Premier Explosives Limited (PREMEXPLN) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q2 and H1-FY27 conference call hosted by Premier Explosives Limited. As a reminder, all participant clients will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star, then zero on your touch-tone phone. I now hand the conference over to Mr. Akhilej Gandhi from Stellar IR. Thank you, and over to you, Mr. Gandhi.

Thank you, Raya. Good afternoon, everyone. I, Akhilej Gandhi, on behalf of Stellar Investor Relations, welcome you to the PREMA Explosives Q2 and H1FR27 earnings conference call. We shall be sharing the key operating and the financial highlights for the second quarter, and the first half of the year ended on September 38, 2026. So, today we have with us senior management team of Brema Explosives. We have Mr. T.V. Chaudhry, sir. He is our managing director. And with him, we have Mr. Vijay Kumar, sir. He is chief financial officer. But before we begin, I would like to state that this call may contain some of the forward-looking statements which are completely based upon the company's beliefs, opinions, and expectations as of today. The statements made in today's call are not a guarantee of future performance and also involve unfortunate risks and uncertainties. The company also undertakes no obligation to update any forward-looking statements to reflect development that occur after the statement is made. The document relating to the company's financial performance, including the investor presentation, has already been uploaded on the stock exchange. With that, I now invite Mr. T.V. Chaudhary, sir, to share his opening remarks on the company's performance for the second quarter. Post that, we'll start with Q&A session. Thank you, and over to you, sir.

Thank you, Mr. Gandhi. Good afternoon, everyone. I welcome you all to the Earnings Conference Call of Premier Explosives for the second quarter and first half of financial year 27. Thank you for joining us. I trust you have reviewed our quarter 2 financial year 27 year earnings and half yearly FY27 results along with the investor presentation available on the stock exchanges and on our website. I am pleased to share that Q2 marked a strong recovery in our operating performance with improved business momentum translating into significant revenue growth and better operating profitability. During Q2, our revenue from operations increased 92% year-on-year and 42% quarter-on-quarter to Rs. 1452 million. As discussed during our previous earnings call, Q1 was impacted by delays in dispatches and project execution, primarily due to global headwinds and supply chain disruptions. A strong sequential improvement in revenue during Q2 reflects better execution momentum and following these challenges. On the profitability front, EBITDA increased 161% year-on-year to Rs.172.3 million in Q2, with EBITDA margin improving to 11.9% compared with 8.7% in Q2F26 and 5.7Q1FA27. The improvement in revenue supported stronger operating leverage and better absorption of operating costs. While the first quarter weighed on our overall half-yearly profitability, the recovery in Q2 is encouraging. We remain focused on operational efficiency, cost optimization, and disciplined execution to further strengthen our performance. Coming to the order book, I am happy to share that our order book has strengthened to Rs. 16,420 million as of October 2026. The defense segment accounts for nearly 96% of the total order book, providing strong revenue visibility for the coming periods. We continue to focus on strengthening our manufacturing capabilities and expanding our product portfolio across high-energy materials, countermeasures, rocket motors, ammunition, and other defense applications. These initiatives are aimed at enhancing our execution capabilities. And addressing the growing requirements of domestic and international defense customers. Coming to the strategic development with Apollo Microsystems, the 26% open offer has been successfully completed, while the proposed acquisition of the additional 41.33% of promoter holding is under progress. As highlighted during our previous earnings call, we believe this association represents an important step in Premier's growth journey. The complementary capabilities of both companies offer opportunities to participate in larger and more complex defense programs, strengthen technological capabilities, and expand our reach across domestic and international markets. Looking ahead, our focus remains on accelerating author book acquisition, strengthening manufacturing capabilities, and developing high-value products. With a healthy order backlog and growing opportunities arising from India's continued focus on defense, indigenization, and self-reliance, we remain confident in the company's long-term growth potential. Now, I request Mr. Vijay Kumar, our CFO, to take you through the financial performance of Q2. Thank you, sir.

