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
- PEL is the only Indian private entity in the niche market of Solid propellants for defence use
- 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
- Defence allocation this budget is- Rs2,03,672 crore
Positives for this company
- Govt opened the sector for private players
- 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
- 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
- Company has the first mover advantage
- 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%
- 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 |
