Premier Explosives Limited (526247) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '26 Conference Call hosted by Premier Explosives Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Akhilesh Gandhi from Stellar IR. Thank you, and over to you, sir.

Akhilesh Gandhi. On behalf of Stellar Investor Relations, welcome you all to the Premier Explosives Quarter 3 and 9-Month FY '26 Earnings Conference Call. We shall be sharing the key operating and financial highlights for the quarter 3 and 9 months ended on 31st December 2025. Today, we have with us the senior management team of Premier Explosives Limited, Mr. T.V. Chowdary, sir. He is the Managing Director. And with him, we also have Mr. Vijay Kumar. He's the Chief Financial Officer. Before we begin, I would like to state that this call may contain some of the forward-looking statements, which are completely based upon the company's beliefs, opinions and expectations as of today. The statements made in today's call are not a guarantee of future performance and also involve unforeseen risks and uncertainties. The company also undertakes no obligation to update any forward-looking statement to reflect developments that occur after the statement is made. Documents relating to the company's financial performance, including the investor presentation have already been uploaded on the stock exchange. I now invite Mr. T.V. sir to share his initial remarks on the company's performance for the third quarter and 9 months ended on 31st December 2025. Thank you, and over to you.

Thank you, Mr. Gandhi. Good morning, everyone. I welcome you -- are you able to hear me?

Yes, we can hear you, sir.

I welcome you to the earnings conference call of Premier Explosives for the third quarter and 9 months ended December 31, 2025. Thank you for joining us. I trust you have reviewed our Q3 and 9 months FY '26 results, along with the investor presentation available on the stock exchanges and on our website. Our performance during the quarter reflects disciplined execution across our defense and explosives segments despite a dynamic operating environment. While certain projects progressed in a phased manner during the year, our manufacturing operations remained stable and efficient with strong adherence to quality, safety and delivery commitments. The year-on-year moderation is primarily due to the elevated base in the corresponding period last year, which included higher dispatches of shafts and flares. Execution timing also influenced comparability. Importantly, the underlying demand environment and operational momentum remains strong, supported by a healthy order book and sustained opportunities across domestic as well as export markets. Our outstanding order book stands at INR 1,294 crores, representing 3.1x of financial year '25 revenue and providing strong medium-term visibility. During the quarter, consistent execution strengthened our positioning and enabled us to secure larger and strategically significant contracts from the Ministry of Defense, domestic defense players and international customers. In October, we secured a major order worth INR 429 crores from the Ministry of Defense, Government of India for the supply of shafts and flares to the Indian Air Force. This reinforces our leadership in countermeasure systems and reflects continued confidence in our technological capabilities. We also strengthened our order inflow during quarter 3 FY '26 through contracts from international entities for defense products and commercial explosives, along with additional countermeasure orders from the Ministry of Defense. These projects are progressing across various stages of execution and are expected to support revenue momentum in the coming quarters. Premier occupies a unique strategic position as the only Indian company qualified to manufacture countermeasures and as a key exporter of fully assembled rocket motors. Our portfolio of warheads, mines and ammunition further strengthens our role in advancing India indigenization objectives. With continued policy emphasis on domestic defense manufacturing and import substitution, the structural growth outlook remains strong. Our focus is clear. We will drive execution excellence, deepen technological capabilities, scale capacity prudently and expand our global presence. We remain confident in our growth trajectory and committed to delivering sustainable value of all stakeholders. Thank you. Now I request Mr. Vijay Kumar, our CFO, to share the financial performance.

Thank you, sir. Good morning, everyone. The results presentation for the quarter ended December 31, 2025, has been uploaded on the stock exchanges and on the company's website. I believe you may have gone through the same. The revenue from operations for Q3 FY '26 stands at INR 81.4 crores. Our operating profit for Q3 FY '26 stands at INR 11.6 crores. The operating margin for the quarter stands at 14.3%. We reported a net profit of INR 6 crores. The PAT margin for the quarter stands at 7.4%. The revenue from operations for 9 months FY '26 stands at INR 299.1 crores. Our operating profit for 9 months FY '26 stands at INR 39.1 crores. The operating margin for the quarter stands at 13.1%. We reported a net profit of INR 39.2 crores. The PAT margin for the quarter stands at 13.1%. The decline is primarily attributable to the high base effect arising from the elevated shafts and flares dispatches in the corresponding period last year with the execution timing affecting year-on-year comparability. Now coming to the order book. The company's current order book stands at INR 1,294.6 crores, out of which the defense segment order is majority of INR 1,191 crores, which is equal to 92% of the total order book. Explosive segment stands at INR 51.8 crores, which is equal to 4% of the total order book and service segment, which is operation and maintenance service segment stands at INR 51.8 crores, which is also equal to 4% of the total order book. The order book shows a solid and strong growth towards the coming years. We are very much confident that with our continued execution run rate in the forthcoming quarters will be continuing with the growth trajectory. With this, we'll now open the floor for questions and answers. Thank you.

