Q1 2027 Premier Explosives Ltd Earnings Call
Speaker #1: Ladies and gentlemen, good day and welcome to the Q1 FY27 conference call hosted by Premier Explosives Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Speaker #1: Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Akhilesh Gandhi from Stellar IR.
Speaker #1: Thank you, and over to you, sir.
Speaker #2: Thank you, Steve. Good afternoon, everyone. I'm Akhilesh Gandhi, and on behalf of Stellar Investor Relations, I welcome you all to the Premier Explosives Q1 FY27 earnings conference call.
Speaker #2: We shall be sharing the key operating and financial highlights for the first quarter, ended June 30, 2026. Today, we have with us the Senior Management Team of Premier Explosives. Mainly, we have Mr. T.
Speaker #2: V. Chaudhary, sir. He is our Managing Director. Along with him, we have Mr. Vijay Ji Kumar, our Chief Financial Officer. Before we begin, I would like to state that this call may contain some forward-looking statements, which are completely based upon the company's beliefs, opinions, and expectations as of today.
Speaker #2: 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 statements to reflect developments that occur after the statement is made.
Speaker #2: Documents relating to the company's financial performance, including the investor presentation, have already been uploaded to the stock exchange. With that, I now invite Mr. T.
Speaker #2: Mr. V. Chaudhary, sir, to share his opening remarks on the company's performance for the first quarter. Thank you, and over to you, sir.
Speaker #3: Thank you, Mr. Akhilesh, and good afternoon, everyone. I welcome you all to the earnings conference call of Premier Explosives for the first quarter ended June 30, 2026.
Speaker #3: Thank you for joining us. I trust you have reviewed our Q1 FY27 results along with the investor presentation available on the stock exchanges and on our website.
Speaker #3: During Q1 FY27, we reported revenue of $102.6 million, reflecting a decline of 28% year on year. The quarter was impacted by delays in dispatches and project execution.
Speaker #3: Primarily due to ongoing global headwinds and supply chain disruptions across certain programs. While these factors affected near-term revenue recognition, the underlying demand environment for our products and solutions remains robust. On the profitability front, operating performance was impacted by elevated raw material costs amid prevailing global market conditions.
Speaker #3: The increase in input prices created temporary pressure on margins during the quarter. However, we continue to focus on operational efficiency, cost optimization, and disciplined execution to mitigate these challenges.
Speaker #3: Encouragingly, we believe that many of these external headwinds are gradually easing as the supply chain stabilizes and execution improves. We expect stronger operational performance and better revenue conversion in the coming quarters.
Speaker #3: Most importantly, our business fundamentals remain strong. As of today, our order book stands at ₹1,393 crore, with approximately 94% of the order book coming from the defense segment.
Speaker #3: The healthy order backlog provides strong revenue visibility and reinforces our confidence in the company's growth trajectory. Also, regarding the recent acquisition by Apollo Microsystems, we believe this marks a significant milestone in Premier Explosives' growth journey and opens up exciting opportunities for the company.
Speaker #3: The partnership brings together Apollo's strengths in defense electronics and mission-critical systems with Premier's capability in energetic materials, rocket motors, ammunition, and propulsion systems, creating a broader and more integrated defense platform.
Speaker #3: For Premier, the strategic benefits are clear: enhanced access to larger and more complex defense programs, stronger technology and R&D capabilities, a wider customer reach, and improved operational efficiencies through scale and collaboration.
Speaker #3: The combined strengths will also strengthen our position in India's growing defense indigenization and export opportunities. We believe this partnership will accelerate Premier's next phase of growth, strengthen our competitive positioning, and create long-term value for all stakeholders.
Speaker #3: We remain excited about the opportunities ahead and look forward to unlocking the full potential of this partnership. Now, I request Mr. Vijay Kumar, our CFO, to share the financial performance.
Speaker #1: Thank you, sir. Good afternoon, everyone. The results presentation for the quarter ended June 30, 2026, has been uploaded on the stock exchanges and on the company's website.
Speaker #1: I believe you may have gone through the same. The revenue from operations for Q1 FY27 declined by 28% year on year, to ₹102.6 crores.
