Event Participants
Executives
3 Akhilesh Gandhi (Stellar IR Advisors), T.V. Chowdary (Managing Director), Vijay Kumar BM (Chief Financial Officer)
Analysts
4 Chandresh Malpani (Niveshaay), Deepak Karwa (Individual Investor), Paras Kulkarni (Ignite Capital), Varun Jain (Dolat Capital Market Pvt. Ltd.)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹102.6 crores | -28% YoY; impacted by dispatch delays, export license hold-ups, and maritime supply chain disruptions |
| Order Book | ₹1,393 crores | 94% defence (₹1,309 cr), 3% explosives (₹42 cr), 3% services (₹42 cr); provides strong multi-year revenue visibility |
| EBIT | ₹4.8 crores | -80% YoY; margin compression from elevated raw material costs amid global headwinds |
| EBIT Margin | 4.7% | Down from ~16% YoY; management maintains 15-20% EBITDA target for FY27 |
| Net Profit | ₹3 crores | -80% YoY; PAT margin at 3% |
Geographic & Segment Commentary
Defence Segment: Order book of ₹1,309 crores (94% of total). Q1 defence and space revenue declined ~35% YoY due to export license delays, maritime shipment disruptions, and delayed imported components for countermeasures. Backlogs expected to be cleared in Q2-Q3 FY27 as export licenses have now been received.
Industrial Explosives Segment: Order book of ₹42 crores (3% of total). Business faces intense competition with 40+ players; margins thin to negative. Management has withdrawn from Coal India contracts; Singareni contracts continuing at low margins. FY27 revenue expected ~₹80 crores, similar to last year.
Operations & Maintenance Services Segment: Order book of ₹42 crores (3% of total).
Company-Specific & Strategic Commentary
Apollo Microsystems Acquisition: Apollo Microsystems acquired Premier Explosives, a significant strategic milestone. Partnership combines Apollo's defense electronics and mission-critical systems with Premier's energetic materials, rocket motors, ammunition, and propulsion capabilities. Expected to enhance access to complex defense programs, strengthen R&D, widen customer reach, and boost export opportunities; full synergy potential to be assessed by December 2026.
Kattapalli Capacity Expansion: RDX/HMX plant pipeline integration and machinery installation nearly complete; water trials expected September 2026, followed by production. 2.5-tonne planetary mixer commissioning delayed due to imported component maritime shipping issues; supplier pressured to air-ship, plant expected ready by end September for dummy trials.
Andhra Pradesh Greenfield Expansion: Land pricing under negotiation with government; company seeking reasonable rates given large land requirements for explosive manufacturing. Status to be decided post Apollo acquisition completion.
Export Business & Licenses: Multiple export licenses received in past week with material already moved out of factories; remaining pipeline expected within days. Q1 backlogs to be completed in Q2. FY27 export target of ~₹200+ crores, with Q2 target of ₹150-200 crores.
DRDO Alternate Raw Material Approval: Considerable progress on alternate raw material tests by DRDO, ARDE, and HEMRL for Adhushi and Ulka mines; clearance expected in ~6 months, opening high-demand mine orders from the Indian Army.
Drone/UAV Payloads: Company partnering with drone manufacturers as payload supplier rather than developing independent drone technology.
July 2023 Flare Order: Liquidation damages reversal still in process, clarity expected by quarter end or October-November. ~₹75 crore backlog to be completed in next 4-5 months. Additional flare orders in pipeline with production started at own plant.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY27 Revenue | ~₹600 crores | Maintained despite weak Q1; supported by ₹1,393 crore order book and export backlog clearing |
| EBITDA Margin | 15-20% for FY27 | Product mix dependent; raw material costs normalizing after Q1 pressure |
| Q2 FY27 Exports | ₹150-200 crores | Export licenses received; backlogged dispatches clearing |
| Order Inflow FY27 | ₹200-300 crores additional | On top of existing ₹1,393 crore order book |
| October 2025 Flare Order (₹430 crores) | Full completion by FY27 end | Only ₹21 crores executed in Q1; capability confirmed with own flare plant, shafts imported |
| Kattapalli Commissioning | Water trials September; production thereafter | RDX/HMX plant near complete; mixing plant by end September |
Risks & Constraints
| Risk | Context |
|---|---|
| Export License Delays | Defense export licenses take 3-4 months and require importing country's license first; delays caused Q1 revenue decline. The ₹350 crore international order still awaits license with dispatches only expected in Q4 FY27 |
| Raw Material Cost Pressure | Elevated input prices compressed Q1 margins; existing fixed-price contracts must be executed before repricing, keeping near-term margins under pressure |
| Imported Component Supply Chain | Maritime shipping disruptions delayed imported components for countermeasures and Kattapalli planetary mixer commissioning |