[Operator Instructions] Our first question comes from the line of Niraj Mansingka from White Pine Investment Management.

I have only one question. Sir, if you see your order book is INR 1,191 crores versus last quarter in September quarter, INR 1,167 crores. It implies an increase of INR 85 crores in net orders after adjusting for the revenues because revenues reported for the defense is only INR 61 crores. Now -- but when you reported in the press releases, we reported an inflow of INR 519 crores on shafts and flares, the 3 orders we have reported till November. So what is the discrepancy? Like has the orders of -- so the discrepancy is almost -- you should have added INR 519 crores, but it seems that you have added INR 85 crores only. So has the -- some orders been canceled to the extent of INR 400-plus crores?

No, that INR 430 crores has come in October. So in the last call, we have added that also and gave the total number.

Okay. So you -- but that was a quarterly presentation. So you added that in the last quarter you gave that....

Yes, yes, because that time -- by the time we got the order, yes, as on that date.

So whatever orders right now you are putting in the presentation, it is as on 15th February also. Is it right? Or is it as on December...

As on date. Yes, as on date.

Our next question comes from the line of Varun Jain from Dolat Capital.

So I have a couple of questions. So first is, sir, what is the status of this explosive RDX, HMX expansion at Katepally? So will it be completed by the end of this financial year? And do we expect like INR 100 crores to INR 200 crores extra revenue from that in FY '27?

No, the civil construction and works and all those are completed. The equipment installation and direction is going on. So we expect this to complete and then come into production in the first quarter of next financial year.

And sir, what will be the revenue from this expansion in FY '27?

That being the initial few quarters, it will be on lower side because we'll be slowly operating it. So we are expecting almost in the next financial year, a contribution of around -- the turnover contribution will come to around INR 150 crores to INR 200 crores in the next financial year.

Okay. And sir, of this shafts and flares order, which we received in October, so sir, will be -- how much of that order contribution will come in FY '27?

Yes, almost 50% of that order has to be executed in 1 year time. And we have to complete it by next year.

So sir, in that case, that INR 430 crores from that and INR 150 crores from that. So only these 2 [ mini ] orders will give you close to INR 550 crores, INR 600 crores of revenue in FY '27, if I'm understanding it correctly?

We'll be doing some in the current financial year and the part will go to the next financial year. It's not the entire order will go to next financial year.

Okay. And sir, on this year FY '26, we revised our guidance INR 550 crores...

We are not able to hear you.

I'm sorry, sir, but your voice is breaking.

Sir, I was saying that last quarter, we revised our guidance down to INR 500 crores to INR 550 crores for FY '26. Is that number still possible?

Yes. Now the year is coming to closer to end, and we have stocks, which need to be inspected and delivered to MoD. So if the inspections are completed and then delivery is completed, yes. If it gets into, then it will go to the next quarter.

Our next question comes from the line of [ Hitanshu Bhatia from Sukrit Investment Private Limited ].

My question was that in our second last page of our presentation, we have mentioned anti-personnel and anti-armored vehicle mines as a product offering. So could you please throw some light on it?

Yes. We already -- we got a supply order and then we are executing that. We've already done almost 50% of it. The balance now it is in the deliveries and then inspections.

So sir, is it related to Project Tandav, because as per report, solar industry is developing an anti-tank influence mine. So sir, how are we lining up against it, sir?

So we are working with DRDO technology, anti-tank intelligent mine. DRDO has transferred as technology. We are on that. But that product, we are yet to get a supply order ToT is completed, we are waiting for the supply order from Army.

Okay. Sir, because the RFP is out for project kind or so, that brings up this question, so.

No, we are not doing Tandav.

Our next question comes from the line of [ Paras Kulkarni from Ignite Capital ].

Sir, my first question pertains to the order inflows. In second quarter conference, we had guided that we would be expecting additional INR 300 crores order inflow for the next -- for the remaining part of this year. However, when I look at it on a run rate basis, we don't seem to be in Q3, not even half of that guidance is being met. So could you highlight what led to the lower order booking in Q3?

The order book is -- I couldn't understand on what basis you said the lowering of the order book. As on date, the order book is INR 1,290 crores.

So we got a new order of INR 430 crores in October.

