Here's why Premier Explosives shares are up 10% on Monday

Shares of Premier Explosives Ltd. gained over 10% to hit a fresh 52-week high on Monday, October 6, after sources told CNBC-TV18 that the defence ministry has opened missile and ammunition production to the private sector.

Sources said an amendment has been made to the revenue procurement manual (RPM).  This eliminates the previous requirement for private entities intending to manufacture bombs or ammunition to secure a no-objection certificate (NOC) from Munitions India Ltd, clearing a longstanding bureaucratic hurdle.

Private companies are now permitted to manufacture:

Impact

The defence ministry's move opens up production of missiles, artillery shells and ammunition.

It streamlines operations, speeds up the approval processes and reduces dependence on PSUs and imports.

It also opens up export opportunities, especially in Europe, which is facing an ammunition shortage, with Trinitrotoluene (TNT) production dependent on a single manufacturing facility in Poland.

It also removes a key entry barrier for private defence firms, which can now set up ammunition production units independently.

The move is positive for private companies such as Premier Explosives, Solar Industries, Astra Microwave Products, among others.

It can take away some market share from Bharat Defence and Bharat Electronics—which are currently the sole manufacturers of missile systems—two to three years down the line.

Shares of Premier Explosives gained 10.3% to hit a fresh 52-week high of ₹668 apiece on Monday, October 6. The stock was up 9.3% at ₹661.7 apiece around 1.35 pm. It has gained 18.6% in the past month and 95.7% in the last six months.

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