Premier Explosives zooms 44% in 2 days on Rs 552-cr order win from MoD

PEL said it has won contracts worth Rs 292.11 crore from the Indian Air Force for supply of Chaffs, and orders amounting to Rs 260.15 crore for supply of Flares

Shares of Premier Explosives (PEL) were locked in the 20 per cent upper circuit for a second straight day, at Rs 706.50 on the BSE on Wednesday, amid heavy volumes.

A combined 719,202 shares, representing 6.7 per cent of total equity of the company, have thus far changed hands on the NSE and BSE. There are a combined pending buy orders for around 160,000 shares on both the exchanges.

In the past two trading days, the stock has zoomed 44 per cent after the company announced that it has received orders worth Rs 552 crore from the Ministry of Defence (MoD) for procurement of Flares and Chaffs.

PEL said it has won contracts worth of Rs 292.11 crore from the Indian Air Force for supply of Chaffs, and orders amounting to Rs 260.15 crore for supply of Flares. These orders are to be executed within 12 months.

In the past one week, the stock price of PEL has zoomed 60 per cent as compared to 0.31 per cent rise in the S&P BSE Sensex.

Earlier on July 6, the company had received orders worth Rs 76.78 crore from MoD, Air HQ (Vayu Bhawan) for supply of 50 MM MTV Flares. It also won Rs 9.73 crore order from Bharat Dynamics for supply of Booster Grains.

PEL is primarily involved in the manufacturing and sale of high-energy materials. The bulk explosives, packaged explosives, and initiating systems manufactured by PEL find application in the mining, infrastructure and construction industries.

The company has also diversified into the manufacturing of propellants for missiles and rockets, and also strap-on motors for satellite launch vehicles. The extended capabilities of the company include products such as chaff, IR flares, explosive bolts, pyro devices, smoke markers, cable cutters, tear gas grenades, and other products, including pyrogen igniters for defence and space applications.

PEL is also involved in the operation and maintenance (O&M) services of solid propellant plants at the Sriharikota centre of the Indian Space Research Organization (Isro).

Icra Ratings, recently, reaffirmed the instruments of PEL, factoring in improved operating margins in FY2023, driven by higher contribution from the commercial explosive segment as well as increasing share of the high-margin defence segment. PEL's margin is expected to improve in the near to medium term, supported by the execution of margin-accretive defence segment orders.

"The ratings consider the favourable medium-term demand outlook with increased demand from the end-users such as the mining, infrastructure and defence sectors. The Atmanirbhar Bharat Abhiyan of the Government of India (GoI), which is aimed at curtailing import dependence and increasing the sourcing of indigenous defence products, also presents large growth opportunities for the company," Icra said.