Yes. As we keep on executing commercial, it comes down and as the new orders get added, it goes up. So we are able to maintain a healthy order book.

No, we are actually operating at less than 1 bill to book as per my understanding.

It is INR 1,294 crores, means it is 2 years order book.

Okay. Secondly, on the gross margin front, we have had a sequential decline of almost 100, 150 bps. So can you throw some light on that as to why it has happened? And was it on account of some change in revenue mix or input in raw material prices?

Earlier, we had this MoD order where we had LDs and all these things because of that, that was on the lower side. Otherwise, we are targeting 15% to 20% EBITDA.

Okay. Got it. And lastly, on the revenue front, see, to achieve the yearly guidance, we need to almost do 3x of -- 3 to 4x of what we did in Q3 the revenue for Q4. So do we expect any change in guidance given that the orders which you mentioned are still not getting executed or are not getting inspected. So is there any definitive time line as to the orders getting inspected from the government and getting executed? Because what I understand is your peers have actually had a strong quarter in the defense segment. So could you throw some light on that?

Yes. See, the third quarter, whatever deliveries have to be made, it has already started and from the stocks. See, this defense MoD process is any product before you dispatch, you have to offer for pre-dispatch inspection. So we have already submitted to them for connecting pre-dispatch inspection. And as per the team arrival and then inspection, it depends. If we can deliver them before 31st of March, they appear in this quarter, otherwise, they will go to the next quarter. So we are trying our best to get them forward rather than pushing them.

Our next question comes from the line of [ Sucrit Patil from Eyesight Fintrade Private Limited ].

I have 2 forward-looking questions. My first question is, as Premier Explosives expand into the defense and aerospace, what steps will you take over the next 1 to 2 years or in the short term 1 to 2 quarters to mitigate risk from defense procurement delays and ensure steady execution in long-cycle contracts? That's my first question. I'll ask my second question after.

Yes. This is -- see, as we explained earlier also, we are building our -- we have a bouquet of products, and we are increasing the bouquet, adding more products like we added a few years back, if you remember, we were -- our concentration was producing propellants and then rocket motors for Indian agencies and DRDO. Today, we are already exporting rocket motors and we are designing and all those things. Next step we added is the countermeasures. Countermeasures, we are the #1 in the country. We are the only source of countermeasures. Whatever orders are, we are executing from that. The third one is the mines. We have started delivering in this financial year, the mines, landmines and anti-personnel mines, we are and the armored vehicle mines and all those, we are yet to start delivering. Anti-personnel mines, we are already delivering. Then the next step comes is the ammunition. Ammunition, yes, we have conducted trials with [indiscernible] technology and all those. Again, it is in the process of RFPs. Once we get into, we'll be entering the complete medium-caliber ammunition line of business. So we are going on adding within the defense and then aerospace industry. There are multiple products. We are going on adding one after the other. And we are also expanding our capacity of producing tactical rocket motors by adding another facility.

My second question to Mr. Kumar is, looking ahead, how will you design Premier's financial discipline to handle raw material cost volatility and working capital tied to defense contracts while still protecting margins and delivering a predictable shareholder return?

We have lines of credit from all the banks. So we do not foresee any working capital issue. So depending on the product and project, we plan working capital accordingly. And also, the margins are also protected when we accept the order.

And we -- every export order we execute or we take, we are including a price escalation clause from year-on-year so that the price increase in the raw materials is protected.

Our next question comes from the line of [ S.C. Gupta ], an individual investor.

I would like to know what is the breakup of exports and domestic sales in the current quarter and 9 months?

9 months export is about INR 40 crores compared to total year exports of about INR 78 crores.

And current quarter?

Current quarter, INR 40 crores.

INR 40 crores.

Previous quarter, third, I mean December quarter.

And what is the breakup of export and domestic orders as on date?

Export is about INR 450 crores, balance is domestic.

Balance is domestic. See, all the export orders which you have given on BSE normally mentioned supply period of 12 months, maximum 12 months.

Yes. 12 to 24 months, some of them.

Okay. Because what I observed is most of them are within 12 months. So in that case, if you have to deliver this in 12 months, so current year, we will be exporting at least INR 400 crores next year, that is '26, '27?

Yes, you have to note one thing. All those exports need export licenses for this. Yes. So the date -- the clock starts from the day of receiving the export license.

Okay. It is not from the date of order. It is from the date of receiving the export license.

Yes, because they all know, we tell them in the beginning itself. We can supply only once we get the export license, which dates anything between 3 to 5 months.

Okay. May I know as on today, how much export license we have to export?

They are in different stages. Maybe in the next call, we can update.

