Premier Explosives Q4FY18 Concall Summary

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Financial Highlights

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  • The total revenue of the fourth quarter stood at INR 83.28 crores with a reported growth of 15 % from the corresponding quarter in last fiscal year
  • Operating profit of the quarter stood at INR 23 crores which was considerably higher than INR 14.02 crores in the last fiscal year
  • PBT which stood at INR 4.02 crores has slipped from INR 11.89 crores in the last quarter of last fiscal year
  • However total revenue in the whole year saw a jump of 15.5%
  • Consolidated Financial Results
    • The total revenue of the group increased to INR 282.53 crores, outperforming their own estimates
    • PBT and PAT was less than PBT and PAT in the last fiscal year
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Costs

  • The costs of labor, power and other raw material has increased by little less than 5% while the selling price of the goods has decreased by 10% thus making it the single most largest factor for dipping margins
  • lso due to higher borrowing the cost of finance has increased by 25%

Cash Utilization

  • The QIP money and the preferential issue money would be mainly utilized as a Capex for raising new buildings

Defence Ammunitions

  • The company has decided to form a JV with next ammunitions
  • JV would equip them with the BMCS technology
  • For importing 30 mm technology a JV with PTL would be formed
  • Company would also add 40 mm to their technology base and they are anticipating to start trials on both the products by the month of August

Capex and Revenue Projections

  • In the fiscal that ended recently the total capex was INR 4.7 crores
  • The CWIP of the firm as of 31st  March, 2018 was INR 15 crores
  • The upcoming projects such as one on Katepalli site would incur INR 50 crores of capex outlay
  • Capex would be on purchasing new machinery and raising new buildings
  • Company is hopeful of producing propellants in the current fiscal year in the new facilities
  • Company is expecting a total jump of  15-20% in the total turnover from the last fiscal year

PELNEXT

  • A company named PELNEXT has been already formed and put up on the website as well
  • It is fully a venture project of  Premier explosives and the partnering company has also asked France govt. for granting them permission to enter into this JV
  • Premiere explosives would retain 51% stakes in the JV while the foreign holding would remain at 49%

Major Products

  • In defense category the major sellers would be propellants and chafs and flares
  • They have also developed a new product for the army, and being the only bidder of this product, they are hopeful of getting a huge order from the army
  • The defense products category may account for 50% of the total revenue in the next fiscal year

Upcoming Business Opportunities

  • Company has received enquiry for products that are to be used in highly valuable missile systems of India namely, Pinaka, Brahmos, Astra and MRSAM
  • The insulation material offered by the company for the lining of motors has received a repeat order which is a positive sign for the 

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