Good afternoon, everyone. The results presentation for the quarter and half year ended September 30, 2026 has been uploaded on the stock exchanges and on the company's website. I believe you may have gone through the same. I will now take you through the key standalone financial highlights. For Q2FI27, revenue from operations increased 92% year-on-year and 42% quarter-on-quarter to 1,452.8 million compared with 755.8 million in Q2FI6 and 1,025.6 million in Q1FI27. Our router increased. 160.8% year-on-year and 193.2% quarter-on-quarter to Rs. 172.3 million, with EBITDA margin improving to 11.9%, compared with 8.7% in Q2-FI26 and 5.7% in Q1-FI27. Our profit-after-tax stood at 119.7 million, compared with 178.8 million in Q2-FI26, a decline of 33% year-on-year. On a sequential basis, FAT increased to 25.1 quarter and quarter from 30.3 million in Q1 FY27. FAT margins stood at 8.2% compared with 23.6% in Q2 FY26 and 3% in Q1 FY27. Coming to the half-yearly performance, H1FI27 revenue from operations grew 13.8% year-on-year to $2,478.4 million, compared with $2,177.2 million in H1FI26. EBITAs stood at $231.1 million, a decline of 15.9% year-on-year, with an EBITDA margin of 9.3% compared with 12.6% in H1FI26. Our profit after tax to date 150 million. Compared with 331.9 million in H1F26, a decline of 54.8% year-on-year, fat margin should date 6.1%. Coming to the order book, outstanding order book should date 16,420 million as of October 2026, with approximately 96% contributed to the defense segment and the balance by explosives and services. The healthy order book provides strong revenue visibility, and we remain focused on improving execution and supporting the company's growth trajectory. With this, we will now open the floor for questions and answers. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and 1. The first question is from Varun Jain from Dolar Capital. Please go ahead.

Yeah, hi. Good afternoon, sir. So, a couple of questions. Starting with a couple of orders, I just want to know what's the progress. So, the July 2023 countermeasures order, I think 75 crore was still pending. So, have we received the delivery period extension which we wanted from the government?

We have applied for the delivery period extension, and, yeah, is expected in this quarter. In the meantime, our supplies are continuing, and we are continuing to deliver.

So, sir, but if we get, assuming we get the delivery plate extension in this quarter, in next month, so then by when will we complete the order, the 75 crore, which is outstanding?

Financially, it will be completed once we get the extension.

So you take 3 months. So that's close to 30 crores of LD which is pending on that order. By when can we expect to recover that?

That is the next process. Once we complete the order, then we have to apply and see.

Okay. Secondly, sir, on the October 2025 countermeasures order, I think by H1, we had executed close to 110 crores, so out of the 430 crore order. So, how much has been executed till now of that order?

There is a balance of about 270 crores left over. And also we have applied for extension. So once we get it, that will be completed, I think, before this financial event.

The entire 270 crore will be completed by March 27th, you're saying? Okay, so then, sir, the revenue, I think we have done 250-odd CR in H1, and we will do close to then 300 CR also in H2. 550 CR.

Yeah, 500 to 600 kind of thing we are targeting.

Uh-huh, sure, sir. And on the April 26th export order of 350 crore, have we received the export license?

Yeah, in the final days, maybe next month, I think we should get some of them.

Sir, I mean, it is more than six months, so this was received in April. Is there any reason, like, why the delay?

This is not in our hands. It's the government policy based on that, and then the committee has to approve that. So they have not rejected it, so it is still in the processing.

But, but, sir, I mean, assuming you are saying next month you expect to receive it, so then the supply will start?

Some of them. Yeah. Some of them. Some of the others which we have applied, we are expecting by next month.

And Madhav, I didn't understand. The approval is in parts or what? How does it work?

No, no. It is multiple others we have, and each other separately we apply for the export license. So some of them are in the process of completion. Some may take a little more time.

Okay, so how much do you expect to receive the export license for in this next month?

We won't be able to comment on this because we are not privy to this. When it is ready, when we get the order, we start producing the product.

Okay, sir. So coming on the bulk exclusive side, sir, have we bid for any new orders with Kingreni or any other customers?

So, the old order itself has extended, and we are continuing to supply that against the existing order.

So, I am assuming we will do close to 80 crores of bulk exposure revenue this year, right?

Yeah, we can expect it.

But then, sir, what happens to the next year? Because we have not announced any major new order in the year. So, how will be the growth in this segment for the next year?

