Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Premier Explosives Ltd (BOM:526247, Financial) reported a 34% year-on-year growth in revenue for Q1 FY25, reaching INR83 crores.
- The company's current order book stands at INR899 crores, translating to 3.31 times the revenue of FY24.
- Premier Explosives Ltd (BOM:526247) has received in-principle approval for setting up a new defense explosives plant in Odisha with a total investment of about INR864 crores.
- The company has successfully completed the development of new defense products, including 40mm HEAP and HEDP ammunition for UBGL and HBGL.
- Premier Explosives Ltd (BOM:526247) is the only qualified Indian company for countermeasures and specializes in the export of fully assembled rocket motors.
Negative Points
- The company faces potential liquidated damages (LD) of up to 15% due to delays in the delivery of shafts and flares caused by external factors.
- Net profit for Q1 FY25 decreased to INR7.3 crores from INR8.2 crores in the same quarter last year.
- EBITDA margins for Q1 FY25 stood at 19%, lower than the 26% reported in the same quarter last year.
- The order book saw a slight decline from March 2024 due to the execution of some large orders and a lack of significant new order inflows during the quarter.
- The company anticipates that the new products added to their list may not reflect in business revenue for the next two to three quarters.
Q & A Highlights
Q: When do you see the scale-up of revenues from the shafts and flares order?
A: The first consignment of shafts is expected to be delivered in September. Delays were due to imported components being held up because of the Red Sea problem. (T. Chowdary, Managing Director)
Q: Will there be penalties due to the delays in the shafts and flares order?
A: Yes, penalties will be applicable as the delays cannot be attributed to the government. The penalties are approximately 1.4% per week, reaching up to 15%. (Srihari Pakalapati, Chief Financial Officer)
Q: What is the outlook for the order book and EBITDA margins?
A: The order book has declined due to execution of orders and lack of significant new orders in the quarter. EBITDA margins vary based on product mix, expected to be around 18% on average. (Srihari Pakalapati, Chief Financial Officer)
Q: What new orders are expected to maintain the order book?
A: We are participating in multiple RFPs from the defense industry and expect to maintain the order book in the range of INR800 crores to INR1,000 crores. (T. Chowdary, Managing Director)
Q: What is the expected contribution from the Odisha CapEx plan?
A: The first phase of the Odisha CapEx plan will require INR250 crores to INR275 crores and is expected to add INR200 crores to INR250 crores in revenue. The second phase will add INR500 crores to INR600 crores. (Srihari Pakalapati, Chief Financial Officer)
Q: What is the expected timeline for the Odisha CapEx project?
A: The first phase is expected to be completed in 1.5 to 2 years after land allotment, with trial production starting six months later. (T. Chowdary, Managing Director)
Q: What is the expected market size for solid propellants in India?
A: The market size for solid propellants in India is expected to reach 1,500 to 2,000 tonnes per annum in the next three to four years. (Srihari Pakalapati, Chief Financial Officer)
Q: What is the estimated order book size for FY25?
A: The order book is expected to be maintained at INR900 crores to INR1,000 crores, including both defense and domestic markets. (T. Chowdary, Managing Director)
Q: What is the expected tax rate going forward?
A: The tax rate is expected to be in the range of 20% to 23%, as the company is no longer under MAT and previous carryforward losses have been wiped out. (Srihari Pakalapati, Chief Financial Officer)
Q: What is the margin profile of export orders?
A: The margins for export orders are in line with domestic orders, with no significant dilution expected. (Srihari Pakalapati, Chief Financial Officer)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
