Premier Explosives

Premier Explosives Q1FY25 Concall Summary

Business Updates

• 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