See, this goes by the tendering process. By the time Singreni has to come out with a new RFP. Again, we will participate. That is the problem.

Okay, sir. And just last one from me, before I join back the crew, can you update on the 2R SAM orders?

We have no knowledge of 2R SAM orders. We have not yet received.

Okay, sir, I'll come back in the queue.

Thank you. Before we take the next question, a reminder to participants that you may press star and 1 to join the question queue. The next question is from K. Urkumar Badalia from Niveshay. Please go ahead.

My first question is regarding, in last part, we have mentioned that because of the supply chain issue. When the supply chain issue means there was a delay insurption flag on the right, so may I know like what is the scenario for that right now, I'm adding on to that log, because we are supplying our mixtures of products to the defense order, right, let's why our margin to fund on the gross level are decreasing on a continuous roll like that, and what is the trajectory you are looking forward?

Yeah, about the present supply chain position, there is improvement in the past two months. So the components which are to be received from abroad, they started coming, and then we have also made supplies in the last month, and current month also, supplies are kept in line. So that part is going on. Second thing about the margins, that's what you asked, no?

I am not

talking about abutta margin, I am talking about the gross material margin.

And we have a lot of products that are there, that depends on each product.

Normally, any company who works on commercial lander defense, exposure of the mixture, normally their margin trajectory has seemed to be increased. But if we seem like from March 25, 2021 to like onward, our margin profile is reducing, excluding March 24th. So just wanted to understand because this is not if this is regarding the supply chain, but what are we working on? Because in Q4 also, we have mentioned that supply chain issue has mostly resolved, and then again, we have seen the effect of that. So is there any vendor we are working on in-end levels, or are we working in-house on that product? We also have another order who are basically developed in-house. I just wanted to understand from that.

One thing is the bulk explosives in the... Negative margin. And also our service contracts, which they are long-term contracts, which take, which are for 10 to 11 years each contract. So the price fixed at the time of accepting the tender and then the price escalation clause, if you look at them, the growth in expenses are not in proportion with the price escalation clause. So the margins have come down. And other Other defense products, like we explained, due to the supply chain problem, the components we could not receive in time, so the deliveries got delayed. And if you remember, we had an accident last year in the flares plant, because of which we had to stop our internal production of the flare components. So that is made up by imports, so definitely that has reduced the margin, imported components instead of making in India.

So, it means for the next quarter and the next financial years, it means what kind of loss profile margin you are looking for? And as you mentioned, like the commercial exclusive market has a negative profile for us. So, what kind of bidding and profile we are seeing, what kind of margin we are targeting there?

It should be 20% at least.

Can you understand that you are on the grasslands, sir?

Yes, that's right, I think, yeah.

Okay, and the phone's profile would be in a similar level of what range?

Anyhow, we have a lot of other products are also coming up. So, it's a product mix that depends on this thing. Anyhow, we'll be trying to... No, no, sir.

I'm asking in terms of, let's say, from the perspective of visions and the bidding we do, so we also have a mindset like this kind of project profiling in terms of the gross level or an operating level, we should be right.

So, I'm asking on that perspective, because for the commercial.

And for the defense.

Oh, it's average. But they can simply be slightly higher.

I'm sorry, I'm not able to understand because right now we are making it out like and after 26, we have made 42% is the gross level margin. So right now we are seeing 20% A. So are we showing off from the operating level or which level?

How was it? You said 42.

42.

42. I don't know how you calculate it.

Okay. Got it. And I think the other questions have also been asked on the export license side. So just wanted to understand because we have different orders for different export materials and all. So the licensing process are going simultaneously for all the orders or it is like with respect to particular order in the process? How that is?

For all the orders.

And you are expecting to closure in one month for all the orders or any particular order?

That's a continuous process. See, the process is when we receive the order, export order, along with that, we have to get certain documents from the buyer, that is, end-user certificates and all those, which they have to obtain from their tournaments. So that takes some time. Then once those are all documents given to us, we submit our application to MOD and also DDP. So that the committee will take the time which normally it takes three to four months for issuing a license or giving a reply. So once we receive the license, then only we take up the production of the product which is for which license is issued.

