Defence Stock: Can Premier Explosives Deliver 80% Revenue Growth With a ₹1,569 Cr Order Book?

Synopsis: Defence-oriented stock that has performed well in FY26 with an order book of Rs 1,569 crore, will it be able to make use of growing defence needs, exporting capabilities, and capacity expansion in FY27?

There is ongoing structural growth in India’s defence manufacturing sector owing to growing emphasis from the government on indigenisation, import substitution and higher defense budget allocations. Firms operating in this sector are now more focused on contract executions, exports and other such factors due to favourable policies and hence, become relevant for investors to follow.

The article outlines the performance, order bookings, capacity expansions and the outlook for FY27 of Premier Explosives Limited. Further outlining the positioning of the company in India’s defence ecosystem, besides the growth drivers like export execution, product line additions and operations turnaround, among others.

Premier Explosives Limited is engaged in the manufacturing of industrial explosives and detonators. It also undertakes operation and maintenance (O&M) services of solid propellant plants at the Sriharikota Centre of ISRO and the Solid Fuel Complex at Jagdalpur under the umbrella of DRDO.

Revenue Segmentation and Performance

In Q4 FY26, the company reported revenues of Rs 89.2 crore, marking a 20 percent increase in YoY terms. Defence & Space services contributed Rs 67.7 crore or 76 percent, whereas Commercial Explosives contributed Rs 21.5 crore or 24 percent. EBIT was recorded as Rs 9.6 crore, marking an increase of 35 percent in YoY terms, at margins of 10.8 percent.

The net profit for Q4 FY26 jumped 78 percent in YoY terms to reach Rs 6.6 crore with PAT margin at 7.4 percent, exhibiting good profit growth, though the execution varied. This quarter saw the major contribution being made by orders from the defence side, dominating the revenues.

For FY26, revenues fell 7 percent in YoY terms to Rs 388.3 crore due to weaker execution against the previous year. But, EBIT rose 42 percent in YoY terms to reach Rs 69.3 crore with 17.8 percent margins, whereas net profit surged 61 percent YoY to Rs 45.8 crore.

Order Book analysis and Capex

The order book witnessed a record level of Rs 1,569 crore for Q4 FY26, up from Rs 750 crore in Q4 FY25, marking a 109 percent of growth YoY. The order book was predominantly defence-based, giving a positive execution outlook for the medium term.

Defence orders comprised Rs 1,491 crore, constituting 95 percent of the total order book. Explosives contributed Rs 31 crore, whereas services contributed Rs 47 crore. The percentage share of export orders in the order book was 54 percent.

Capex of about Rs 32 crore is yet to be completed by the company. Katepally expansion plant is scheduled for commissioning from Q2 to Q3 FY27 depending on progress in execution and approvals. Large rocket motor plant will commence operations during October-November 2026 which will help in future capacity expansion and execution capability.

Guidance from Management for FY27

The company forecasts revenues to be within the range of Rs 600 crore to Rs 700 crore which is a growth of 80 percent from the current number of Rs 388 crore, driven by better execution and additional product lines in the defence segment. Operating margin is guided to be in the range of 15 percent to 20 percent, showing stability in the company’s profits.

The execution of the existing order book is expected to take place over a time horizon of 2 to 3 years. Growth is expected to come from orders in the defence space, exporting and delayed projects recovering.

Can Premier Explosives Achieve Its FY27 Revenue Guidance?

Strong order book visibility is achieved through a record order book. In FY26, the company reported its highest-ever order book at Rs 1,569 crore, which is more than 4x FY26 revenues of Rs 388 crore. Management is optimistic about execution within the next 2-3 years, giving medium-term visibility and FY27 growth prospects.

Dominance of the Defence segment in the order book pipeline: Defence has an allocation of Rs 1,491 crore or 95 percent of order book, with an export share of 54 percent and domestic share of 46 percent. This portfolio reflects high exposure of the company to defence spending, exports and increased demand for ammunition and related systems.

Expansion in capacity to enable execution: There is a capex of around Rs 32 crore pending with the company. Katepally will be expanded in Q2-Q3 FY27, while the large rocket motor factory is set to commence operations in October-November 2026.

Various sources of growth for FY27: Chaffs and flares, rocket motors, landmines, drone payload, loitering munitions and medium-calibre ammunition are some of the sources of growth for the company in FY27. Improved availability of raw materials and restart of the factories is likely to enhance execution in FY27.

Premier Explosives starts its FY27 journey with good execution visibility supported by a robust order book worth Rs 1,569 crore, which is over 4 times FY26 revenues. The company has an excellent demand pipeline given that defence orders make up 95 percent of orders and 54 percent of orders from exports. The company is set to benefit from capacity expansion via Katepally and Rocket motor plant and better availability of raw materials.

Management guidance on FY27 revenue guidance of Rs 600 crore to Rs 700 crore is a sign of good growth expectations from FY26. The company has multiple defence-led product lines, improved operational stability, and a 2-3-year execution timeline for the order book. Execution speed and regulatory approvals are two major monitoring considerations for the company.

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