Speaker #1: Our EBIT for Q1 FY27 declined by 80% year on year, to $4.8 crore. The EBIT margin for the quarter stands at 4.7%. Our net profit decreased by 80% year on year, to $3 crore.
Speaker #1: The PAC margin for the quarter stands at 3%. Now, coming to the order book, the company's current order book stands at ₹1,393 crore, out of which the defense segment order is the majority at ₹1,309 crore, which is equal to 94% of the total order book.
Speaker #1: The explosives segment stands at ₹42 crores, which is equal to 3% of the total order book, and the services segment, which includes operational and maintenance services, also stands at ₹42 crores, which is equal to 3% of the total order book.
Speaker #1: This order book 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.
Speaker #1: With this, we will now open the floor for questions and answers. Thank you.
Speaker #4: Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone.
Speaker #4: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use a handset while asking a question.
Speaker #4: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Parish Kulkarni with Ignite Capital.
Speaker #4: Please go ahead.
Speaker #5: Hi. Thank you for taking my question. Firstly, on the cost side, we have seen a sharp decline in other expenses from ₹20 crores to ₹11 crores in one quarter.
Speaker #5: So, if I were to build it for the entire year, what is the run rate cost we expect for the full year? And also, what contributed to this decrease?
Speaker #1: There are earlier in earlier quarters, there were provisions expected the credit loss provision and there was a decline in forex decrease in forex losses.
Speaker #1: So those are—it is compared, not comparable, but exact apple to apple. There is a reduction in cost.
Speaker #5: Okay. So this.
Speaker #1: There are other concerns. Yeah, yeah.
Speaker #5: Sure. So, is it ₹11 crore for the sustainable run rate, you mean?
Speaker #1: Yeah, you can say it is around 9 crores. You can see, as of 30th June '25 also, it is around 9 crores.
Speaker #1: So, 9 to 10, kind of.
Speaker #5: Okay, understood. Now, coming to the gross margin—you explained in your opening remarks that the reduced quantitative situation affected the margins. So, looking ahead to FY27, where do we see the gross margin?
Speaker #5: Do we see that improving sequentially, or should we maintain the 35% as a decent assumption?
Speaker #1: Yeah, margins will definitely improve because we have different products in the portfolio of products. So, depending on the dispatches of the products, it keeps on increasing.
Speaker #3: Yeah. LD order book and execution pattern—we have already, in this quarter, seen movement of materials and all those goods, which gives us confidence that it will improve in the coming quarter.
Speaker #5: Okay, so could you please clarify whether this is a baseline, and whether we should assume a 40% kind of gross margin going forward, looking at Q4 as well?
Speaker #1: Even in earlier calendar flows also, we said that we are targeting an EBITDA of 15% to 20%. So I think, on the same lines, we are trying to achieve it.
Speaker #1: Yeah.
Speaker #5: Okay. Now, you mentioned enhancing your product offering, and you said that you will also be looking at growth and UAV. So, what is the current stage of development here?
Speaker #5: I mean, are we trying to develop our own UAV technologies, or would we be partnering with other companies? Could you throw some light on this?
Speaker #3: We are not developing our own drone technologies—that is for the birds and all those. We are partnering with several drone manufacturing industries for the payloads.
Speaker #3: We are making the payloads and then participating along with them in this, as a partner—not as an independent, standalone supplier.
Speaker #5: Okay. Okay. Understood. And now with Apollo taking up I mean, taking over. So do you expect any orders from the Newell side of the business because they have got good they have got good relations with the Navy and they have got orders with respect to the sea mines and submarines.
Speaker #5: So, do you see any traction going ahead in the order book from the naval side?
Speaker #3: Yeah, we are hoping that this association will help us to strategically strengthen ourselves, but the total potential of this will be known by December only.
Speaker #5: Okay. By December. And last question: regarding the export licenses in the fourth quarter, we have talked about around ₹400 crore of export licenses that we have not received.
Speaker #5: So, when do we, sort of, have we received them currently? Because last time we had said that we would be expecting to get those licenses within three to four months.