Got it. And so I think earlier government or I think MOT was in proposal that they will disclose that once the license runs with the respective product, the company won't be needing to take those licenses. So that this kind of delay won't appear on an industry level. So was that proposal in the still process or it is not there entirely?

No, right now it is not there. It is order to order, it is processed. It is not product to product. It's up to up to up to up.

Okay, understood, sir. And just last question on the government side. After the Polo's run, what kind of changes we are expecting on the government side? I'm saying after the full acquisition of the 41.6% and the open offer that we did through the Polo, what kind of changes in the government side we are expecting? Or it would be the same?

It will be same only as far as the present is concerned. We won't be able to comment on that, but we expect it will remain same.

Okay. Thank you, sir.

Thank you.

Thank you. Participants who wish to ask questions, please press star and 1. The next question is from Devansh Mehta, who is an individual investor. Please go ahead.

Yeah, hi, thank you for the opportunity. Just wanted to ask a few questions. So, we have seen a strong recovery in revenue and operating profitability.

Seem to have lost the line for Mr. Devansh. The next question is from Varun Jain from Donath Capital. Please go ahead.

Yes, sir. Sir, so on Kattapalli, RDX, HMX, so in the last quarter you said you expect water trials by October, so water trials have been completed?

Yeah, water trials have started. It's going on.

So, when do we expect to end all the trials and start commercial production?

I think by middle or end of December, we should be ready for commercial production.

Okay, and so in Q4, Q4 FY27, then we'll have the capacity for the entire corporate. So, we expect to sell 50 tons, at least from that in Q4.

The production will start, but it will not be at that scale, so we'll have to, this being a hazardous item, so we'll have to go step-by-step, slowly.

I mean, but how much can be the production, like 20 tons, what?

Yeah, somewhere around 30 tons, they're expecting. 30 tons, okay.

And that would give us a revenue potential of 30-40 CR, that much, or less than 25-30 CR. Sorry?

Around 20 crores will be there.

Okay, got it.

And in FY28, sir, what will be the revenue we expect from the capacity because the entire capacity will be available?

From the RDX plant?

Yeah, the new, the entire capacity of 600 tons, which we have, IDX plus HMS, what will be the revenue potential?

This is mainly dependent on the export business. So it depends on the licenses received from government. Because this is RBX and HMX, they are raw materials which we are exporting. So based on the government licenses. This will be made. We are expecting that from around 300 tons, we will be able to produce in the...

And also in that around 50 to 60 percent, we will be consuming ourselves.

Sure, sir, but the market, even domestic and international, both the markets are in such a short supply that you will be able to sell the entire thing, right? Whatever you can produce, you will be able to sell, whether domestic or import. So, overall, what will be the revenue potential? Assuming you are able to produce a 400 ton and you use 150 or 200 tons internally, out of the 200 or 250 tons you sell, what is the revenue potential you expect for 28? Thank you.

I have told you that this requires export license. Most of them are export orders. It's not that we have orders and then we can count it on red. Others also from different countries coming, dramatically orders. So it depends on the government policy in the present geopolitical conditions, whether the license is given or not for a particular country.

So, sir, I understand that. My question is, assuming the license is given, what can be the revenue?

I told you, you know, around 300 tons we are targeting for the next financial year.

Oh, 300 tons. And I can take a blended realization of 70 or 80 dollars per ton, right? Per kg, right?

Present international pricing is very much fluid. 60 to 70. Yeah, it's not different because, like you said, the demand is high, availability is less. So based on demand and supply, it is fluctuating. The prices are fluctuating. Got it, got it, sir.

Okay, and sir, your H1 capex, from your cash flow statement, I saw it was close to 11 crores. So, I think we were planning to do 32 CR for F527. So, what will be the final CAPEX, like in H2, how much CAPEX will be done? And all of it will be towards the RDX, HMX capacity.

We'll be completing it before this financial error end, whatever numbers last time we discussed in Hyderabad. So, and it is RDX, HMX, and other statistics are also there. Reconstruction. Reconstruction of the layer mags.

No, I understand that, but actually the number I was working with was the 4-week apex of 320 million, 32 crores, so we have done only 11 crores, which is much less than half.

