Stock price of this explosives company has zoomed 74% in 5 weeks; here's why

Shares of Premier Explosives hit a record high of Rs 2,396.60 as they rallied 15 per cent on the BSE in Monday's intraday trade after the company announced stock split in the ratio of 1:5 to enhance the liquidity.

In the past five weeks, the stock price of the explosives company has zoomed 74 per cent. Moreover, in the past two weeks, it has surged 42 per cent after the company announced a stock split plan on April 9. 

The decision to split the stock comes after the market price of Premier Explosives skyrocketed 491 per cent in the past one year as compared to 22 per cent rise in the S&P BSE Sensex. In the past four years, its price has jumped 30-fold or 2,934 per cent from a level of Rs 79.

In an exchange filing, the company said its board has approved the sub-division / split of existing 1 equity share of face value of Rs 10 each, into 5 equity shares of face value of Rs 2 each.

"The rationale behind stock split is to enhance the liquidity of company's equity shares at the stock market and to encourage participation of retail investors by making equity shares of the company more affordable," the company said.

Meanwhile, the company’s board also approved raising Rs 400 crore through preferential allotment basis and/or a qualified institutions placement and/or rights issue and/or further public offering.

Premier Explosives is engaged in manufacture of high energy materials like bulk explosives, packaged explosives, detonators, detonating fuse, solid propellants, pyrogen igniters, pyro devices, etc., having applications in mining, infrastructure, defence, space, homeland security and such other areas. The company also operates and maintains solid propellant plants of defence and space establishments.

The company is one of the few private players supplying chemicals/explosives for the defence sector and benefits from its technological expertise in the segment. The company has also entered the Indian Space programme as an approved supplier of PSOM XL motor to ISRO for use in polar satellite launch vehicles (PSLV).

Meanwhile, Premier Explosives started getting large orders in the defence segment, especially from counter measures, from the last fiscal. The company has completed the designing and development orders of various Rocket motors for overseas buyers. The company has also received supply orders for these products and the deliveries against the orders have started from last year.

The company is focused on increasing exports by developing new customers and higher volumes with existing customers. The company will maintain its thrust in exports by adding products in existing markets and foraying into new markets.

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. The company’s marquee clientele include Singareni Collieries Company Limited (SCCL),  Bharat  Dynamics  Limited  (BDL)  and  Indian  Space  Research  Organisation  (ISRO).