Speaker #5: So, what is the status there? And what is the export portion that we would be expecting in FY27 from the current order book execution?
Speaker #3: Yeah. Over the past week, we have received several export licenses, and we have also moved out the material from the factories. Some of them are in the pipeline.
Speaker #3: We are expecting them to arrive in one or two days, so it's quite satisfactory. Receipt of export licenses and what material is moving out.
Speaker #3: All the backlogs of previous quarters, I think, will be completed in this quarter.
Speaker #5: Okay, so is it fair enough to expect around ₹200–300 crore of exports in '27, as stated earlier?
Speaker #3: Yeah. We are targeting around ₹200 crores this quarter—based on the 15th, ₹150 to ₹200 crores.
Speaker #5: Okay, understood. I'll go and make the call. Thank you for answering.
Speaker #1: Yes, thank you. The next question comes from the line of Varun Chen with Olet Capital. Please go ahead.
Speaker #2: Yeah. Hi, good afternoon, sir. I have a couple of questions, starting with the July 2023 flares order. This was guided for completion in Q1 FY27.
Speaker #2: And the 30 crore of LD reversal was expected. So, any update on that?
Speaker #1: Yeah, LD, they still are in process. Maybe by this quarter, or by October or November, I think we will come to know, because a lot of processes are there.
Speaker #1: It's going on. And as far as flares are concerned, yeah.
Speaker #3: Further orders are in the pipeline, and we have started production in our own plant and all those. So, we are hoping that this will contribute well in the coming quarters.
Speaker #1: No. Regarding the earlier order also, we are going to complete it in another three to four months. There is a backlog of about ₹75 crore.
Speaker #1: So, that will be completed in the next four to five months.
Speaker #2: It did that. So just for clarity, sir, this July 2023 order will get completed in the next four to five months? Is that right?
Speaker #1: Yes. Yes. Already started completed.
Speaker #2: Okay. And sir, earlier management had guided for this ₹430 crore order of October 2025, that approximately two-thirds will be done in FY27. So that would be close to ₹285 crore.
Speaker #2: So, is that guidance on track? And how much did we do in Q1?
Speaker #1: In Q1, it was only ₹21 crore. And in the second quarter, we are expecting a better number.
Speaker #2: And for the entire year, will we do close to 285 or something?
Speaker #1: No, no. We had to complete the order before this financial year.
Speaker #2: This was the entire ₹430 crore? Will it be done in FY27?
Speaker #1: Yeah.
Speaker #2: We have the capability, like the capacity, to do the entire order?
Speaker #1: Yes. Yes.
Speaker #3: Yeah, we have. The sharp-sharp material payload, we are dependent on imports, which we have completed. We have executed. The flares we do in our own plant, so we have the capability to complete.
Speaker #2: Got it, sir. And sir, on the guidance front, I think in FY27 management had guided for 600–700 crore. So we have done close to 103 crore in this Q1.
Speaker #2: So do in the balance nine months, can we do 5, 600 CR more? I mean, is that do we have that kind of capacity and?
Speaker #3: Yeah. Capacity was like I explained. We have the capacity for flares and other products to make, whereas for items like shafts, we are dependent on imports, where it depends on the conditions prevailing there.
Speaker #3: But otherwise, flares and other things are made in our own facility, and then we'll be able to execute that.
Speaker #2: So, you retain the ₹600 crore guidance for FY27. Is that right?
Speaker #3: Yeah.
Speaker #2: Okay, sir. Got it. And sir, last quarter, you mentioned that there was a new alternate raw material which you had sent to DRDO for approval.
Speaker #2: And this was going to be used for these landmines and loitering munitions for drones. Any update on that?
Speaker #3: Yeah. There is considerable progress on it. They are conducting tests of our material, what we have proposed. And that is being done by DRDO, ARDE, and HMRL.
Speaker #3: Once it is complete, I think they will give us clearance to use that material. That will open the door to completely getting into mines—that is, Adrishi mines and Ulka mines—which are very much in demand.
Speaker #3: From my Indian army.
Speaker #2: So, by when do we expect any completion of the survey by DRDO?
