Premier Explosives Limited (526247) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 and 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, Mr. Gandhi.

Thank you, Avirath. Good morning, everyone, and thank you for joining on Saturday morning. I, Akhilesh Gandhi, on behalf of Stellar Investor Relations, welcome you all to the Premier Explosives Q4 and FY '26 Earnings Conference Call. We shall be sharing the key operating and the financial highlights for the fourth quarter and the full year ended on March 31, 2026. Today, we have with us the senior management team of Premier Explosives, namely Mr. T.V. Chowdary, sir; he is a Managing Director. Along with that, we also have Mr. Vijay-ji Kumar, he's a Chief Financial Officer. But 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. These 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 statements to reflect development that occur after the statement is made. Document relating to the company's financial performance, including the investor presentation, has already been uploaded on the stock exchanges. With that, I now invite Mr. T.V. Chowdary, sir, to share his initial remarks on the company's performance for the fourth quarter and the full year ended on March 31, 2026. Thank you, and over to you, sir.

Thank you, Mr. Gandhi, and good morning to everyone. I welcome you to the earnings conference call of Premier Explosives for the fourth quarter and full year ended 31st March 2026. Thank you for joining us. I trust you have reviewed our Q4 and FY '26 results, along with the investor presentation available on the stock exchanges. During Q4 FY '26, we delivered a healthy revenue performance, driven primarily by strong momentum in our Defense & Space segment. The segment contributed 76% of the overall revenue at INR 67.7 crores and registered an impressive growth of 43% year-on-year. For FY '26, revenue performance was impacted due to the execution of a larger volume of high-value chaffs and flares orders in financial year '25, with execution timing affecting the overall performance during the year. Additionally, operating profitability for both the quarter and the full year was impacted by elevated raw material prices amid prevailing global tensions, a challenge that was experienced across the industry. Highest ever order book stands at INR 1,569 crores, representing 4.04x of FY '26 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 April, we secured a major export order worth INR 350.23 crores from international clients for the supply of defense products. Additionally, we continue to witness healthy order momentum across key product categories, including chaffs and flares, rocket motors and other defense systems, further strengthening our order pipeline. We are currently in discussions with Andhra Pradesh government for acquisition of a 400-acre land parcel to establish a dedicated defense manufacturing facility. In parallel, the company is also actively developing new products, which are expected to generate a healthy order inflow in the coming quarters. Premier continues to occupy a unique strategic position as the only Indian company qualified to manufacture countermeasures. And as the key exporter of fully assembled rocket motors, our diversified portfolio across warheads, mines and ammunition further reinforces our contribution towards India's defense indigenization objectives. Sustained policy support for domestic defense manufacturing and import substitution, we believe the long-term structural growth outlook for the sector remains highly promising. Going forward, our focus remains firmly on driving execution excellence, strengthening technological capabilities, scaling capacities in a calibrated manner and further expanding our global presence. We remain confident in our growth trajectory and committed to delivering sustainable value for all stakeholders. Now I request Mr. Vijay Kumar, our CFO, to share the financial performance.

Thank you, sir. Good morning, everyone. The result presentation for the quarter ended March 31, 2026, has been uploaded on the stock exchanges. I believe you may have gone through the same. The revenue from operations for Q4 FY '26 grew by 20% year-on-year to INR 89.2 crores. Our EBIT for Q4 FY '26 grew by 35% year-on-year to INR 9.6 crores. The EBIT margin for the quarter stands at 10.8%. Our net profit increased by 78% year-on-year to INR 6.6 crores. The PAT margin for the quarter stands at 7.4%. The revenue from operations for FY '26 degrew by 7% to INR 388.3 crores. Our EBIT per FY '26 grew by 42% year-on-year to INR 69.3 crores. The EBIT margin for FY '26 stands at 17.8%. Our net profit increased by 61% year-on-year to INR 45.8 crores. The PAT margin for the quarter (sic) [ year ] stands at 11.8%. Now coming to the order book. The company's current order book stands at INR 1,569 crores, out of which Defense segment order is majority of INR 1,491 crores, which is equal to 95% of the total order book. Explosive segment stands at INR 31 crores, which is equal to 2% of the total order book. And Service segment, which is operational and maintenance service segment, stands at INR 47 crores, which is equal to 3% of the total order book. So this represents our highest level order book and reflects the strong growth visibility we see over the coming years. We remain confident that, supported by sustained execution momentum, continued development of new products and our ongoing expansion initiatives, the company will continue to maintain a strong growth trajectory in the forthcoming quarters. With this, we'll now open the floor for questions-and-answers. Thank you.

