Synopsis:
A leading explosives and defence manufacturer is poised for a 29% upside, backed by strong order inflows, rising defence spending, and capacity expansion. Robust Q1FY26 financials, diversified exports, and government-backed initiatives further strengthen its growth outlook and long-term profitability potential.
India’s explosives sector is booming, fueled by mining, construction, and increased defence orders. Market value crossed USD 9.1 billion in 2025, with a projected annual growth of around 6 percent. Solar Industries leads, holding a 24 percent market share, and strong exports plus government infrastructure drive further expansion.
With a market capitalization of Rs 3,400 crore, the shares of Premier Explosives Ltd closed at Rs 632.30 per share, increasing around 3 percent as compared to the previous closing price of Rs 613.50 apiece.
Brokrage Recommendations
ICICI Direct, one of the well-known brokerages in India, gave a ‘Buy’ recommendation on this explosive stock with a target price of Rs 815 apiece, indicating a potential upside of 29 percent from Tuesday’s closing price of Rs 632 per share.
Rationale
As per the brokerage, PEL stands out in India’s explosives and defence sectors with six manufacturing plants, producing bulk explosives, detonators, fuses, solid propellants, HMX/RDX, warheads, and rocket ammunition. Its integrated capabilities across tactical, strategic, and space-grade explosives position it among the few private leaders in the industry.
Moreover, PEL benefits from rising government defence spending and expedited procurement, with an order book of Rs 989 crore (2.1x TTM revenue). With 87% defence orders and strong FY26 inflows, management targets Rs 600 crore revenue, offering two-year visibility and growth supported by ongoing RFP opportunities.
Additionally, the company is expanding its defence and energetic materials portfolio through major capacity additions. It plans a Rs 800 crore greenfield project in Odisha over ten years, with Phase I costing Rs 100 crore for ammunition and warheads. To support this, around Rs 300 crore will be raised via QIP or preferential issue for capex and loan repayment.
Premier Explosives Ltd is well-positioned to witness strong growth in the coming years, led by robust industry tailwinds with a focus on better-margin segments. ICICI estimates a revenue CAGR of ~27 percent over FY25-28E while EBITDA & PAT CAGR of ~40 percent & ~54 percent respectively over the same period
Financial Highlights & Opportunity
The company delivered strong financial growth, with revenue surging 71 percent to Rs 142 crore in Q1FY26 from Rs 83 crore in Q1FY25. Net profit more than doubled, rising 114 percent to Rs 15 crore, reflecting improved operational efficiency, strong demand, and effective cost management, signalling robust business momentum and profitability expansion.
Premier Explosives Limited is a leading enterprise in the Indian explosives, defence, and aerospace sectors, transforming visionary ideas into groundbreaking realities. The company’s strategy is driven by a focus on indigenisation, enabling it to lead the production of high-energy materials for defence and space applications.
Premier Explosives operates a diverse commercial explosives business, producing bulk explosives, cast boosters, detonators, and fuses for mining and infrastructure clients. The company serves major Indian entities like Coal India and caters to international markets, exporting to countries such as Israel, Turkey, and Indonesia, reflecting its expansive footprint and strong manufacturing capabilities.
India’s defence sector is witnessing a massive transformation under the “Make in India” push, with 900+ import embargoed defence items and contracts worth Rs 4 lakh crore expected for domestic firms. Exports have surged sevenfold in three years to Rs 10,745 crore, while new policies and strategic partnerships expand long-term growth opportunities across defence production and innovation.
Written by Abhishek Singh
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post Defence stock to buy now for an upside of 29%; Do you own it? appeared first on Trade Brains.