores compared to Rs. 6.6 crores in Q4 FY '24.
The revenue from FY ‘25 stands at Rs. 417.5 crores as compared to Rs. 271.7 crores in FY ‘24 translating a growth of 54% year-on-year. Operating profit, FY ‘25 stands at Rs. 58 crores as compared to Rs. 58.5 crores in FY ‘24. The operating margins stood at 13.9% in FY ‘25. The net profitin FY ‘25 stood at Rs. 28.6 crores compared to Rs. 28.1 crores in FY ‘24.
The Company’s current order book stands at Rs. 750 crores, out of which the defense segment order is majority of Rs. 610 crores, which is equal to 81% of the total order book. Explosives segment stands at Rs. 73 crores, and the service segment which is operational and maintenance service segment stands at Rs. 67 crores.
The total order book of Rs. 750 crores, which is, of course, the period of this is expected to be executed in a period of 18 months. Out of this, 100 crores are of export and balance is domestic.
Order inflow guidance for FY ‘26 is expected to be maintained at 800 crores.
About the accident that happened in a large mixing plant, propellant mixing building, where the building has totally collapsed and the equipment also damaged the mixer. And the cause for the accident is being investigated. We have two facilities, Katepalli and Peddakundukur, for propellant manufacturing. So, most of the tactical missiles and all those are produced at Peddakundukur facility and also we have a parallel line at Katepalli for doing it. So, the only area which can get affected is the large diameter rocket motors, which is supplied to ASL and ISRO. The total revenue from this is expected to be Rs. 25 crores to Rs. 30 crores of the total revenue. So that there will be effect on that amount.
As far as financial impact is concerned, we are fully insured.
The company attributed the fall in revenue for the order to the vagaries of orders. However, “our total turnover is higher than the previous year turnover of Rs. 271 crores. This is the highest turnover in the Company’s history.”
Our target is Rs. 600 crores of revenue for the current financial year and expect to reach Rs. 1,000 crore turnover by 2030. And EBITDA margin is between 18% to 20% is our future.
The company tried to shrug off late delivery charges. It did not rebut the statement from an investor that "due to these LD charges, that EBITDA margin dropped down significantly from that level to currently around 12.9%."Unless the delays are caused by force majeure it really doesn’t reflect well on execution efficiency.
“We have only one order in which we have LD. So, when we are executing that order, there will be a reduction of 15%. So, that also we are requesting them to reverse it and give it back to us. So, that effort is also going on. Otherwise, only on particular order, there will be 15%. Otherwise, rest of the order, there is no LD.” The company lost 35 cr in total, not an insignificant amount, due to LD.
As for *MRSAM, we have order of more than 500 numbers from BDL. BDL is the only integrating agency and Premier is the only propellant supplying agency. Only thing is, we are dependent on the hardware as FIM from BDL. Right now they are providing us around 30 numbers per month hardware. So, whatever filling propellant and then delivering back.
Medium Range Surface - To - Air Missile (MRSAM) is a high response, quick reaction, vertically launched supersonic missile, designed to neutralize enemy aerial threats – missiles, aircraft, guided bombs, helicopters.
There is also a significant increase in payables and inventory. Last year turnover was Rs. 271 crores. This year it is Rs. 417 crores. Turnover has also gone up. Accordingly, inventories have also gone up. The increase in payables is almost close to 10x.
We are not working directly with Philippines. We are exporting industrial explosives to Thailand and Philippines. Not the defense.
PS: I have just started reading the concall of Solar. One gets entirely different vibes. While Premier Explosives management appears on the defensive all the time, the Solar team is buoyant.
Disclaimer: Have made a small investment in Premier Explosives. May shift to Solar.
I was invested in this stock before split and already made good money. Now I’ve reduced my position significantly as found some points which didn’t give me confidence to hold this any longer. Below are the points.
2 fire related incidents in a span of 2 months in Telangana plant. 3-4 deaths in these incidents. State government ordered closure of this plant. Although this plant contributes little to the revenues, still expecting some impact on financials.
No news on MoU with Astra Microwave for joint sale of products.
They’ve formed a JV with Nibe for joint manufacturing of defence products. However, Nibe itself is a shady company and there are many posts on Valuepickr about redflags in this company. Did they not do any background check about Nibe before entering into JV.
I hardly have very less shares of the company now.
