A multibagger microcap stock hit the 20 percent upper circuit after receiving two major orders from the Ministry of Defence, Government of India. These orders were almost equal to the company’s market capitalization.
Shares of Premier Explosives shares skyrocketed to hit the 20 percent upper circuit after receiving these orders. Its shares were locked at ₹ 590.55 apiece on Tuesday’s intraday trades.
In an exchange filing, the company mentioned that it has received an order worth ₹ 292.11 crores for the supply of Chaffs and another order worth ₹ 260.15 crores for the supply of Flares from the Ministry of Defence, Government of India. These orders are to be delivered within 12 months.
Premier Explosives is engaged in the manufacturing of industrial explosives and detonators. It also undertakes operation and maintenance (O&M) services of solid propellant plants at the Sriharikota Centre of the Indian Space Research Organisation (ISRO) and Solid Fuel Complex at Jagdalpur under the umbrella of the Defence Research and Development Organisation (DRDO).
Recently, the company also received orders worth ₹ 43.26 crores and ₹ 13.94 crores from Bharat Dynamics and Larsen & Toubro respectively. Moreover, the company has manufactured solid propellants for India’s prestigious missile programmes like Akash, Astra, and LRSAM.
The company has delivered multibagger returns of 224 percent in the past two years as its share price increased from ₹ 182.20 apiece to ₹ 590.55. Therefore, if an investor had invested ₹ 1 lakh in its shares two years ago, the value of their holdings would have been ₹ 3.24 lakhs today!
With a market capitalization of ₹ 529 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-e15.55, indicating that the stock might be overvalued as compared to its peers.
Retail investors 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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