Paras Defence and Space Technologies, a Mumbai based defence engineering company technology company that has broken all records as far as subscription of the IPO is concerned, the IPO witnessed overwhelming response as it was subscribed 304 times with investors bidding for 217 crore shares against the 71.40 crore shares on offer. The company announced its final share allotment on Tuesday, September 28. The Initial Public Offering (IPO) was open for subscription from September 21 to 23. For those who have not been allotted the shares, the initiation of a refund procedure will begin from Wednesday, September 29. The expected listing date of Paras Defence IPO is October 1, 2021.
The Qualified Institutional Buyers (QIBs) category was subscribed 169.65 times, non-institutional investors a massive 927.70 times, and Retail Individual Investors (RIIs) 112.39 times. The GMP of Paras Defence and Space Technologies is Rs 230, this means that the shares of the company were trading at Rs 405 in the unlisted market, that is the premium of 134.28 per cent. The GMP was hovering around Rs 250 on September 28. The GMP between Rs 230-250 means the potential of 143 per cent listing gain over its issue price of 175. The tentative date of the listing on bourses is October 1.
“Paras Defence has a niche product profile & technology and a dominant market positioning catering to the space and defence sector. It is one of the leading “Indigenously Designed Developed and Manufactured” category private sector companies in India, and thus is anticipated to benefit from the central government’s flag ship programs like “Atmanirbhar Bharat” and ‘Make in India’. Based on the above considerations, we have assigned a “SUBSCRIBE” rating for its IPO. The fundamentals for the company is positive and thus can be a good bet in the medium term, ” Rajnath Yadav, analyst from Choice Broking said.
The Paras Defence IPO has received a very strong response from investors, especially from qualified institutional buyers and non-institutional investors.
The company has made it clear that the fresh issue proceeds would be used by the company to fund capital expenditure requirements, to support incremental working capital needs and repayment or prepayment of loans availed.
“At the upper band of INR 175, the issue is valued at 31x its FY21 EPS of INR 5.6. We believe Paras Defence is a robust business model with Wide range of portfolio of products and services, one of the key player for high precision optics manufacturing, strong R&D capabilities, strong relationship with customers, benefits from Govt initiatives, better position in competition, paying off debts, experienced management team, continues expansion and increasing presence in international markets would lead the profitability and margin levels in going forward. We are recommending “Subscribe for long term” for this issue,” an analyst from Arihant Capital said.
Company Profile
Paras Defence, a Mumbai-based defence engineering company, is well known for designing, developing, manufacturing and testing a variety of defence and space engineering products and solutions. The firm is one of the leading providers of optics for various Indian defence and space programs. It has two manufacturing plants set up in Maharashtra. The company is also in the process of expanding its current manufacturing facility at Nerul in Navi Mumbai. Its major clients are Bharat Dynamics, Hindustan Aeronautics and Bharat Electronics, along with international firms in South Korea, Belgium and Israel. Paras Defence’s total assets account for around Rs 363 crore as of this year. The promoters for the issue are Sharad Virji Shah and Munjal Sharad Shah. The Paras Defence clocked revenue growth at a CAGR of 1.3 per cent to Rs 143.3 crore during FY18-FY21 and profit grew at a CAGR of 14.4 percent to Rs 15.7 crore. Earnings before interest, tax, depreciation and amortisation increased at a CAGR of 1.8 percent to Rs 43.4 crore during FY18-FY21.
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