Prem. Explosives (PREMEXPLN)

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 0/2 · Dividend: 0/1

Key Financials

Strengths

• Low debt-to-equity of 0.10 provides financial stability during downturns
• ROE of 18.23% and ROCE of 16.88% are respectable despite the business slowdown
• Latest quarter still profitable with net profit of ₹6 Cr on sales of ₹81 Cr
• Promoter holding of 41.33% suggests some alignment with minority shareholders

Concerns

• Sales growth collapsed by 50.93% and profit growth fell 34.28%, indicating severe demand weakness
• Valuation is expensive at P/E of 61.63 and P/B of 12.33 against book value of ₹43.32
• Piotroski F-Score of 3/9 and FairStock Score of 0/100 point to poor financial health and high risk
• Dividend yield of only 0.09% offers negligible downside protection

AI Analysis

Looking at Prem Explosives, my first reaction is that the numbers don't give me confidence. The company earns a return on equity of 18.23% and return on capital employed of 16.88%, and debt-to-equity is low at 0.10. That shows financial conservatism. But as Graham said, price is what you pay, value is what you get. At ₹534, I'm paying 61.63 times earnings and 12.33 times book value. Book value is only ₹43.32. The dividend yield of 0.09% is nearly nothing. The latest quarter shows sales of only ₹81 Cr and net profit of ₹6 Cr—meaningful, but the trend is disturbing. Sales are down 50.93% and profits are down 34.28%. That is not a growing franchise; it looks like a cyclical or fading business. The Piotroski F-score of 3/9 reinforces the weak fundamentals. Promoter holding at 41.33% is okay, but not enough to compensate for the collapse in the top line. A 52-week range of ₹378.40 to ₹829.80 tells me this stock is volatile. The FairStock score of 0/100 calls it risky, and I agree. In Buffett's language, it is far better to buy a wonderful company at a fair price than a fair company at a wonderful price. Here, I am unsure the company is wonderful, and the price is certainly not wonderful. With sales growth severely negative and a high multiple, there is no margin of safety. I would wait for evidence of a sustained recovery in sales, stable margins, and a lower valuation. Until then, this is not a stock I would include in a Graham-style portfolio.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer