Paras Defence and Space Technologies will be the 42nd maiden public offer to open in 2021 and the fourth in September, after Ami Organics, Vijaya Diagnostic Centre and Sansera Engineering.
Here are 10 key things to consider before deciding to subscribe to the initial public offer:Here are 10 key things to know before subscribing the public issue:
1) IPO Dates
The offer is open from September 21 to September 23.
The anchor book, if any, will open for single day on September 20.2) Price Band
The shares will be offered in a range of Rs 165-175 each.
3) Public Issue
The offer comprises a fresh issue of shares for Rs 140.6 crore and an offer for sale of up to 1.72 million shares by promoters Sharad Virji Shah and Munjal Sharad Shah, and individual selling shareholders Ami Munjal Shah, Shilpa Amit Mahajan and Amit Navin Mahajan.
Sharad Virji Shah will sell 1.25 million shares and Munjal Sharad Shah will offload 50,000 shares. Ami Munjal Shah will sell 300,000 shares and Shilpa Amit Mahajan and Amit Navin Mahajan will each offer 62,245 shares.
The share sale may fetch Rs 169.05 crore at the lower end of the price band and Rs 170.78 crore at the upper end.
The company has already raised Rs 34.4 crore through a pre-IPO placement of 2.55 million shares.
4) Objectives of Issue
The company intends to use the net proceeds of the issue for purchase of machinery and equipment, incremental working capital requirements, repaying certain borrowings, and general corporate purposes.
5) Lot Size and Investors' Reserved Portion
The minimum bid size is 85 shares and thereafter, multiples of 85 shares per lot. Retail investors can apply for a single lot of shares by putting in Rs 14,875 and a maximum of 13 lots for Rs 1,93,375.
Half of the offer size is reserved for qualified institutional buyers, 15 percent for non-institutional investors and 35 percent for retail investors.
6) Company Profile
Paras Defence designs, develops, manufactures and tests defence and space engineering products and solutions. It is one of the private companies in the indigenously designed developed and manufactured category that caters to four major segments of India’s defence sector – defence and space optics, defence electronics, electro-magnetic pulse protection solutions and heavy engineering.
It is the sole Indian supplier of critical imaging components such as large size optics and diffractive gratings for space applications in India. It manufactures high-precision optics for defence and space applications such as thermal imaging and space-imaging systems. It is the only Indian company to have the design capability for space optics and opto-mechanical assemblies.
The company has contributed to some prestigious defence programmes. Under its defence electronics operations, it provides an array of high-performance computing and electronic systems for defence applications, including sub-systems for border defence, missiles, tanks and naval applications. The company undertakes and delivers customised turnkey projects, especially in defence electronics and electro-magnetic pulse protection.
It has two manufacturing facilities in Maharashtra located at Nerul (Navi Mumbai) and Ambernath (in Thane).
Its customers include Bharat Electronics, Hindustan Aeronautics, Bharat Dynamics, Hindustan Shipyard, Electronic Corporation of India, Tata Consultancy Services, Solar Industries India, Alpha Design Technologies and Astra-Rafael Comsys. Foreign customers include Advanced Mechanical and Optical Systems of Belgium, Tae Young Optics Company of South Korea, and Green Optics of South Korea.
Currently, outlays to defence electronics, optics, electro-magnetic pulse protection and heavy engineering made to Indian companies are about $3.21 billion. By 2031, the spending will increase to over $14.5 billion because of extensive fleet recapitalisation and greater indigenous supply preferences. The cumulative market is expected to be about $99.4 billion for 2022-2031, the company said in its IPO documents.
7) Competitive Strengths & Business Strategy
a) Wide range of products and solutions for defence and space applications.
b) One of the few companies in India making high-precision optics for space and defence applications.
c) Strong research & development capabilities with focus on innovation.
d) Well-positioned to benefit from Aatmanirbhar Bharat and Make in India initiatives.
e) Strong relationships with a diverse range of customers.
f) Experienced management team.
a) Expansion of production capacity.
b) Strengthen foothold in expanding Indian market.
c) Continue focus on R&D.
d) Diversify products and solutions range, with focus on growth by expansion.
e) Increase reach in international market.
8) Financials and Orderbook
The company’s financial performance has been volatile over the past four years. Paras Defence reported revenue growth at a CAGR of 1.3 percent to Rs 143.3 crore during FY18-FY21 and its profit grew at a CAGR of 14.4 percent to Rs 15.7 crore in the same period. However, earnings before interest, tax, depreciation and amortisation increased at a CAGR of 1.8 percent to Rs 43.4 crore during FY18-FY21.
Its current order book was Rs 304.99 crore as of June 2021.
9) Promoters and Management
The promoters are Sharad Virji Shah and Munjal Sharad Shah, who together hold 59.53 percent shareholding in the company. The promoter and promoter group’s stake in the company stands at 79.4 percent. The remainder is held by public shareholders including Abakkus Emerging Opportunities Fund 1 (1.01 percent), Mukul Agrawal (2.92 percent) and Badve Engineering (2.57 percent).
Sharad Virji Shah is chairman and non-executive director of the company. He has worked in engineering and manufacturing and has played a major leadership role in the company.
Munjal Sharad Shah is managing director. He has over 23 years of experience in the areas of flow forming, special purpose machines and equipment, turnkey mechanical units and titanium structures, among others, primarily for defence applications.
Shilpa Amit Mahajan is a wholetime director and has been on the board since June 25, 2018. Before joining the company, she was associated with Concept Shapers and Electronics as director.
Sunil Kumar Sharma, Manmohan Handa, Hina Gokhale and Suresh Katyal are independent directors.
Harsh Dhirendra Bhansali is chief financial officer with over 15 years of experience. Before joining the company, he was associated with predecessor Paras Engineering Company as the finance manager.
10) Allotment, refunds and listing dates
The company will finalise the IPO share allotment on September 28 and refunds to unsuccessful bidders will start on September 29.
The shares will be credited to eligible investors’ demat accounts on September 30 and they will start trading on the BSE and NSE on October 1.
Anand Rathi Advisors is the sole bookrunning lead manager to the offer.