[Operator Instructions] The first question is from the line of Dipen Vakil from PhillipCapital.

Congratulations on a great quarter. Sir, my first question is, you mentioned that you had some -- like FY '25 was a year boosted because of chaffs and flares and FY '26 was largely -- the performance was muted because of that. So for FY '27, how do you look at the outlook to be as to what kind of growth and margins are we targeting considering that now those emergency procurement orders will be limited?

FY '27, we are expecting a growth which is commensurate to previous year from this. Because the new areas that is land mines and payloads for drones and loitering munitions and medium-caliber ammunition, which were going slow because of the nonavailability of raw material, now alternate raw material is found and then our designers have accepted that. So we are hoping that the current year, these are the areas which are going to contribute to our turnover and profitability.

So any quantum to that?

These orders are already there in the -- included in the order book what is mentioned in the above.

I meant to ask on the revenue growth for FY '27.

Yes, it is -- we are to be -- yes, targeting INR 600 crores to INR 700 crores.

Got it, sir. And margins?

Margins, it will be similar between 15% to 20%.

Got it, sir. Sir, you also mentioned about the raw material unavailability impacting Explosive segment. So right now, how is the execution paced with, especially with respect to our domestic PSUs in terms of the deliveries and the kind of availability from them? So is the execution on track or there's a slowdown on that front as well?

No, it has -- see, we had a slowdown on the chaffs and flares earlier. But now we are happy to inform you that we have executed the order -- last year's order completed, and we have started producing against the new order. In the meantime, I would like to share with you that the plant -- flares production plant where there was an accident 1.5 years back, that plant is recommissioned and it is producing. So our dependence on the imports also has reduced and then we are hoping that this all is going to contribute well for the current financial year.

Got it, sir. Got it. So right now with QRSAM order also coming -- expected to finalize soon, are you expecting any order inflow from QRSAM as well?

We are ready to take the order. But the status and all those, we are not very sure, very clear when the order will come and when that -- so this -- our estimates are not -- QRSAM in is not included in this.

The next question is from the line of Varun Jain from Dolat Capital.

I have a couple of questions. So the first question is, sir, on the guidance front. I think in February '26 call, you said that you'll try to get to INR 500 crores, but we've come in at much lesser like close to INR 390 crores. So sir, has anything changed from Feb to till now, like Q4 was not as well as it was expected?

Yes. Like I mentioned earlier, the multiple factors have affected this. One of them I said is the availability of raw material for execution of these mines and loitering munition and also flares, where we were dependent on the -- some of the inputs, raw materials on MIL, Munitions India Limited, but they have informed their inability to meet the requirements. So we had to, again, take up the matter with DRDO, who are the technology providers, with an alternate raw material against that. And it took time for acceptance. In fact, the trials are still going on with the alternate raw material. We are hoping that in a month or 2, we'll be completing that and then we'll be in production with the permission from DRDO.

Sure, sir. And sir, on the CapEx front, I think you have been close to INR 28 crores of CapEx in FY '26. And the total CapEx for '26 and '27 was INR 45 crores was required for Katepally expansion and INR 15 crores for PDK. That is my understanding. So now you're saying PDK INR 15 crores is done, so that would imply that close to INR 25 crores for Katepally is still pending. Is that understanding correct? And why -- when is that expected to complete?

The PDK what figure you have mentioned, that is not including the execution. We have already completed the flare production plant, which is productionized in the last financial year, that is FY '25 itself. The balance amount what is there, the other new mixers and the new storage facilities, magazines and all those construction is going on.

And for Katepally?