Thank you for the financial aid.

Okay, okay, got it. And sir, secondly, we have started supplying to these drones. We have started supplying explosives for drone payloads. So what was the drone payload revenue in FY26 and what do we expect it to be in FY27?

See, these drone payloads are in the process of qualification by Air Force and Army, so right now we are supplying on a trial basis, whatever is required. Trial basis in the sense, trial by them. For us, it is a product, it is complete product. So, now the quantities going are small. Once the trials are complete, then the quantities we are expecting is larger quantities. But right now, we are not able to mention anything about in that line because it depends on the actual bird, the drone qualification by armed forces. Our portion is only the payload.

Got it. Okay. And, sir, I think we were working with ARDE and DRDO on the mine program that we had proposed a different kind of explosive which they had accepted on Nippon Mines and Ardushi and Ulka Mines. So, any progress there? Are these programs, you know, have they gone to a commercial production stage?

Yeah, we have supplied samples. Produced as per the changes mentioned by the committee and the samples are accepted and the clearance is given for production. So, production has restarted with the changes incorporated. So, we are hoping that this financial leader itself will be starting the supplies in bulk quantities.

But have we received any big order for this mine explosive?

No, we already, Nippon we already have in hand, so we have to service that order, and Adrishi and Ulka, they are not yet. They are in the process of qualifications.

And so what is the size of the Nippon wine order?

It's a production order. You mean type of order? What did you say?

No, I'm asking the quantity. What is the size of the order?

Size of the agar, okay. It is more than a lack of pieces.

Sir, in rupee terms, like what is the amount?

These are competitive and we don't want to dwell too much on the prices.

Okay, no issues. If it's competitively sensitive, then no issues. The last two questions, sir. Any update on the 40mm ammunition which you are developing for the grenade ammunition?

No, the status is same. Like we have mentioned earlier, even though we got the technology transferred from ARDE, but we are still dependent on the raw materials and primers and propellants on MIL, which is not available right now. So as on that side, nothing is happening. We are still trying for importing the propellant components, which are not available from MIL.

Thank you. Mr. Jain, we request you to rejoin the queue so that the management is able to address questions from all participants in the conference. To rejoin the queue, we request participants to please press star and one. The next question is from Ronak Singhvi from NAPA Asset Managers. Please go ahead.

Hello. Thank you for the opportunity. I just wanted to know whether... Premier Explosives is doing something on 155mm ammunition artillery shells, like whether it has supplied any samples to Indian Army or the MIL?

No, we have, as on date, we don't have any facility to produce 155mm artillery shells, and as on date, we have no plans also for establishing any facility.

Explosives, are we supplying any explosives to them?

No, because these are all based on the TNT-based explosives, which are used for filling the shelves, so we don't make TNT.

Okay, okay, got it, sir. Thank you.

Thank you. Participants who wish to ask questions, please press star and 1 to join the question queue. The next question is from Ruthvi, who's an individual investor. Please go ahead.

Hi. Thank you for the opportunity. I had a question. The company has been... Exploring opportunities in areas of mines, agonitions, bombs, and warheads. Some of these opportunities wish products are closest to commercialization.

Mines, yes, they are closer to commercialization, landmines. And other than that, warheads we are already producing and we are exporting warheads. Bombs are now in the early stage. We have participated and we are participating in some of the tenders. They are in the early stage now.

Okay, and where do we see the greatest access for the meaningful revenue contribution over next few years?

Can you please repeat?

When will you see the potential for revenue contribution among these products over the next few years?

We are expecting the contribution will come in the next financial year from these areas.

But among which products?

One thing is, like I explained, Nipun Vines, we are qualified, and others. We are in the process of qualification, and the RFPs are expected. And warheads, we are doing presently, we are already producing and supplying, and we are expecting an increase. And the other area for the small payloads, that is explosives and warheads, which is expected to grow into regular production is payloads or drones.

So, okay, I got it. I had the second question was regarding the resource called collaboration with the institutions like IIT, Mantas, and Dajpilani. So, could you share how these collaborations are translating into commercially viable products?

We couldn't get you. Okay, is it possible to repeat?

