Premier Explosives: Will Defence Stock Grow Despite Weak Revenue Guidance from Management?

Synopsis:- ICICI Direct has given a ‘Buy’ call with a ₹610 target, implying 12% upside from ₹540. The company holds a ₹1,294 crore order book and ₹850 crore YTD inflows, largely defence-led. Despite near-term execution delays, capacity expansion plans support medium-term growth visibility.

India’s explosives sector thrives on mining, infrastructure, and defence demands. In FY 2025, it showed robust growth, with one major player reporting  Rs 75.4 billion in revenue, up 24% YoY, fueled by defence needs. The emulsion explosives segment is projected to expand at a 5.9% CAGR through 2035, backed by infrastructure and mining surges. Overall, the industry benefits from government policies promoting safe blasting practices.

With a market capitalisation of Rs 2,906.33 crore, the shares of Premier Explosives Ltd closed at Rs 540.60 per share, decreased around 0.20 percent as compared to the previous closing of Rs 541.70 apiece.

Brokerage Recommendations

ICICI Direct has issued a “Buy” recommendation on the stock with a target price of  Rs 610, implying a potential upside of 12% from the current market price of  Rs 540.60. The brokerage’s positive stance suggests confidence in the company’s growth prospects, order visibility, and improving execution outlook.

As per the brokerage, 9MFY26 revenue declined around 13% YoY due to dispatch delays caused by pending MoD inspections. Management expects execution to improve from Q4FY26E, though FY26 revenue guidance has been trimmed to Rs 500 crore. The implied Q4 growth appears sharp, but estimates remain slightly conservative.

Order inflows continue to stay strong, with YTDFY26 inflows at nearly  Rs 850 crore and a two-year execution cycle. The current order book of  Rs 1,294 crore, about 3.5 times TTM revenue, offers solid visibility. Notably, 92% of the backlog comes from defence, supporting stable medium-term growth prospects.

The company is expanding defence capacities, including the Katepally facility focused on RDX, HMX, and rocket integration, expected by Q1FY27E. Additional capex in Telangana and a planned Odisha greenfield project signal long-term intent. As per the brokerage, higher-margin products like mines and ammunition could strengthen profitability over time.

In Q3FY26, the company’s revenue declined 51% to  Rs 81.41 crore from  Rs 165.92 crore in Q3FY25. Net profit also fell 34% year-on-year, dropping from  Rs 9.19 crore to  Rs 6.04 crore, reflecting a sharp slowdown in business activity and pressure on overall earnings performance during the quarter.

Between Dec 2024 and Dec 2025, operating performance remained volatile. Operating profit declined from ₹15.45 crore in Dec 2024 to ₹11.65 crore in Dec 2025. Meanwhile, operating margin (OPM) improved from 9.31% to 14.31% during the same period, indicating better cost control and improved efficiency despite lower absolute operating profit.

Premier Explosives Ltd is an Indian company engaged in manufacturing high-energy materials and explosive products for defence, space, mining, and infrastructure sectors. With decades of experience, the company supplies propellants, detonators, and related systems, playing a key role in supporting India’s strategic and industrial requirements.

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