Premier Explosives Limited — Q3 FY26 earnings call

Call held 20 Feb 2026

Management summary

Premier Explosives reported a moderated Q3 FY26 performance with revenue of INR 81.4 crores and a net profit of INR 6 crores, primarily due to a high base effect from the previous year and execution timing. Despite this, the company maintains a robust order book of INR 1,294 crores, driven by a significant INR 429 crore defense order. Capacity expansion projects, particularly for RDX/HMX, are on track for Q1 FY27 commissioning, and the company is actively pursuing new opportunities in defense and aerospace, while navigating challenges like inspection delays and export licensing.

Highlights

  • Strong order book of INR 1,294 crores as of February 2026, providing medium-term visibility.

  • Secured a major order worth INR 429 crores from the Ministry of Defense for chaffs and flares, reinforcing leadership in countermeasure systems.

  • RDX, HMX expansion at Katepally expected to complete and begin production in Q1 FY27, contributing INR 150-200 crores revenue in FY27.

  • Improved cash conversion cycle from over 300 days to approximately 90 days.

  • Diversified product portfolio and ongoing R&D in defense and aerospace segments, including anti-tank intelligent mines.

Concerns

  • Year-on-year moderation in performance primarily due to a high base effect from Q3 FY25, which included higher dispatches of chaffs and flares.

  • Execution timing and inspection delays from the Ministry of Defense can push revenue recognition to the next quarter, impacting current year guidance.

  • FY26 revenue guidance revised down to INR 500-550 crores from an earlier INR 600 crores due to an accident at a rocket motors facility and geopolitical conditions affecting input imports.

  • Export orders face delays of 3-5 months due to the time required to obtain export licenses, impacting execution timelines.

Key financials

2 periods

Q3 FY26

  • Revenue
    ₹81.4 Cr
  • Operating Profit
    ₹11.6 Cr
  • Operating Margin
    14.3%
  • Net Profit
    ₹6 Cr
  • PAT Margin
    7.4%

9M FY26

  • Revenue
    ₹299.1 Cr
  • Operating Profit
    ₹39.1 Cr
  • Operating Margin
    13.1%
  • Net Profit
    ₹39.2 Cr
  • PAT Margin
    13.1%

What they filed

Q1 FY27: revenue down 27.9%, net profit down 80.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue95 166 74 142 76 −20%81 −51%89 +20%103 −28%
EBITDA17 15 10 21 7 −60%12 −25%-0 −103%6 −72%
Net profit8 9 4 15 18 +113%6 −34%7 +78%3 −80%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Order Book Value
₹1,294.6 Cr Total
  • Defense Segment (Order Book) ₹1,191 Cr 92.0%
  • Explosive Segment (Order Book) ₹51.8 Cr 4.0%
  • Service Segment (Order Book) ₹51.8 Cr 4.0%

Order book

high confidence

Total value

₹1,294.6 Cr

as of 2026-02-15 quantified

Inflow this quarter

₹429 Cr

Execution

3.1x of financial year '25 revenue, providing strong medium-term visibility. Almost 50% of the INR 430 crores chaffs and flares order to be executed in 1 year. Export orders typically 12-24 months, with clock starting from export license receipt (3-5 months delay).

Composition

Mix 3 segments
  • Defense 92%
  • Explosive 4%
  • Service 4%

Share of order book by segment

The order book shows solid and strong growth, with continued execution expected to maintain growth trajectory.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹60 Cr
    • RDX, HMX expansion at Katepally
    • Propellant manufacturing and casting, rocket motor integration at Katepally and PDK plants
    Yes, around INR60 crores is the capex for Katepally and PDK together. ... We have expansion planned in Katepally plant and also at PDK plant, additional capacity of propellant manufacturing and casting and also integration of rocket motor integration. So all those areas and also, sorry, RDX and HMX plant. So all these activities, we are expecting INR60 crores of capex in the financial year.
  • Liquidity Liquidity disclosed Sufficient working capital lines from banks are available. Company plans working capital based on product and project. Also utilizes advances from customers.
    We have lines of credit from all the banks. So we do not foresee any working capital issue. So depending on the product and project, we plan working capital accordingly. ... We have sufficient working capital lines. Lot of banks are ready to give further working capital also. So on the need basis, we are taking it. That's why our finance cost is also lower. Wherever it is required, we are taking it. Otherwise, we are not we are utilizing it from the advances from the customers and others.

Guidance & targets

Revenue

  • FY26 Revenue Revenue · FY26 · Medium confidence INR 500-550 crores

    Previously INR 600 crores → INR 500-550 crores

    Sir, I was saying that last quarter, we revised our guidance down to INR500 crores to INR550 crores for FY '26. Is that number still possible? ... Yes. Now the year is coming to closer to end, and we have stocks, which need to be inspected and delivered to MoD. So if the inspections are completed and then delivery is completed, yes. If it gets into, then it will go to the next quarter.