Speaker #3: For the hardware part, we have assembled everything together, along with other components and chemicals. It's ongoing and may take another six months.
Speaker #2: Another six months. Okay.
Speaker #3: Yeah.
Speaker #2: Got it, sir. And sir, on the Kattapalli this CAPEX, so we we had earlier said that by Q1 and some some assets will start commissioning.
Speaker #2: Then by Q2, some will start. So, did we see anything commissioned by the end of Q1, or even till now? Because we are halfway through Q2 also.
Speaker #3: The integration of the pipelines and the plant and machinery erection and installation for the RDX and HMX production is almost complete. And then we are expecting to take up the water trials in September.
Speaker #3: That water trial will take a month, and after that, it will go into production of the products intended for that. That is about RDX and HMX.
Speaker #3: And about mixing plant where two and a half tons planetary mixer is installed. Some of the components which are imported by the supplier of the mixer they got delayed because of the movement maritime movement of ships and all those.
Speaker #3: So now we have put pressure on them and made them ship it by air. So, we are hoping that by the end of September, we'll be ready with the plant, and then we'll take up the tummy trials.
Speaker #2: Got it, sir. And sir, on the Andhra Pradesh expansion plan—after the acquisition of promoter stake by Apollo, are we continuing with it?
Speaker #2: And have we finalized the land parcel for it?
Speaker #3: Land parcel pricing was an issue. We were requesting the government for a reasonable price that we can afford to install, because, as an explosives industry, we require large land areas.
Speaker #3: Such a large area, the price makes a big difference. So we have requested the government to rework the price and give us a better price, through which we can be gainfully benefited.
Speaker #3: So, at present, it is at that status.
Speaker #2: And this expansion will be going on even post, like Apollo will continue with it, right?
Speaker #3: Yeah. The requirements are there, which definitely I think once they come into the picture, and then we'll be taking a call after making the presentation of our thing.
Speaker #2: Okay, sir. Got it. And just the last one from my side, sir. What what changes do you expect like post Apollo? Like what with the new capabilities they bring in, what more can you do really?
Speaker #2: Any synergy benefit or any guidance there?
Speaker #3: We are expecting there there is a capabilities are in the defense electronics. So where in which area where we have no expertise. So we are expecting that we'll be able to get a good gainful benefits from them with their expertise and then the systems which where you work integrated with the electronics and high energy materials that's where I think we can definitely we are looking forward to do a better strategically beyond to be better on that.
Speaker #3: More details on all of these will probably come by the next quarter.
Speaker #2: Okay, sir. Got it. Thank you, and all the best.
Speaker #3: Thanks.
Speaker #1: Thank you. The next question comes from the line of Chandresh with Nivesh. Please go ahead.
Speaker #2: Yeah. Hi, sir. Thank you for the opportunity. Sir, two questions on the order book side. Can you provide the program-wise breakup of the order book?
Speaker #3: You can only give a breakup of industrial explosives and defense, that's all.
Speaker #2: Yeah, we have 95% defense orders and 6% regular explosives—industrial explosives. Okay. And sir, secondly, with respect to this project, which, I mean, BEL is also expecting, about 30,000 to 40,000.
Speaker #2: So, on that side, how much is female exposure expected in the QR from the category?
Speaker #3: We'll get the question. Could you please repeat?
Speaker #2: So basically, I mean the query is, how much are you expecting under the project? Yeah.
Speaker #3: No. If you have participated in a tender or something, then we can say that. But tenders themselves are not at call.
Speaker #2: Okay. Got it. Yeah. Thank you so much, sir.
Speaker #1: Thank you. Participants who wish to ask a question may press star, then one. The next question comes from the line of Faris Kulkarni with Ignite Capital.
Speaker #1: Please go ahead.
Speaker #4: Wait. Just one question on the order book side. Sir, what is the order inflow guidance for FY27?
Speaker #2: Already, we have 1,393. So for FY27, we are expecting another 200 to 300 crores.
Speaker #4: Okay, 200 to 300 crore. And the execution is still in FY27 itself, or?