Katepally also -- Katepally, the plant is -- you know that we have taken up expansion of RDX and HMX plant. The expansion project is going on. It is not yet completed. Similarly, the other area, this large planetary mixer and the supporting balancing equipment and supporting recruitment and magazines is still going on work. We are hoping that in the -- by the end of first quarter itself, some of them will be capitalized.

So sir, this Katepally entire expansion is expected to end by Q2, like Q2 FY '27, it will end?

It may go up to Q3 because see, we are in the business of explosives where the qualification of the plant and qualification of the product produced from the plant is important. That will take another 1 or 2 months once we complete the execution, production and commissioning of the plant.

Okay. Okay. And sir, I saw that there was a INR 18.9 crores order, which was received in Feb and it got canceled in April because there was [indiscernible] not given. So I saw that recently company won a INR 350 crores order of defense products to an international client, so does this risk of export license not being given exist for such orders like this big order and other orders?

Yes. This is -- see, under ARMS ACT and all this, this is -- export license is very important. And in this business, yes, there is a possibility of export license getting rejected also based on -- because this depends on the government policy. Based on the policy, this -- whether permission is given or not given will be decided by government.

Depending on the country also...

Yes.

Okay, sir. Okay. And sir, just last 2 questions from my end. So sir, we had won this INR 430 crores order in October of 2025, so out of this INR 430 crores order, how much has been completed in FY '26 and how much will be completed in FY '27?

It has just started, the execution. Because we have complicated the order prior to that, which is an emergency procurement order, that part we have completed and then started the next order, working on that.

So sir, this -- out of this INR 430 crores, how much revenue do we expect to see in FY '27?

It will be -- I think 2/3 will be done before the end of financial year '27, 1/3 may still flow to next year.

Okay. Okay. And sir, the July '23 chaffs and flares order has it completely been executed? It is fully executed as of now? And if yes, so, have we received the full LD reversal? We received, I think INR 23 crores-or-something back, but there is some amount left in LD reversal on that order, right?

Yes. Yes, we are still trying to get it with the MOD.

But the order has been completely executed for both chaffs and flares?

Chaffs is completed; flares, little portion is left.

Still it is left? Okay. And by when will that be completed?

This financial year.

First quarter itself we are expecting to complete that.

Okay. Okay. And then only the LD reversal will be processed. Okay, sir. That's all for me. All the best.

Thank you.

[Operator Instructions] The next question is from the line of [ S. C. Gupta ], an individual investor.

Firstly, I have a couple of questions. One is with respect to the order book, what is the breakup between export and domestic?

Exports is about 54% and domestic is about 46%.

Okay. And in case of exports, out of this 54% for which how [indiscernible] we have export license available?

All these things are in process now. They are...

I mean you can take it like this: from the date of receiving the order that [indiscernible] anything between 3 months to 6 months.

No, now many of these orders are pending for more than 1 year. So I just would like to know that on these orders because out of INR 1,600 crores around INR 800 crores is export order. And recently, we got only INR 300 crores-something and maybe another order of INR 100 crores-or-so. So balance INR 400 crores are more than 1 year old. So we have not got export licenses for that?

No, those are all -- we already have the export licenses. Most of them which are in the process of completion or execution, they are the development areas received where the product is developed to the specifications of the customer. Yes, and in those cases, there is milestones we have to achieve in the development, and we go by that process. And as per the milestone completion, we keep on raising our invoices against it.

So in simple terms, if I have understood correctly, out of the about INR 800 crores of export orders, we are already in development stage for INR 400 crores -- above INR 400 crores, not to be precise and another INR 400 crores, we are awaiting the export licenses.

Yes.

Sir, my second question is with respect to domestic orders. These domestic orders are also almost INR 700 crores to INR 800 crores. What is the pendency time line? Like how many of these are pending for more than 2 years or 1 year?

See, the orders from BDL and DRDO, there -- as I mentioned many times earlier, there we are dependent on the free-issue materials given by these agencies. So these orders -- unless we get the free issue, FIMs, we cannot execute them on our own. So rightly present delivery status is, we are able to do around -- different type of motors around 40 numbers for these domestic customers.