    — T. V. Chowdary

  • FY27 Revenue Revenue · FY27 · Medium confidence INR 500-600 crores
    Yes. Because of our experience in the current year, we are a little cautious in taking that run. We are expecting INR500 crores to INR600 crores turnover next year.

    — T. V. Chowdary

  • Revenue from RDX/HMX expansion Revenue · FY27 · Medium confidence INR 150-200 crores
    So we are expecting almost in the next financial year, a contribution of around -- the turnover contribution will come to around INR150 crores to INR200 crores in the next financial year.

    — T. V. Chowdary

Capex

  • FY27 Capex Capex · FY27 · High confidence INR 60 crores
    Yes, around INR60 crores is the capex for Katepally and PDK together.

    — T. V. Chowdary

EBITDA Margin

  • FY27 EBITDA Margin EBITDA Margin · FY27 · Medium confidence 15-20%
    That also is there, and we have other products also. So it can be anywhere between the 15% to 20% based on the product mix, what we supply.

    — T. V. Chowdary

Order Book Execution

  • Export Order Execution Timeline Order Book Execution · within 1.5-2 years · High confidence 1.5-2 years
    Okay. So normally, can we expect that this INR450 crores will be executed maximum within 1.5 years or 2 years? ... Yes, that assumption you can take.

    — Vijay Kumar

What to watch in Q4 FY26

RDX/HMX expansion completion and production

Q1 FY27
Current Civil construction complete, equipment installation ongoing
Target Completion and commercial production in Q1 FY27

Why it matters

This expansion is expected to contribute INR 150-200 crores in revenue in FY27, making its timely commissioning crucial for future growth.

No, the civil construction and works and all those are completed. The equipment installation and direction is going on. So we expect this to complete and then come into production in the first quarter of next financial year.

Risks & concerns

  • Execution timing and inspection delays

    medium

    Deliveries to MoD require pre-dispatch inspections, which can delay revenue recognition and push it to the next quarter.

    Management acknowledged

  • High base effect from previous year

    low

    Year-on-year moderation in performance is primarily due to elevated dispatches of chaffs and flares in the corresponding period last year.

    Management acknowledged

  • Accident at rocket motors facility

    low

    An accident at the large rocket motors facility in the beginning of the year affected business by INR 20-30 crores.

    Management acknowledged

  • Geopolitical conditions affecting input imports

    low

    Geopolitical conditions caused delays in importing some input materials, affecting targets.

    Management acknowledged

  • Export license delays

    low

    Export orders require licenses, which can take 3-5 months to obtain, delaying the start of the execution timeline.

    Management acknowledged

  • Raw material cost volatility

    low

    Company includes price escalation clauses in export orders to protect against raw material price increases.

    Management acknowledged

Q&A highlights

7 direct
Order book discrepancy and new order inflow Direct
No, that INR430 crores has come in October. So in the last call, we have added that also and gave the total number.

Clarified the actual new order inflow and its inclusion in the reported order book, addressing analyst's concern about a potential INR 400 crore cancellation.

Asked by Niraj Mansingka

Status and revenue contribution of RDX/HMX expansion Direct
No, the civil construction and works and all those are completed. The equipment installation and direction is going on. So we expect this to complete and then come into production in the first quarter of next financial year. ... So we are expecting almost in the next financial year, a contribution of around -- the turnover contribution will come to around INR150 crores to INR200 crores in the next financial year.

Provided a clear timeline for the completion of the RDX/HMX expansion and quantified its expected revenue contribution for FY27.

Asked by Varun Jain

FY26 Revenue guidance achievability Partial
Yes. Now the year is coming to closer to end, and we have stocks, which need to be inspected and delivered to MoD. So if the inspections are completed and then delivery is completed, yes. If it gets into, then it will go to the next quarter.

Indicated that achieving the revised FY26 revenue guidance is contingent on timely inspections and deliveries by the Ministry of Defense, highlighting a potential risk of revenue deferral.

Asked by Varun Jain

Anti-personnel and anti-armored vehicle mines product offering Direct
Yes. We already we got a supply order and then we are executing that. We've already done almost 50% of it. The balance now it is in the deliveries and then inspections. ... So we are working with DRDO technology, anti-tank intelligent mine. DRDO has transferred ustechnology. We are on that. But that product, we are yet to get a supply order ToT is completed, we are waiting for the supply order from Army.