So, the company has research collaborations with IIT Madras and Bich Pilani. So, could you share how these collaborations are translating into commercial and IIT products?

No, right now there is no commercialization of these collaborations. They are in the research stage only.

Okay. Sir, other question was, the plan is to expand production of critical high energy materials. How is the management characterizing these investments

for

RDX, SMX, P&D?

We have already taken up expansion and investing in that. That is, our present capacity is 100 tons per annum, which now we are increasing it to 600 tons per annum.

Okay, that was all from mine. Thank you for your questions, and thank you for the coming questions.

Thank you. Thank you. A reminder to participants that you may press star and one to ask questions. The next question is from Manoj Shah from LaxCurve Investments. Please go ahead.

Thank you for the opportunity. Just wanted to check, are we only the sole suppliers for the shafts and the flares, or some other players have qualified for the technical business?

About qualification, we do not know. Others' qualification. But yes, we know that along with Premier, another, I think, five other companies have taken the technology transfer from Defence Lab, Jodhpur, for the shaft production.

Other than you, has anybody also supplied?

I don't think as far as my knowledge goes, nobody supplied. But anyway, this needs to be checked.

Okay, and how is the current pipeline for this? Do you expect a longer pipeline for this product over next 3-5 years?

Yeah, coming 3-5 years, yes, we expect the same thing will continue, because one thing is we have to complete the orders in hand which is going on now, and the new orders are also in pipeline.

Okay. If my understanding is correct, these shafts and fairs once loaded and there's a plane there where the shell size is only 90 days?

We have no knowledge of that.

Okay. Okay.

Thank you.

Thank you. Participants who wish to ask questions, please press star and 1. The next question is from Ayush from Nirmalma. Please go ahead.

Hello, sir. Thank you for taking my question, sir. Sir, I just have one question. Of the current order book of 1,642 crores, can you just give me a breakup of how much of the order book comprises of projects from solid propellants and rocket motors, sir, specifically? Sir, am I audible?

We have an export balance of about 60% in that, and then 40% is from plastic.

Sorry, sir, 60% from solid propellants, and 40% from rockets.

I am talking about exports, because exports consist of a lot of products. Okay.

Sir, can you just repeat? Sorry, I am not understanding, sir.

No, no, no, balance 40% is domestic.

Okay, okay, okay. Got it, got it. No, sir, actually, I was asking, like, the order book, what percent of the order book comprises of solid propellant and rocket motors, sir?

Difficult to give that answer.

Okay, okay. No problem, sir. Answer, Regarding the shafts and flares, can you just give me the contribution that we can expect from shafts and flares in the coming FY27, sir? Revenue, sir. Hello.

Yeah, yeah, we heard it. Based on the orders in hand, what we are servicing, 200 crores is expected from that, the revenue of 200 crores.

Okay, so revenue of 200 crores from shafts and flares, sir. Yes, sir?

Yes.

Okay, sir. I got it, sir. Thank you so much, sir. Thank you.

Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. Next question is from Varun Jain from Dollar Capital. Please go ahead.

Yes, sir, this last two questions. AP land, I think last call we were discussing with the government what happened there.

I beg your pardon, I think there is a background disturbance.

Sir, AP land, my question was, the Andhra Pradesh land, I thought the last one was.

AP land, you mean?

Yeah, yeah, yeah.

You all know the status?

Yes.

Okay. The Andhra Pradesh government has formulated a policy for defense and ammunition industry in AP, which is the latest development based on our approach to them. So, they have, we, from that they have given a choice of four different options. We have selected one of the options, and we have also replied to them about that. So, it is at that status, and we hope that we can.

Okay, sure. And do we expect the transition to happen with the Apollo acquisition in December? Like, we expect a reconstitution of the board?

As per date, December is the month we are expecting that it will be completed. And the board vacancies, we have already intimated to the end.

Okay, sure. Okay, sir, that's all. Thank you and all the best.

Thank you. Thank you very much. That was the last question in queue. I would now like to hand the conference over to Mr. T.V. Chaudhary for closing comments.

Thank you very much for your cooperation and then for the comments. I hope that we will move forward with your support.

Thank you very much. On behalf of Premier Explosives Limited, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your hands.