Speaker #2: No, no. All our orders are for the next two years, so we are expecting a run rate of ₹1,000 crore plus, based on whatever we execute after that.
Speaker #2: It will.
Speaker #4: Okay. Okay. Yeah, understood. Thank you.
Speaker #1: Thank you. The next question comes from the line of Deepak, an individual investor. Please go ahead.
Speaker #4: Hello. Hello.
Speaker #2: Yes, sir. You're audible. Please go ahead.
Speaker #4: Okay. Hi, good afternoon, sir. I have a particular question: In Q1 FY27, revenue declined by 28% year on year. Did you dispatch any execution delay, and were specific projects impacted? Also, what portion of the deferred revenue is expected to recover during FY27?
Speaker #3: Particularly the export orders that we have—those deliveries were delayed because of maritime problems. Similarly, some of the components which we are importing for delivery to the finished product, that is, countermeasures, which are supposed to come from abroad, there are also delays that have been caused.
Speaker #3: Delays in deliveries—this is the main reason for the things which we are expecting to overcome or complete those executions in the current quarter, second quarter, that is.
Speaker #4: Okay, understood, sir. And in Defense and Space, revenue declined by 35% year-on-year despite a strong defense environment, as you mentioned. Was this purely timing-related, or have there been delays in the customer procurement and acceptance process?
Speaker #3: There have been some delays, which are due to the time taken to obtain export licenses for the export orders. But now, like I mentioned at the beginning, most of the licenses have been received, and we are in the process. We hope that in the second quarter and third quarter, we'll be completing all of this.
Speaker #4: Okay, so there are no delays from customer procurement and acceptance? Okay. And what will be the revenue guidance for FY27? Does management still expect to achieve meaningful growth despite a weak start to this year?
Speaker #3: Yeah. Like you mentioned, we are expecting a target of around ₹600 crores turnover, which is a considerable increase over the previous year and the year before that, if you take it.
Speaker #4: Okay, understood, sir. Thank you for the opportunity. I will run that through the queue. Thank you.
Speaker #1: Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. The next question comes from the line of Arun Chen with Dollar Capital.
Speaker #1: Please go ahead.
Speaker #2: Yeah, so just a couple of follow-ups. On this April 2026 ₹350 crore international order for defense products, have we received the export license for this one?
Speaker #2: It's in process actually. Yes.
Speaker #3: So like why when when
Speaker #2: Can we receive an export license for this, and when will the...
Speaker #3: How much we are expecting?
Speaker #2: Yeah.
Speaker #3: Usually, it takes at least three to four months for every processing of the export license. And before we submit for processing, we have to receive the import licenses from the importing country.
Speaker #3: So this process takes time, at least a minimum of three to four weeks, or months.
Speaker #2: I didn't understand about the import license. Why do you need the import license for this?
Speaker #3: The other party, the country where we are going to export, has to issue an import license to the importer there.
Speaker #2: Okay. Got it, got it. So once that comes, then you start the production. So, is it safe to assume that in this calendar year there will be no production for this order?
Speaker #3: Actually, I think the last quarter at the in the last quarter, yeah, we're expecting some dispatches.
Speaker #2: Last quarter. Got it. And sir, on this bulk explosives business, what is the guidance for FY27 and 28 also, if you can give?
Speaker #3: Is it going to predict that for FY28? And because the prices are very much dependent on the raw material import prices, and there are multiple manufacturing capacities, that also plays a role.
Speaker #3: There are also more than 40 players in this field, so it's difficult to predict that.
Speaker #2: For FY27, if you can give—because I think we are already done with 40% of '27—some guidance of what kind of revenue there will be, and what is the margin profile right now?
Speaker #3: Margin profile.
Speaker #2: I think ready order. Hello.
Speaker #3: Yeah.
Speaker #2: So, we have an executed contract with Singarani Collieries. So, the balance part of about ₹25 to ₹30 crore will be executed this year, this financial year.
Speaker #4: So, and other than that,
Speaker #2: nothing. Just that much.
Speaker #3: Other than that, we have detonating fuse orders and all these things there. Also, we have export orders, so those things will be continuing.
