1. At a Glance
Premier Explosives Ltd (PEL) is India’s only listed defence-grade solid propellant manufacturer with strong ties to DRDO, ISRO, and BDL. With defence & space contributing 84% of revenue in FY25, and exports now catching fire, this little rocket might just be ready for lift-off. But with a 98x P/E? Strap in tight.
2. Introduction with Hook
Imagine being the only one allowed to light fireworks on Diwali… and everyone’s depending on you for the show. That’s Premier Explosives in India’s defence and aerospace sector—playing arsonist for ISRO, DRDO, and Bharat Dynamics, but officially.
- India’s first private manufacturer of solid propellants.
- 5-year profit CAGR? 38%.
- But wait—Q4 FY25 profits down 44% QoQ. Firecracker or fizzler?
3. Business Model (WTF Do They Even Do?)
PEL manufactures industrial and defence explosives, detonators, and solid rocket propellants.
Segments:
- Defence & Space (84%) – Rocket motors, explosive warheads, flares, chaffs, pyro devices.
- Industrial Explosives (16%) – For mining & infrastructure.
- O&M Services – Operates solid propellant plants for ISRO & DRDO.
Clients:
ISRO, DRDO, BDL, BEL, ASL, and global defence companies.
USP:
- India’s first and only private solid propellant supplier.
- Export momentum kicking in (₹105 Cr order recently).
- ISO-certified, defence-compliant facilities.
4. Financials Overview
| Metric | FY25 | FY24 | YoY Growth |
|---|---|---|---|
| Revenue | ₹417 Cr | ₹272 Cr | 53% |
| EBITDA | ₹58 Cr | ₹58 Cr | Flat |
| Net Profit | ₹29 Cr | ₹28 Cr | 3.6% |
| EPS | ₹5.31 | ₹5.23 | – |
| ROCE | 17% | 18% | ↓ |
| ROE | 12.2% | 10.1% | ↑ |
| Debt | ₹45 Cr | ₹66 Cr | ↓ |
| OPM% | 14% | 22% | ↓↓ |
Highlights:
- Revenue rocketed.
- Margins compressed due to higher input costs and possible execution delays.
- EPS up… barely.
- Debtor days improved drastically from 98 to 33 (finally collecting dues, huh?).
5. Valuation
| Method | Fair Value Estimate (₹) |
|---|---|
| P/E based (40x FY26E EPS) | 360 – 440 |
| DCF (10% discount rate) | 475 – 525 |
| EV/EBITDA (20x multiple) | 490 – 550 |
FV Range: ₹440 – ₹525
Current market price: ₹525
Conclusion: Valuation is… spicy. It’s priced like it’s already won a war. But future orders (domestic & export) may justify the heat.
6. What’s Cooking – News, Triggers, Drama
- July 2025: ₹105 Cr export order for defence explosives.
- June 2025: $762K defence export order.
- **Q4 FY25 profit fell 44% QoQ. Why? Delayed execution or margin squeeze?
- ISRO + DRDO dependency: Great for relevance, risky for concentration.
- Defence capex push: GOI plans ₹1.5 lakh Cr capex for FY26. Guess who benefits?
7. Balance Sheet
| Item | FY25 | FY24 |
|---|---|---|
| Equity Capital | ₹11 Cr | ₹11 Cr |
| Reserves | ₹235 Cr | ₹210 Cr |
| Borrowings | ₹45 Cr | ₹66 Cr |
| Other Liabilities | ₹240 Cr | ₹159 Cr |
| Fixed Assets | ₹198 Cr | ₹198 Cr |
| CWIP | ₹3 Cr | ₹3 Cr |
| Cash & Equiv. | ₹73 Cr | ₹20 Cr |
| Total Assets | ₹531 Cr | ₹445 Cr |
Key Notes:
- Significant cash jump from ops (₹119 Cr).
- Debt down.
- No major capex jump. Efficient, but maybe playing too safe?
