Paras Defense and Space Technologies, a Mumbai based defense engineering company technology company which has broken all records regarding subscription of IPO, IPO It witnessed an overwhelming response as it was subscribed 304 times, with investors bidding for 217 crore shares against an offer of 71.40 crore shares. The company announced its final share allotment on Tuesday, September 28. The initial public offering (IPO) was open for subscription from 21 to 23 September. For those who have not been allotted shares, the refund process will begin from Wednesday. , 29 September. The tentative listing date for Paras Defense IPO is October 1, 2021.
The Qualified Institutional Buyers (QIBs) category was subscribed 169.65 times, non-institutional investors 927.70 times and Retail Individual Investors (RIIs) 112.39 times. The GMP of Paras Defense and Space Technologies is Rs 230, which means the company’s shares were trading at Rs 405 in the unlisted market, which is a premium of 134.28 per cent. The GMP was hovering around Rs 250 on September 28. A GMP between Rs 230-250 means a 143 per cent listing profit potential at an issue price of Rs 175. The tentative date for listing on the exchanges is October 1.
“Pars Defense has a distinctive product profile and technology and a dominant market position that caters to the space and defense sector. It is one of the leading “Indigenously Developed and Manufactured” category private sector companies in India, and is thus expected to benefit from flagship programs of the Central Government such as “Atmanirbhar Bharat” and ‘Make in India’. Based on the above considerations, we have given a “Subscribe” rating to its IPO. Choice Broking analyst Rajnath Yadav said, “Fundamentals are positive for the company and thus can be a good bet in the medium term.
Paras Defense’s IPO has received a very strong response from investors, especially qualified institutional buyers and non-institutional investors.
The Company has made it clear that the proceeds from the fresh issue will be utilized by the Company for meeting capital expenditure requirements, meeting growing working capital requirements and for repayment or prepayment of loans taken.
“At the upper band of INR 175, the issue price stands at 31x the FY21 EPS of Rs 5.6. We believe that Paras Defense has a strong business model with wide range of products and services, high precision optics manufacturing, strong R&D capabilities, strong relationship with customers, benefiting from government initiatives, superior position in competition, Pay is one of the major players. Debt-free, experienced management team, continued expansion and increased presence in international markets will help drive profitability and margin levels going forward. We are recommending “Subscribe for long term” to this issue, said an analyst at Arihant Capital.
Company Profile
Paras Defence, a Mumbai-based defense engineering company, is known to design, develop, manufacture and test a variety of defense and space engineering products and solutions. The firm is one of the leading providers of optics for various Indian defense and space programmes. It has two manufacturing plants established in Maharashtra. The company is also in the process of expanding its existing manufacturing facility at Nerul in Navi Mumbai. Its major clients are Bharat Dynamics, Hindustan Aeronautics and Bharat Electronics as well as international firms in South Korea, Belgium and Israel. The total assets of Paras Defense this year is around Rs 363 crore. The promoters of this issue are Sharad Virji Shah and Munjal Sharad Shah. Paras Defense witnessed revenue growth of Rs 143.3 crore at a CAGR of 1.3 per cent during FY18-FY21 and profit grew at a CAGR of 14.4 per cent to Rs 15.7 crore. Earnings before interest, tax, depreciation and amortization grew at a CAGR of 1.8 per cent to Rs 43.4 crore during FY18-FY21.
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