Premier Explosives Ltd (BSE Code-->526247) at the CMP of Rs.30.90, is trading cheap as compared to its Peer Solar Explosives Ltd. Buy with a price target of Rs.53--Rs.65--Rs.72, for the Short Term to Medium Term perspective: Triggers: 1. It has reduced its debt burden with the money from the selling of the Mushroom division last year. 2. Special Product Division dedicated for defence sector for production of Solid Propellants was completed during the year and was commissioned on 16th September, 2006. The Company is now mainly focussed on the Lucrative Defence Sector. 3. The Company has established two joint ventures abroad for manufacture of explosives and accessories. At one JV the production has commenced in April 2007. The second JV is expected to commence during July / August 2007. Both JVs making good good contribution during this financial year. 3. The Comapny earlier signed a 10 years (renewable for another 10 years) prestigious contract with Satish Dhawan Space Centre, SHAR, Indian Space Research Organisation (ISRO). The contract is for operation and maintenance of Second Propellant Plant at an annual value of about Rs. 70 million with price escalation on annual basis. The total value of contract would be around Rs. 700 millions. The operations have commenced from 18th January, 2007. 4. In the last fiscal the Premier Explosives Ltd got the following awards: a) The Company has been awarded Appreciation Certificate by Andhra Pradesh Pollution Control Board in the category of Best Greenbelt Industries. b) It has also received award of achieving highest rating in the ranking of India's Top 500 Manufacturing Small and Mid Sized companies during August, 2006. c) Naval Science & Technological Laboratory, D.R.D.O., Visakhapatnam, has presented Appreciation Award to the Company in recognition of its valuable contribution to them in the development of various specialized products. d) Premier Explosives Ltd has also received Certificate of Appreciation by Rotary Club in appreciation of company's service and support for Drinking Water Project and organization of medical camps in remote villages around twin cities. 5. The Indian explosive industry is one of the few highly developed ones in the world. The total consumption of explosives in India is amongst the first five in the world. The total market had been increasing steadily due to infrastructure development and more demand of key minerals and power. This increases the chance of this well established player to improve both on the top and the bottomlines. The company is moving at a rapid pace. 6. Explosives production in some of the countries had been monopolised by global giants like Orica, Dyno, UEE etc. This Company has established two joint ventures abroad to take advantage of better margins. Production has already commenced in one Joint Venture from 17th April, 2007. The production at second Joint Venture is has started during July, 200. Explosives production in some of the countries had been monopolised by global giants. Major contribution is coming from special products division, overseas ventures and operations and maintenance contracts during the financial year 2007-08. So there are multiple revenue streams of the company. Hence the scrip is expected to cross Rs.100 this time. 7. The company, one of the three in the country manufacturing the entire range of explosives and accessories for the civil/industrial requirement, is poised to become a defence/strategic industry supplier through capacity expansion, including missile fuel. Premier Explosives, which already produces the fuel, would double its capacity in about 12 months time frame. For the new project, it has already bought 150 acres of land off Hyderabad, near its existing plant, and purchase of another 100 acres from Indian Space Research Organisation at a subsidised rate has also been completed. The complete capex plan is almost ready. 8. Q3FY08 results were good considering that there was not income from the Mushroom Division in view of it being sold in the last Fiscal. Both the toplines and the bottomlines were flat, speaking Q-o-Q. This is no major achievement as this was achieved only from the income from its core divisions, i.e. manufacture of explosives. The net profits margins have also increased marginally.

Conclusion: Considering the above mentioned factors it has been found that the stock is trading cheap as compared to its peers. Buy with a Price Target of Rs.65--Rs.72 in the short to medium terms perspective.