1:5 Stock Split: Defence Stock Rises 3.25% In 5 Sessions, Up 134% In 12-Months; Is It Overvalued?

Defence company, Premier Explosives has witnessed a bullish trading week from October 7-11, gaining by more than 3%. The stock has been volatile since its first ever stock split. Nonetheless, Premier Explosives is a multibagger, skyrocketing by nearly 134% in a year. Does that make Premier Explosives overvalued or undervalued?

Premier Explosives Share Price:

The stock ended at Rs 523.25 apiece, flat on BSE, with market cap of Rs 2,813.05 crore. From October 7-11, the stock surged by 3.25% overall, extending its YTD gains by 68%. The stock emerged as multbagger with gains of a whopping 134% in 12 months.

The defence stock's 52-week high and low is at Rs 909.35 apiece and Rs 220.01 apiece respectively. Its price-to-equity ratio is at 103.47x, and return on equity is at 12.34%.

Is Premier Explosives Overvalued?

As per Alpha Spread data, the intrinsic value of one PREMEXPLN stock under the Base Case scenario is 84.67 INR. Compared to the current market price of 521 INR, Premier Explosives Ltd is Overvalued by 84%.

Premier Explosives Stock Split:

The stock first time split on June 21, 2024, in the ratio of 1:5. This meant that 1 equity share of Premier Explosives at a face value of Rs 10 each was split into five smaller shares with a face value of Rs 2 each.

Premier Explosives Fundamentals:

As per Trendlyne data, the following are the fundamentals of the stock:

- Annual Net Profit rose 310.53% in the last year to ₹28.36 Cr. Its sector's average net profit growth for the last fiscal year was 32.52%.

- Annual Revenue rose 35.1%, in the last year to ₹275.87 Cr. Its sector's average revenue growth for the last fiscal year was 10.64%.

- Stock Price rose 146.8% and underperformed its sector by 60.1% in the past year.

- Debt to Equity Ratio of 0.28 is less than 1 and healthy. This implies that its assets are financed mainly through equity.

- Price to Earning Ratio is 102.73, higher than its sector PE ratio of 71.24.

- Return on Equity(ROE) for the last financial year was 12.87%, in the normal range of 10% to 20%.

- Promoter Share Holding stayed the same in the most recent quarter at 41.33%.

- Promoter Pledges are zero.

- Interest Coverage Ratio is 5.96, higher than 1.5. This means that it is able to meet its interest payments comfortably with its earnings (EBIT).

- Mutual Fund Holding decreased by 0.4% in the last quarter to 8.89.