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Hidden Gem - Premier Explosives: Robust growth potential from exploding defence opportunities

ICICIdirect Research 12 Sep 2025 DISCLAIMER

Premier Explosives (PEL) is a leading manufacturer of high-energy materials like propellants & counter measures (for defence segment) and bulk explosives (for mining and infrastructure).
Company has six manufacturing facilities in India, of which four are for bulk explosives and two facilities for propellants. The company is the only domestic manufacturer and supplier for counter-measures (chaffs & flares)
Order inflows have been strong at Rs 700+ crore in YTDFY26E and the current order book is estimated to be at ~Rs 1100 crore (2.3x TTM revenue) of which maximum orders pertain from defence segment (85%+). The order execution cycle for the company is 12 - 24 months, providing strong revenue visibility for the next 2-3 years
Company is also targeting Rs 700 crores in RFPs, which would enhance future revenue. Management has guided revenue of Rs 600 crores for FY26E (which implies ~44% YoY growth)
Company reported revenue of Rs 417 crore in FY25, which is ~1.7x of its gross block. Currently, company is undertaking brownfield capex of ~Rs 25 crore for defence propellants and plans a greenfield capex program of Rs 800 crore over the next ten years.
We believe that, with the strong order inflows and increase in capacities, company is well positioned to witness robust growth in the coming years
We estimate revenue CAGR of ~27% over FY25-28E while PAT CAGR of ~54% over the same period
Valuation at 28x P/E on FY28E basis looks attractive considering the robust opportunity of company’s products in both domestic & export markets in coming years. We have a Buy rating on Premier Explosives with a target price of Rs 680

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