The BJP-led NDA Government seems to be serious about encouraging private investment in defence. Undoubtedly, the move to allow FDI in the defence is aimed at boosting self-reliance in defence production, encouraging more private sector manufacturers to enter the sector, cutting expensive imports, bringing more clarity on guidelines and curbing corruption.
Company story:
Premier Explosives Limited [PEL] is manufacturer of the entire range of (1)commercial explosives for the mining and (2)Defence application and (3) Wind Power Generation.
1. Commercial Explosives:
PEL makes Cartridge Explosives, Bulk Explosives, Cast Booster, Detonators, Detonating fuse, Hygroscopic chemicals for Cloud harvesting flares which are mainly used for mining and civil applications.
Major Customers for Commercial Explosives
Coal India Limited
Singareni Collieries Limited
Neyveli Lignite Limited
NMDC Limited
Karnataka Emta Coal Mines Ltd
Cement companies
PEL also exports commercial explosives to S.E Asian countries,Middle East & Europe.
2. Defence Applications:
PEL is operating and maintaining a solid propellant production facility of Indian Space Research Organisation (ISRO) at Sriharikota and Solid Fuel Complex of Advanced Systems Laboratory at Jagdalpur.
Amongst many firsts, PEL is the first company in the world to produce safer and greener NHN (Nickel Hydrazine Nitrate) detonators on commercial scale replacing ASA (Lead Azide, Lead Styphnate and Aluminum Powder) detonators.
Premier is the only private entity producing oleoresin based tear gas grenades used for mob control by law enforcement departments. The company had developed this product in collaboration with Defence Research Development Establishment (DRDE), Gwalior.
Premier also produces Explosive Bolts, Pyro Actuators, Smoke Markers, Cable Cutters and many other products including Blazer Plates for the Indian defence services,providing import substitutes and saving foreign exchange.
Financial Analysis:
CMP:Rs 235
Market Cap: Rs 209 cr
Promoter Holding: 47.39%
Debt: Rs 10.24 cr
Cash Reserves: Rs 48 cr
Consistent Dividend Paying company.
Profits for last four years[2010 to 2014] is stagnant and the stock price has gained 300%(approx) from lows of 62 to 235 recently.
Now the price is fairly valued and can be added at dips if corrected.
Both, Dolly Khanna [Rajive Khanna] and Vijay Kishanlal Kedia, who are recognized for great stock picks like Cera, Hawkins Cooker, RS Software, Atul Auto, Avanti Feeds etc are holding 116174 and 100000 shares respectively [as on Sep 14].
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