8. Cash Flow – Sab Number Game Hai
| Flow Type | FY25 | FY24 | FY23 |
|---|---|---|---|
| Operating Cash Flow | ₹119 Cr | ₹79 Cr | ₹20 Cr |
| Investing CF | ₹-11 Cr | ₹-25 Cr | ₹-16 Cr |
| Financing CF | ₹-35 Cr | ₹-34 Cr | ₹-4 Cr |
| Net Cash Flow | ₹73 Cr | ₹20 Cr | ₹-0 Cr |
Notes:
- Operating cash = 💪
- Investing mostly maintenance-level.
- Borrowings repayment shows balance sheet clean-up underway.
9. Ratios – Sexy or Stressy?
| Ratio | FY25 | FY24 | FY23 |
|---|---|---|---|
| ROCE | 17% | 18% | 7% |
| ROE | 12.2% | 10.1% | 6% |
| OPM | 14% | 22% | 13% |
| D/E | 0.2x | 0.3x | 0.5x |
| Debtor Days | 33 | 98 | 97 |
| Inventory Days | 235 | 290 | 335 |
| Payable Days | 178 | 51 | 66 |
Verdict:
Ratios are looking tighter than a DRDO NDAs. But that inventory… clean it up, Premier.
10. P&L Breakdown – Show Me the Money
| Year | Sales | EBITDA | PAT | EPS |
|---|---|---|---|---|
| FY21 | ₹153 | ₹7 | ₹-11 | -2.00 |
| FY22 | ₹199 | ₹22 | ₹6 | 1.04 |
| FY23 | ₹202 | ₹26 | ₹7 | 1.24 |
| FY24 | ₹272 | ₹58 | ₹28 | 5.23 |
| FY25 | ₹417 | ₹58 | ₹29 | 5.31 |
Trend Check:
Revenues exploded (pun intended), but PAT is growing slowly. Margins under pressure even as topline zooms.
11. Peer Comparison
| Company | CMP (₹) | P/E | ROCE | OPM % | PAT (Cr) | MCap (Cr) |
|---|---|---|---|---|---|---|
| Solar Industries | 14,900 | 107 | 38% | 26.88% | ₹1,255 | ₹1,34,830 |
| Premier Expl. | 526 | 98.9 | 16.9% | 13.89% | ₹28.5 | ₹2,823 |
| GOCL | 395 | 17.6 | 7% | -4.78% | ₹111.5 | ₹1,957 |
| Keltech Energies | 4,333 | 17.4 | 25.9% | 7.45% | ₹24.9 | ₹433 |
Takeaway:
PEL has scope to grow into Solar’s space. But profitability, scale, and brand visibility still far behind.
12. Miscellaneous – Shareholding, Promoters
| Holder | Jun 2025 |
|---|---|
| Promoters | 41.33% |
| FIIs | 0.73% |
| DIIs | 8.03% |
| Public | 49.91% |
Interesting Nuggets:
- Public held strong despite run-up.
- No promoter change = steady hands.
- DII confidence improved post FY24.
13. EduInvesting Verdict™
Premier Explosives is no joke. From ISRO’s fuel tanks to DRDO’s warheads, they’ve secured a seat at India’s strategic table. The export orders are the new rocket fuel. But can they convert this boom into bottom-line consistency?
Big Positives:
- Monopoly-like positioning in solid propellants.
- Govt defence capex = long runway.
- Improving collections and debt metrics.
Big Risks:
- Q4 FY25 slowdown.
- Valuations hotter than the propellants they make.
- Order lumpiness = lumpy earnings.
Final Thoughts?
Premier isn’t a one-quarter story. But valuation requires faith in future defence megaprojects. Either you’re an early investor in the next Solar Industries… or you’ve lit a sparkler hoping for a rocket.
Metadata
Written by EduInvesting Research | 18 July 2025
Tags: Premier Explosives, Defence Stocks, ISRO Suppliers, Propellants, DRDO, Smallcap Defence
