Premier Explosives stock: Premier Explosives’ shares reached a new high of Rs 909.35 on Friday during intraday trading on the BSE, rising 10% in an otherwise choppy market following the firm’s ex-date for a 1:5 split. After today’s surge, the smallcap explosives company’s stock price has more than doubled or soared by 109% from its June 5 level of Rs 426.80 (adjusted for a stock split).
According to Business Standard, premier Explosives was trading 9% higher at Rs 903 at 02:34 pm, while the BSE Sensex was down 0.57%. On the NSE and BSE, 2.1 million shares were exchanged.
To subdivide or split the company’s existing equity shares, Premier Explosives set June 21, 2024, as the “Record Date” for determining the entitlement of equity shareholders. This will allow for the division of one equity share, which has a face value of Rs. 10, into five equity shares, each of which has a face value of Rs. 2.
Premier Explosives explained the reasoning behind the stock split, saying that the board decided to subdivide the company’s equity shares to increase the liquidity of the company’s equity shares on the stock market and to promote participation from retail investors by making equity shares of the company more affordable.
The price of Premier Explosives stock has gone up by 181% in the first few months of 2024. On the other hand, the BSE Sensex has gone up by 6.5%. In the past year, 2023, Premier Explosives’ market value has grown by 277%. It went from a low of Rs 11.30 on the BSE in March 2020 to a high of 7,776%.
The company makes a lot of High Energy Materials. To help with defense and space tasks, the company uses both its own technology and technology that it gets from other companies. It is hard to get into and has rights for both making products and developing new ones.
Premier Explosives produces a wide variety of industrial explosives for the infrastructure and mining sectors. Bulk explosives, cartridge explosives, cast boosters, detonators, detonating fuses, etc. are among its products.
The company produces solid propellants for strategic (Agni), tactical (Astra, Akash, and LRSAM / MRSAM), and other missiles. It joined the Indian Space Program as an authorized supplier of PSOM-XL Motor to the Indian Space Research Organization (ISRO) for use in the Polar Satellite Launch Vehicle (PSLV).
Premier Explosives currently has an order book of Rs 965 crore, or around 3.6 times its sales for FY24. Of this amount, the defense sector accounts for Rs 834 crore, or 86% of the overall order book. The operational maintenance (OM) service segment is valued at Rs 111 crore, while the explosives segment is valued at Rs 19 crore.
Order inflow for FY24 was around Rs 711.5 crore (GST excluded). These included directives to be carried out during the following nine to eighteen months from BDL, L&T, MoD (IAF), Elbit, and IAI.
According to the business, it is attempting to obtain further orders in the explosives and defense industries. Moving forward, it is anticipated that the defense segment orders will continue to pour in and be executed, which will help the company’s margins and overall cash generation to improve.
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India, the world’s second-largest producer of coal and one of the biggest markets for industrial explosives and mining, presents PEL with enormous prospects. The demand for explosives has increased, which benefits the company, and is directly related to the amount of industrialization activities as well as building and infrastructure projects in the country.
The business meets the needs of end-user sectors like mining, infrastructure, aerospace, and defense. The government’s increased budgetary commitment to defense is anticipated to boost demand for the company’s products.
Additionally, the government’s move to promote domestic procurement by announcing a negative list of imports and allowing the export of specific products presents an opportunity for the defense supply industry. However, ICRA stated in its most recent rating rationale that lumpiness in income from this segment may result from the lengthy approval process and the tender-based bidding process.
