A small-cap defence stock vaulted 10 percent by the closing bell on Wednesday and got locked in an upper circuit after it reported stellar results for the first quarter of the financial year 2023-24 (Q1FY24).
Shares of Premier Explosives were locked at ₹ 889.55 apiece in a 10 percent upper circuit after it reported a 540 percent increase in its consolidated net profit at ₹ 8.26 crores for the April to June quarter (Q1FY24) against ₹ 1.29 crores reported in the corresponding quarter last year (Q1FY23). The company’s total revenue climbed 19 percent to ₹ 62.25 crores in Q1FY24 against ₹ 52.22 crores reported in the same quarter a year ago.
The company’s share price rose from ₹ 339.30 apiece to ₹ 889.55, delivering multibagger returns of 162 percent in the past year. Therefore, if an investor had invested in the company’s shares a year ago, the value of their holdings would have been ₹ 2.62 lakhs today!
Premier Explosives primarily manufactures high-energy materials and allied products for the defence, space, mining and infrastructure industries. It also undertakes operation and maintenance (O&M) services of solid propellant plants at the Sriharikota Centre of ISRO and Solid Fuel Complex at Jagdalpur under the umbrella of DRDO.
With a market capitalization of ₹ 870 crores, Premier Explosives is a small-cap company. It has a low return on equity of 3.60 percent but an ideal debt-to-equity ratio of 0.43. Its shares were trading at a price-to-earnings ratio (P/E) of 125.97, which is substantially higher than the industry P/E of 16.14, indicating that the stock might be overvalued as compared to its peers.
Its shareholding pattern shows that its promoters hold a 55.08 percent stake in it, followed by promoters with 41.33 percent, mutual funds with 3.42 percent and foreign institutions with 0.17 percent.
Written by Simran Bafna
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