Confirmed active execution of mine orders and ongoing development with DRDO for advanced anti-tank mines, indicating future growth avenues in defense.

Asked by Hitanshu Bhatia

QRSAM orders and company's role Direct
The QRSAM order is yet to be received. We are also hearing about QRSAM. But right now, we have no order on QRSAM. If any order comes, we are the supplier. The propellant is to be supplied by only Premier. ... I told you in earlier calls also, it is somewhere around 10% to 15% is the percentage contribution of propellants by us and other explosives. It varies but from motors to motors.

Clarified the company's position as the sole propellant supplier for QRSAM, quantifying potential revenue contribution if orders materialize, despite no current orders.

Asked by Niraj Mansingka

Unexecuted portion of 2023 countermeasure orders Direct
Around INR110 crores is left over. ... We have completed the chaffs part of it. So some quantity of link is left over. That is around INR120 crores which we are hoping that in the first quarter, we'll complete that. ... Around INR30 crores worth material is with us as on date. And some more is on the pipeline, yes.

Provided specific figures for the remaining portion of significant countermeasure orders, indicating near-term revenue potential and inventory status.

Asked by Niraj Mansingka

Impact of export license delays on order execution Direct
Yes, you have to note one thing. All those exports need export licenses for this. Yes. So the date -- the clock starts from the day of receiving the export license. ... Yes, because they all know, we tell them in the beginning itself. We can supply only once we get the export license, which takes anything between 3 to 5 months.

Explained the operational challenge and timeline impact of export licensing on order execution, which can affect revenue recognition.

Asked by S. C Gupta

Engagement with Coal India for bulk explosives Direct
Coal India, the prices are so low. So unless we get our price at a reasonable price, which at least breaks even, we are not entering into that. So right now, we are not supplying any bulk explosives to Coal India. Some accessories are being supplied. We are right now servicing Singareni Collieries in 2 mines with the bulk explosives and all those. Coal India plants are under shutdown.

Clarified the company's cautious approach to Coal India contracts due to unfavorable pricing, indicating a disciplined approach to profitability over volume.

Asked by Deepak Karva

2 min read 5 chapters

Detailed narrative

Q3 FY26 Performance Overview

Premier Explosives reported Q3 FY26 revenue from operations of INR 81.4 crores, with an operating profit of INR 11.6 crores, translating to a 14.3% operating margin. Net profit for the quarter stood at INR 6 crores, yielding a PAT margin of 7.4%. For the nine months ended December 31, 2025, revenue was INR 299.1 crores, operating profit INR 39.1 crores (13.1% margin), and net profit INR 39.2 crores (13.1% PAT margin). The year-on-year moderation was attributed to a high base effect from Q3 FY25, which saw higher dispatches of chaffs and flares.

Robust Order Book and New Inflows

The company's order book remains strong at INR 1,294 crores as of February 15, 2026, representing 3.1 times its FY25 revenue, providing solid medium-term visibility. This includes a significant INR 429 crore order secured in October 2025 from the Ministry of Defense for chaffs and flares. The defense segment constitutes the majority of the order book at INR 1,191 crores (92%), with explosive and service segments each contributing INR 51.8 crores (4%). Management expects approximately 50% of the INR 430 crore chaffs and flares order to be executed within one year.

Capacity Expansion and Future Revenue Streams

The RDX and HMX expansion project at Katepally is progressing well, with civil construction complete and equipment installation underway. This facility is expected to commence production in Q1 FY27 and contribute an estimated INR 150-200 crores in revenue during FY27. The company has planned a capex of around INR 60 crores for FY27, focusing on further expansion at Katepally and PDK plants for propellant manufacturing, casting, and rocket motor integration. Premier Explosives is also exploring new land for future expansions, with an application cleared by the Andhra government appearing more promising than Odisha.

Product Development in Defense

Premier Explosives is actively involved in developing advanced defense products. The company has already received and is executing supply orders for anti-personnel and anti-armored vehicle mines, with about 50% already completed. Furthermore, they are working with DRDO on an anti-tank intelligent mine, having received technology transfer and awaiting a supply order from the Army. In the QRSAM program, Premier Explosives is positioned as the sole propellant supplier, expecting a 10-15% contribution if orders materialize.

Operational Challenges and Risk Mitigation

The company faces challenges related to execution timing and inspection delays from the Ministry of Defense, which can defer revenue recognition to subsequent quarters. Export orders also experience delays of 3-5 months due to the time required for obtaining export licenses. To mitigate raw material cost volatility, Premier Explosives incorporates price escalation clauses in its export orders. The cash conversion cycle has significantly improved from over 300 days to approximately 90 days, and the company maintains sufficient working capital lines and utilizes customer advances to manage its liquidity.

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