Speaker #2: So, close to 80-80 crore, I think we can get right in '27 in this revenue.
Speaker #3: Yeah, just like last year, I think we'll maintain.
Speaker #2: Got it, sir. And so what is the what is the margin profile we are getting here right now because from what I've heard like the Coal India and Singhrani margins have been very very down.
Speaker #3: The market margin, in fact, with Coal India, we have withdrawn last year also, and then before last year also, because of the prices—very low prices.
Speaker #3: Singhrani, yes, we are servicing because it is close by. So, a little better than Coal India prices with our net cost and all this.
Speaker #3: But otherwise, yeah, the margins are very, very thin. In many places, they are negative.
Speaker #2: It's like low single-digit margins then, right?
Speaker #3: Yeah.
Speaker #2: Yes, got it, sir. And just one last question, sir. What is the scenario in the international market for RDX and HMX supply, demand, and pricing?
Speaker #2: If you can give us some color there.
Speaker #3: Demand is good, but getting licenses is difficult.
Speaker #2: And pricing of RDX HMX.
Speaker #3: Price good in exporting the different countries so depending on country. Present because war scenario and all those pushed the demand up. So for the present yes prices are good.
Speaker #3: Maybe after two years or three years, what happens, we'll have to see that.
Speaker #2: So, can you quantify the prices? Can you give us some range or band? That would be helpful for RDX, HMX, or any other major grades of explosives.
Speaker #3: We are competing in this area also, so we don't want to say anything on that.
Speaker #2: No just the just the industry price band what what price band it operates in. Not not the your selling price.
Speaker #3: You can easily get that from the internet and other places.
Speaker #2: Okay. Okay. No, no issue, sir. That's all from me. Thank you, and all the best.
Speaker #3: Yeah.
Speaker #1: Thank you. The next question comes from the line of Deepak, an individual investor. Please go ahead.
Speaker #2: Hello. Thank you for the opportunity again, sir. My question is related to the EBITDA margin. We have seen a drastic decline in EBITDA margin from 15% to 6% in Q1 FY27.
Speaker #2: So, like, can you share what’s the reason behind it?
Speaker #3: As RMD sir explained, there is a bouquet of products. So, depending on product dispatch, it slightly varies, but overall our guidance is about 15% to 20% as our yearly target.
Speaker #2: So in this, how much margin has been eroded due to raw material cost and under-absorption of fixed cost?
Speaker #3: The difference that we are seeing is there, but I think in the coming quarters we'll be making it up.
Speaker #2: Okay. So, in this, has the raw material price started normalizing?
Speaker #3: Yeah, it's not normalizing, but already we have existing contracts, so we have to execute them. Once we complete the contracts, we'll be increasing the price also.
Speaker #2: Okay, so if the raw material prices get normalized, what EBITDA margin range can we expect? Is it the same, like 15 to 20%?
Speaker #3: Right. For this financial year.
Speaker #2: Okay. And sir, one last question on the order book. We have nearly 13 to 14 million in our order book, equivalent to nearly 3.5 to 3.6 times of FY26 revenue.
Speaker #2: So what percentage of this order book is executed in, like, the next 12 to 18 months?
Speaker #3: As per our turnover, the run rate we are expecting is about ₹500 to ₹600 crore—rather, ₹600 crore is what we are targeting. So, yeah.
Speaker #2: You are targeting ₹500 to ₹600 crore in the next 12 to 18 months.
Speaker #3: Yeah.
Speaker #2: Okay, okay. Thank you, sir. Thank you so much for your opportunity, and all the best for the next quarter.
Speaker #1: Thank you. Ladies and gentlemen, if you wish to ask a question to the management, you may press star and one. Thank you. As there are no further questions from the participants...
Speaker #1: I now hand the conference over to Mr. T.V. Chaudhary for closing comments.
Speaker #3: Yeah, thank you, Mr. Agilesh. And thank you, everybody—all the stakeholders—for showing interest in the company and wishing us good success in the future, and yours as well.
Speaker #3: Thank you very much.
Speaker #2: Thank you.
Speaker #1: Coming. Thank you. On behalf of Premier Explosives Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your mics.
