Synopsis:
Shares of Premier Explosives Ltd surged 10 percent following the government’s policy changes and the company’s updated FY26 guidance.
A small-cap company specializing in the manufacture of explosives and detonators is under the spotlight today following government reforms in the production policy and company’s guidance related to revenue and margins.
With a market capitalization of Rs. 3,484.53 crore, the shares of Premier Explosives Limited closed at Rs. 648.15 per equity share, up by 7.03 percent from its previous day’s close price of Rs. 605.60. It has touched an intraday high of Rs. 668, making 10.30 percent from previous close price.
What’s the News?
The Defence Ministry has amended the Revenue Procurement Manual (RPM), removing the requirement for private companies to obtain a no-objection certificate (NOC) from Munitions India Ltd to manufacture bombs or ammunition. This long-standing bureaucratic hurdle has now been cleared, allowing private players to independently set up production units.
Private firms are now permitted to manufacture a wide range of munitions, including 105mm, 130mm, and 150mm artillery shells, Pinaka multi-barrel rocket launcher systems, 1,000-pound general-purpose bombs, mortar bombs, hand grenades, and medium and small caliber ammunition.
The move is expected to streamline operations, speed up approvals, reduce dependence on public sector undertakings (PSUs) and imports, and open export opportunities, particularly in Europe, which faces ammunition shortages. The amendment removes a key entry barrier for private defence companies, enabling them to compete with established players like Bharat Defence and Bharat Electronics over the next two to three years.
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FY 26 Guidance
The company has provided its FY26 guidance, expecting revenue in the range of Rs. 500–600 crore and an EBITDA margin of 18–20 percent, which could potentially decline to 15 percent under certain conditions.
About the Company
Premier Explosives Ltd. (PEL), a leading Indian company, specializes in manufacturing industrial explosives and detonators for the mining, infrastructure, defence, and space sectors. The company also provides operation and maintenance (O&M) services for solid propellant plants at DRDO’s Solid Fuel Complex in Jagdalpur and ISRO’s Sriharikota Centre.
The company has over 850 employees, including over 100 engineers and scientists, and operates seven manufacturing facilities in Telangana, Madhya Pradesh, Maharashtra, and Tamil Nadu. PEL plays a vital role in space and defense programs, as it is supported by its robust technological capabilities and licensed manufacturing rights.
Financial Outlook
In Q1FY26, the company posted revenue of Rs. 142 cr, up 71 percent YoY from Rs. 83 cr in Q1FY25 and 91.9 percent QoQ from Rs. 74 cr in Q4FY25. Net profit rose to Rs. 15 cr, increasing 114 percent YoY from Rs. 7 cr and 275 percent QoQ from Rs. 4 cr, showing strong sequential and annual growth.
At the moment, the company’s P/E ratio is 86.7x higher as compared to its industry P/E of 22.6x. The company’s ROE and ROCE are 12.2 percent and 16.9 percent, respectively and the D/E ratio stands at 0.18, indicating the company’s financial position.
Written by Akshay Sanghavi
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