Okay. So normally, can we expect that this INR 450 crores will be executed maximum within 1.5 years or 2 years?

Yes. yes, that assumption you can take.

That assumptions maybe okay. And secondly, with respect to the turnover, we started the year guidance of INR 600 crores. Now then we have come to guidance of INR 500 crores to INR 550 crores in the last quarter. And now also this INR 500 crores to INR 550 crores also looks a little bit shaky depending upon the inspections. But does this inspection delays somewhere end, what I'm trying to say that previous inspection gets delayed and it transformed to next quarter. So it becomes a normal lead time in delivering the order. So considering that, are we sure that this year, we will be able to achieve at least around INR 550 crores?

We are targeting INR 500 crores because you know that we had accident in the beginning of the year because of which our large rocket motors facility got affected. So that time it will be told around INR 20 crores to INR 30 crores business will be affected at that time. Yes. And also, you know the geopolitical conditions because of that, some of the inputs which you are importing got delayed. So these have affected our targets and that's what happened. So we are hoping that right now, current year or coming year, the problems are not foreseen. So we are hoping that we'll cover off that.

We will achieve that. And secondly, are we expecting any LD on this?

Yes, the LD clauses are there. But when we submit detail all the reasons for this, they are considering, where in many cases, they have considered favor of LD. So any such things also there, we are approaching them.

And one final question. Can we assume that next year, we can achieve a turnover of INR 700 crores to INR 800 crores because of these delays, whichever is postponed in the current year?

Yes. Because of our experience in the current year, we are a little cautious in taking that run. We are expecting INR 500 crores to INR 600 crores turnover next year.

That is a conservative estimate as on date based on the...

Yes.

[Operator Instructions] Our next question comes from the line of Niraj Mansingka, a follow-up question from White Pine Investment Management.

I wanted to know we are present in the QRSAM and sir, what is the general percentage share of QRSAM orders that we should receive?

The QRSAM order is yet to be received. We are also hearing about QRSAM. But right now, we have no order on QRSAM. If any order comes, we are the supplier. The propellant is to be supplied by only Premier.

So that I understand, sir, whatever is the percentage the main suppliers, how much percentage of that would you be getting generally on a range, if you can give us?

I told you in earlier calls also, it is somewhere around 10% to 15% is the percentage contribution of propellants by us and other explosives. It varies but from motors to motors.

Okay. And are we supplying full rocket motors or only the propellant for QRSAM?

Only propellant casting.

Only the propellant, not the full motors?

Yes, not full motors. It's being assembled by BDL. BDL places order on us for propellant. We supply them the propellant cast, then they do the full motor assembly and integration.

Got it, sir. So that's one. So second question is on the countermeasure orders that we received earlier, which is in 2023, July. So entire has been -- how much is left on that part in terms of unexecuted portion?

Around INR 110 crores is left over.

Will get the order...

We have completed the shafts part of it. So some quantity of link is left over. That is around INR 120 crores -- INR 112 crores, which we are hoping that in the first quarter, we'll complete that.

The order which is yet to be checked and booked on revenues, are they included in that INR 110 crores includes that or exclude that?

No, INR 110 crores is whatever we have delivered, what is in our magazines and stocks are not in that, that is additional, which we are thinking that in the next month or in the first quarter of the next year, we'll be able to exit it.

And sir, how much of the stock, which is yet to be pending to be verified by the defense side?

Around INR 30 crores worth material is with us as on date. And some more is on the pipeline, yes.

So sir, is it right that then the countermeasure revenues to be booked on the earlier order is INR 140 crores. INR 110 crores is yet to be executed and...

As on date, outstanding is about INR 110 crores -- INR 112 crores.

That includes the stock...

Everything. All inclusive, yes.

Okay. Got it, sir. So that's one. And sir, on the LD numbers of countermeasures, you said that in the past that the reversal of margins can come after only you supply the entire order. So what is the status of that?

Like we told now, only the flare part, INR 30 crores -- sorry, around INR 60 crores of flare part is to be supplied. And counter is -- shafts, we have already approached MoD for considering year of LD. And flares we will approach once we complete this.

So you have approached for the shafts, but yet the acquisition is yet to be received. Is it the right...

Government, it has to go from various levels, so it will take some time.

Okay. Got it. Third, can you tell something about the RFP on the mine side?

RFP on mines. We have orders in our hand. We are supplying -- executing the order. It's no more in RFP stage. Other mines, yes, the anti-armored vehicle intelligent mine, which are -- they are in the -- we are waiting for the RFP to come.

How large, sir, they can be the value?

