Net sales grew 10.6% YoY to INR 4.2bn in 1QFY17 vs INR 3.8bn in 1QFY16 led by robust volume growth of 36.7% YoY in cartridge from 22,426MT to 30,665MT and 10.7% growth in bulk explosive segment from 43,224MT to 47,843MT; exports revenue grew 16.5%YoY. The company’s has consistently reduced its reliance on CIL (Coal India Ltd) for revenues diversifying its customer portfolio. Consequently, customer share (in terms of revenue) stood at – CIL (24%), Non CIL & Inst (20%), Export & Overseas (25%), Trade & Others (31%), Defense (0.35%). Moreover management highlighted that the company has INR 720mn of defense orders in the order pipeline which would be completed within the year.

Valuation: Strong order book, expected rapid revenue growth from defense and growing export revenues are the key growth drivers. At current levels, the stock trades at P/E of 23.0X its FY18E. Consequently, we rate the stock an OUTPERFORMER, assigning P/E of 26X to FY18E EPS to arrive at a target price of INR 696.