Multibagger Premier Explosives shares hit 10% upper circuit, gain 78% in just 8 sessions – here’s why

Premier Explosives hits record high with a 77.60% surge in 8 sessions. Government's push for defence sector self-sufficiency and increased exports opens up growth avenues for industry players.

A Ksheerasagar
First Published18 Jun 2024, 02:32 PM IST
Premier Explosives:  So far this year, the stock has already gained 144%, building on its whopping 278% gain in CY23.
Premier Explosives: So far this year, the stock has already gained 144%, building on its whopping 278% gain in CY23.(REUTERS)

It seems the rally in defence stocks shows no signs of stopping as investors continue to jump into this space, driving them to touch record highs with each passing day. After a stellar rally during Friday's session, defence stocks extended their upward momentum into Tuesday's trading. 

Premier Explosives was one such stock that continued its robust rally. The stock in today's session hit the 10% upper circuit limit to reach a fresh record high of 3,882 apiece.

Over the last eight sessions alone, the stock has surged from 2,186 to its current price, marking an impressive rally of 77.60%. So far this year, the stock has already gained 144%, building on its whopping 278% gain in CY23.

Also Read: Paras Defence and Space Tech share price surges over 18%. Here's why

With the BJP securing a third consecutive term in power, supported by its allies, investors are buoyed by the prospects of policy continuity and ongoing economic reforms. One significant area of emphasis for the government is the defence sector, which is undergoing a transformative phase characterised by increasing funding, expanding defence budgets, and rising defence exports.

Rajnath Singh, who assumed office as Defence Minister on Friday, announced that the government aims to boost defence sector exports to 50,000 crore over the next five years, reaffirming an earlier milestone set by the government.

Over the past decade, the government has launched several initiatives to enhance self-reliance in supplying advanced weapon systems to the Indian Armed Forces, along with facilitating exports to Friendly Foreign Countries (FFCs). 

Also Read: Hindustan Aeronautics gets defence ministry RFP for 156 light combat helicopters

These efforts have opened up growth avenues for domestic defence manufacturing companies. With the Defence Ministry aiming for 70% self-sufficiency in weaponry by 2027, significant opportunities are on the horizon for industry players. 

Additionally, under the 'Atmanirbhar Bharat Programme,' the Defence Ministry has placed '101+ Defence items' under import embargo, further reinforcing the push towards self-reliance.

Also Read: How India's defence sector is going all guns blazing

Well positioned

In light of anticipated growth in the defence sector, Premier Explosives is strategically positioned as the company is a leading player in the defence and aerospace space. The company manufactures solid propellants for tactical missiles (Astra, Akash, LRSAM/MRSAM), strategic missiles (Agni, Veda), and more. 

It is the only domestic manufacturer supplying countermeasures like chaffs and flares to the Indian defence forces. Additionally, it has entered the Indian space program as an approved supplier of the PSOM-XL motor for use in the Polar Satellite Launch Vehicle (PSLV) for ISRO. 

Also Read: This smallcap defence stock is up 2800% in 5 years

The company also undertakes the operation and maintenance services for the solid propellant plants of ISRO at SHAR, Sriharikota, and DRDO at ASL, Jagdalpur. 

The company is expanding its product portfolio to include various supplies for the Indian Army, such as 70 mm rockets, air-glide bombs, re-graining of existing missiles, and indigenisation of power cartridges and canopy severance systems.

Beyond the defence sector, the company manufactures a diverse range of commercial explosives for mining and infrastructure industries, including bulk explosives, cartridge explosives, cast boosters, detonators, and detonating fuses.

Also Read: Indian stock market ready for a dream run, target Nifty 50 at 25,816: PL

Solid order book 

The company's order book at the end of March 31, 2024, stood at 9,647 million, which is 3.6 times its FY24 revenue, according to the company's Q4 investor presentation. 

The company saw substantial growth in defence exports during the fiscal year, with defence export revenue increasing by 225% year-on-year to 564.5 million. Overall export revenue, including explosives, grew by 112% year-on-year to 697 million in FY24.

Also Read: Modi 3.0: What the PM may focus on for India's transformation into Viksit Bharat

Overall, the revenue from operations jumped to 2,717.2 million, a growth of 34% YoY, while the net profit improved by 320% to 280 million in FY24. 

 

Disclaimer: We advise investors to check with certified experts before taking any investment decisions.

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First Published:18 Jun 2024, 02:32 PM IST
HomeMarketsStock MarketsMultibagger Premier Explosives shares hit 10% upper circuit, gain 78% in just 8 sessions – here’s why

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