So we have many orders pending because we do not have a free-issue material available with us?

Yes, yes. As and when the free-issue material comes, then we immediately complete the product and deliver back. Right now, like I said, around 50 numbers per month are being produced between different types of products, that is LRSAM, MRSAM, Astra, all this.

Okay. And what is the average cost of this -- revenue from this 1 unit?

I think we can share with you some information later on.

Okay. No issues. One more thing. What is the amount of LD which is pending which can be reversed? You just now indicated that your final flares will be supplied in the month of -- in this quarter itself. Then what is the amount of LD which you will be putting a claim for reversal?

We are trying with the government. We have to see, it is around INR 30 crores kind of thing.

So INR 30 crores is the amount which we will claim and depending upon the final approval, we may get something?

That is the claim. We always claim for the largest amount.

Yes, I agree with you. I agree with you. You will claim for the best and whatever you will get it, that is what we get.

Yes.

And one more thing, what is the amount of orders which could not be dispatched at the end of March?

That means you are saying that we have missed the delivery period?

Yes. Either we have missed the delivery period or otherwise, the inspection could not be done, so we could not be -- these orders could not be dispatched.

Yes, these are all running orders, so they have no 31st March deadline other than our own balance accounting systems.

Okay. Because in last call, you indicated that some of our orders depend upon the inspection by the defense people, and these are dispatched only after the defense inspection.

See, the -- very recently, we completed 1 PDI. PDI means pre-dispatch inspection.

Yes. Yes, this is what I'm saying, that anything was pending on 31st March for pre-dispatch inspection, it means material was ready...

These were ready and then 3 different lines of around INR 30 crores worth were offered for inspection and in the month of April...

This has been dispatched.

Yes, it was completed, and we have dispatched. And in June, again, we are offering further quantity for inspection. We hope that in the first quarter we'll be completing those also.

Okay. And one more thing. Are we considering any kind of strategic kind of alignment with any other company to expand our business, like one we have with NIBE global ammunition.

That is, yes, we have one joint venture company, which [indiscernible] but we have strategic memorandum of understanding signed with multiple companies, which are going to help us in our -- like because we are -- one of the areas is that presently, which is very much in the -- all these that drones and loitering munitions. So we are -- we have understanding and MoU signed with multiple countries -- companies for provision of -- yes, payloads to these companies. They are producers of drones, but the payload has to be supplied by us. We have multiple kind of understandings and MoUs.

Okay. And my final question is with respect to the current year target of revenue of about INR 600 crores to INR 700 crores, how much do you expect will be the export contribution out of this?

INR 200 crores will be in the current year that is FY '27, we are expecting to export. But mind you that these are all the -- presently majority of these are development orders we are executing. Once we complete, then they get converted into production orders, which are a little larger than these figures.

Okay. So we are normally this year, if I understood correctly, it is around INR 200 crores of export and INR 500 crores of domestic revenue.

Yes.

So that is what we had -- or will it be evenly distributed across the quarters or there will be variation across the quarters?

There will be variation. It's always there. One of the reasons like I told you, the inspections and dispatches. And then we are dependent on some imports for some of the raw materials where they are getting delayed that also is affecting the deliveries.

Okay. So in normal course that is our target as on date?

Yes, exactly.

The next question is from the line of [ Apar Bansal ] from Alpha Ventures.

So firstly, many congratulations, sir, to achieve this kind of milestone.

Thank you.

I have only 1 question. Why is the execution risk in this business? Because we are delaying the orders and we are not able to complete the orders at the specific time, so how do you assess this execution risk?

Yes. You remember, we had accidents in the last year in 2 of our plants. One of them is the flares manufacturing facility. And you know that flares is one of the important products we produce for Indian Air Force and we are the only source, and then we are holding multiple orders on that. Because of these things, the deliveries got affected. We had to import some of the components which we produce ourselves. And the imports got affected because of geopolitical conditions, ship movement. And now -- like I mentioned, now we have completed the reconstruction of the plant for flares and all those. We are producing ourselves. We are not dependent on the imports now. And we hope that we'll be executing it much faster than earlier.