Mines, we have to supply around INR 30 crores of mines. Future, you are asking?

No, I'm asking of the upcoming mines that are going to upcome, how much -- how large can those mine RFP recovery?

It is going to be large from our estimate, but I can't tell you the figures, because the mines are needed by Army all along our border when there are tensions, they have to plant. So right now, the demand will remain continuously for the anti-personnel and also for anti-armored vehicle.

Our next question comes from the line of Varun Jain from Dolat Capital.

Just a follow-up. Sir, what is your CapEx guidance for FY '27 next year and '28?

The next financial year?

Next year and next to next year?

Yes, around INR 60 crores is the CapEx for Katepally and PDK together.

And sir, any update on the Odisha CapEx since we have a Board permission to raise funds, what is the status there?

Odisha land is still not finalized because we happen to go and then see and look for the land. So it's more of hilly and forest and all those. In the meantime, the Andhra government has cleared our application for land in Andhra. So that appears to be more closer than Odisha. So that also will add to our CapEx plan once the land is allotted to us.

And so sir, this INR 60 crores, which you said for FY '27, what is the breakup of that?

We have expansion planned in Katepally plant and also at PDK plant, additional capacity of propellant manufacturing and casting and also integration of rocket motor integration. So all those areas and also, sorry, RDX and HMX plant. So all these activities, we are expecting a INR 60 crores of CapEx in the financial year.

Sir for this RDX and HMX capacity, I think the current round of CapEx, we are taking it from 100x to 600 or so. So beyond that also, you are taking in FY '27, if my numbers are correct?

Yes. CapEx-wise, I don't think we will do in '27 at Katepally or PDK. That will be finishing in the current year and probably year FY '26, first quarter or 2. So after that, I think we'll be full. There will be no possibility of adding anything because of the land constraint. So we have to go to the new place.

Okay. And sir, any like CapEx plans for FY '28, have you chalked out or not yet?

No, not yet. We have plans, but I don't think...

Land is allotted.

Yes, once the land is allotted, we'll. Otherwise, now we are at the stage of project report submission for allocation of land and other things.

Okay. Okay, sir. And just my last question is that, sir, for FY '27, I think your majority of revenue will come from, one, the shafts and flares orders and secondly, the HMX and RDX sales, which will be INR 150 crores or so. So next year, the EBITDA margin, consol EBITDA margin should be close to 21%, 22% in that range, right?

That also is there, and we have other products also. So it can be anywhere between the 15% to 20% based on the product mix, what we supply.

Because majority of it will be coming from these products, and they are very higher-margin products and especially with RDX and HMX, they have a very high realization presently. So that's why I was asking that it should be on the higher side, right?

We are hoping so.

We are hoping that it will be higher side. We are also hoping that based on the present orders and also product mix.

[Operator Instructions] Our next question comes from the line of [ Deepak Karva ], an individual investor.

Am I audible, sir?

Yes.

My first question is regarding our cash conversion cycle has improved significantly over 300 days in the past few years to around 90 days currently. Like going forward on a sustainable basis, where do you expect the cash conversion cycle to stabilize?

We are trying to maintain this. Actually, that depends on the product mix, if you go with the Ministry of Defense and other things. So that takes a little time to get the funds. So rest of the people, we have a fixed time line. So anyhow, we are trying to maintain...

Okay. And like additionally, on the working capital side, how much working capital would be required to execute the current order book of approximately INR 1,300 crores?

We have sufficient working capital lines. A lot of banks are ready to give further working capital also. So on the need basis, we are taking it. That's why our finance cost is also lower. Wherever it is required, we are taking it. Otherwise, we are not -- we are utilizing it from the advances from the customers and others.

Okay. And are we expecting any sustainable order for bulk explosives? Any order we expecting to receive from Coal India?

Coal India, the prices are so low. So unless we get our price at a reasonable price, which at least breaks even, we are not entering into that. So right now, we are not supplying any bulk explosives to Coal India. Some accessories are being supplied. We are right now servicing Singareni Collieries in 2 mines with the bulk explosives and all those. Coal India plants are under shutdown.

[Operator Instructions] As there are no further questions from the participants, I would like to hand the conference over to Mr. T.V. Chowdary for the closing comments. Thank you, and over to you, sir.

Thank you very much, Mr. Gandhi. Thank you very much, all of you for supporting us and time to time. This conference call could not be conducted immediately after the Board meeting because I was traveling for land and other things to Andhra government. So we will inform all of you whenever the land allotment is completed. Thank you.

Thank you.

Thank you so much, sir. Ladies and gentlemen, on behalf of Premier Explosives Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.