| Bulk Explosives Margins | Industrial explosives business operates at thin/negative margins due to pricing pressure from 40+ players; management exited Coal India contracts |
| Andhra Pradesh Land Acquisition | Land pricing dispute with government delays greenfield expansion; explosive manufacturing requires large land parcels at viable prices |
Q&A Highlights
Margins & Cost Structure
- Question: Other expenses dropped sharply from ₹20 crores to ₹11 crores—what's the sustainable run rate? Can we assume ~35-40% gross margin going forward? (Paras Kulkarni)
- Answer: Earlier quarters included one-off provisions for expected credit loss and forex losses, making them non-comparable; sustainable run rate is ₹9-10 crores. EBITDA target remains 15-20% for FY27, and margins will improve sequentially with product mix and dispatch volumes. (Vijay Kumar BM, T.V. Chowdary)
Export License Status & Backlog
- Question: Have export licenses been received and what's the FY27 export expectation? (Paras Kulkarni)
- Answer: Several export licenses received in past week with material already moved out; remaining pipeline expected within 1-2 days. Q1 backlogs will be completed this quarter; targeting ₹150-200 crores exports in Q2. (T.V. Chowdary)
Apollo Acquisition Synergies
- Question: Do you expect naval orders and other synergies post Apollo acquisition? (Paras Kulkarni)
- Answer: The association will strategically strengthen the company, particularly in defense electronics integration with high-energy materials. Full potential will be known by December 2026. (T.V. Chowdary)
Flare Orders Execution
- Question: Status of July 2023 flare order (₹30 crore LD reversal) and the October 2025 ₹430 crore order? (Varun Jain)
- Answer: LD process ongoing, clarity by quarter end or October-November. July 2023 order has ~₹75 crore backlog to be completed in 4-5 months. October 2025 order: only ₹21 crores executed in Q1; full ₹430 crores to be completed by FY27 end. Capability confirmed—flares made in own plant, shafts imported with deliveries received. (Vijay Kumar BM, T.V. Chowdary)
FY27 Revenue Guidance
- Question: Is the ₹600-700 crore FY27 guidance on track given only ₹103 crores in Q1? (Varun Jain)
- Answer: Guidance maintained at ~₹600 crores. Capacity exists for flares and other in-house products; shaft items depend on imports. Revenue confirms target of ~₹600 crores, a considerable increase over prior year. (T.V. Chowdary)
Kattapalli Capex Commissioning
- Question: Did any assets commission by end of Q1 or through mid-Q2? (Varun Jain)
- Answer: RDX/HMX plant integration nearly complete; water trials to start in September, taking ~1 month before production. The 2.5-tonne planetary mixer components were delayed by maritime shipping; supplier pressured to ship by air, plant expected ready end September for dummy trials. (T.V. Chowdary)
DRDO Alternate Raw Material
- Question: Update on DRDO approval for alternate raw material for land mines and loitering munitions? (Varun Jain)
- Answer: Considerable progress; tests being conducted by DRDO, ARDE, and HEMRL. Clearance expected in ~6 months, which will open complete access to Adhushi and Ulka mines—high-demand products for the Indian Army. (T.V. Chowdary)
Bulk Explosives Business
- Question: What's the FY27-28 guidance and margin profile for bulk explosives? (Varun Jain)
- Answer: ~₹80 crores revenue expected in FY27, similar to last year—Singareni contract balance of ₹25-30 crores plus detonating fuse export orders. Margins very thin, at times negative; Coal India contracts withdrawn due to low prices. (T.V. Chowdary, Vijay Kumar BM)
₹350 Crore International Order
- Question: Have export licenses been received for the April 2026 ₹350 crore international order? (Varun Jain)
- Answer: License is in process. Processing typically takes 3-4 months and requires importing country's import license first. Dispatches expected in the last quarter (Q4 FY27). (T.V. Chowdary, Vijay Kumar BM)
Order Inflow Guidance
- Question: What is the FY27 order inflow guidance? (Paras Kulkarni)
- Answer: ₹200-300 crores additional inflows expected in FY27 on top of existing ₹1,393 crores. All orders have a two-year execution runway with a run rate of ₹1,000+ crores. (Vijay Kumar BM)
Key Takeaway
Premier Explosives reported a weak Q1 FY27 with revenue declining 28% YoY to ₹102.6 crores and EBIT falling 80% to ₹4.8 crores, driven by export license delays, maritime supply chain disruptions, and elevated raw material costs. Management retains the ₹600 crore FY27 revenue guidance and 15-20% EBITDA target, supported by a ₹1,393 crore order book (94% defence) and improving execution momentum as export licenses now flow through. Strategic focus centers on the Apollo Microsystems acquisition—combining defense electronics with energetic materials—and Kattapalli commissioning expected September. Key watch points include DRDO alternate raw material approval (6 months), export license processing for the ₹350 crore international order, and the margin-dilutive bulk explosives business, which management continues to de-emphasize in favor of defence.