This defence stock doubled investor wealth in a month; buy, sell or hold?

Shares of Premier Explosives Ltd have more than doubled in a month, delivering 129% returns during the period. The defence stock, which stood at Rs 430.75 on July 3, 2023 ended at Rs 987.65 on August 2, 2023. Premier Explosives shares ended 0.64% lower at Rs 987.65 in the previous session. Total 0.24 lakh shares of the firm changed hands amounting to a turnover of Rs 2.29 crore on BSE. Market cap of the firm rose to Rs 1071 crore.  

In terms of technicals, the relative strength index (RSI) of the stock stands at 81.5, signaling it's trading in the overbought zone. Premier Explosives shares have a beta of 0.7, indicating very low volatility in a year. The stock stands higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages. 

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Aditya Gaggar, Director of Progressive Shares said, “From the technical perspective, Premier Explosives Ltd has doubled in a month from the levels of Rs 438 (128%) without any considerable pullback. This is majorly attributed to the recently received orders (the order inflow to date in FY24 stands at Rs 725cr, executable over the next 12-24 months and providing the revenue visibility going forward). However, at present, all the chart indicators are in an extremely overbought condition. Those investors who are already invested can hold on it while for fresh entry one definitely needs to wait, as the zone of Rs 870-890 will offer a good opportunity to enter.” 

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Abhijeet from Tips2Trades said, "Premier explosives stock price is very overbought on the daily charts with next resistance at Rs 1010. Investors should book profits as close below support of Rs 957 could lead to  Rs 800 in the near term." 

The Q1 earnings of the firm were announced on July 19 during market hours.  Since then, the stock has risen 22.18% or Rs  179.3 on BSE. 

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The defence firm’s June quarter profit rose five times on a year-on-year basis. Premier Explosives reported a profit of Rs 8.21crore in the June quarter against Rs 1.26 crore profit in the corresponding period of the previous fiscal. 

Revenue in the last quarter rose to Rs 61.95 crore against Rs 51.77 crore in the June quarter of 2022. Earnings per share (EPS) climbed to Rs 7.64 in Q1 against Rs 2.17 in the June 2022 quarter.  

Premier Explosives Limited is primarily engaged in the manufacture of high energy materials and allied products for the defence, space, mining and infrastructure industries. The company's geographical segments include India and the rest of the world. It is focused on developing and manufacturing solid propellants for rockets and strap-on motors for satellite launch vehicles.

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