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Positional Call: Buy Premier Explosives for an upside of 15% in 3 months - IndiaNotes.com
Positional Call: Buy Premier Explosives for an upside of 15% in 3 months
Rudra Shares and Stock Brokers | Published: 01 Feb, 2017  | Source : IndiaNotes.com


Investment Rationale


Prominent player in manufacturing and supplying solid propellants for India's prestigious missile programmes like Akash, Astra, and reached a milestone ofdelivering 100oth Booster grain for Akash missile in july 2016.


Company has received an order from ISRO (Indian Space Research Organization) for use in the Polar Satellite Launch Vehicle (PSLV). With receipt of this order, the company would be foraying into the niche- space sector, which is a significant milestone for the company.


Additionally, company also bagged domestic order worth Q’ 33.18 crore from Air Head Quarters, Ministry of Defence. This order which company have won was a global tender and competed against international companies. The order is for a product called chaffs and flares which are used as a countermeasure by the air force, navy as well as in army and is to be completed by the end of 2017.


Updates:


- Total order book as on 3oth September 2016 stands at Q’ 273 crore and currently order book is almost same at Q’ 268.


- On 5th October, company has bagged an order worth Q’ 27.79 crores for the supply of Booster grains from Bharat Dynamics

 

- Market expansion in explosives and defence business with new Industrial licenses obtained


- Signed NDAs and MOUs with global missile players


- Plans to enter the ammunition business and negotiating for technological tie-up with foreign OEMs


Focusing on exports to South East Asia and Africa


Production of explosives went up by 33% to 32014 tones from previous year of 24066 tones and production of detonators increased to 46.28 million pieces from 42.20 million pieces a year ago. Windmill generated 8.25 lakh units of power compared to 13.67 lakh units during the previous year, a decline of 40% due to unfavorable wind patterns.


Indian explosives industry, estimated to be ` 40 Bn p.a., is considered among the top 5 in the world. Coal requirements for the power sector are projected to reach to about 1070 MT by 2020. Out of this, domestic coal supply is projected to increase to 756 MT by 2022. Industry has been showing a mixed trend with dynamics of changing mining activity levels, technological advancements, use of electric & shock tube detonators etc.


Receiving orders / enquires for export of detonating fuse and other accessories coupled with orders for explosives from coal companies which have been higher than previously executed amounts, would enhance the revenue & profits. Apart from that, company is expecting solid propellants opportunities to grow in view of induction of various missiles in to defence.


To cater the expected higher demand, company is planning to spend about `30.0 crores on expansion and new projects, which includes Greenfield project at new site and expansions at current site during 2016-18, these projects would be funded by internal accruals and a term loan of ` 23.00 crores already sanctioned.


Increasing mining activities by public sector coal companies, expected operations from private coal miners, amended mining regulations, priority of government for construction of roads & irrigation projects and rising export enquiries combined with ‘Make in India’ initiative, revised defence procurement policy, likely induction of new missiles by defence forces, etc. provides large and long term opportunity to company's both military & commercial explosives.



There is a strong support of Rs 351.38. After that, another support is at Rs 327.60.


If it breaks resistance of Rs 381.30, then it may reach to another resistance of Rs 410.08 and further reach to 52 W/H of Rs 430, which is also our target.

  Read full report Click here to read the full report


About Rudra Shares and Stock Brokers

RUDRA is one of the growing & dynamic brokerage houses with a strong presence in the Retail and HNI broking segment. With over 25 years of experience and lead by a team with outstanding managerial acumen, RUDRA is a professionally managed company supported by over 100 professionals, including Chartered Accountants, MBAs and other senior executives. RUDRA can thereby cater to its clients' short-term as well as long-term financial needs through a comprehensive bouquet of investment services. RUDRA offers a diverse range of financial services, including institutional and retail brokerage of Equity, Currency, Commodities, Derivatives, Online Trading, Depository Services, Fixed Deposits, IPOs and Mutual Funds Distribution, and Wealth Advisory & Research. RUDRA is looking to become one of the biggest broking houses. RUDRA Securities Limited, is a member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited, MCX Stock Exchange, and Depository Participant of Central Depository Services (I) Limited. RUDRA can be approached online at www.rudrashares.com.

 

For more information please write in to editor@indianotes.com

Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.

 
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