Paras Defence and Space Technologies' maiden public offer continues to witness healthy response from investors. The issue has so far been oversubscribed by 304.26 times receiving bids for 217.26 crore equity shares against IPO size of 71.40 lakh shares on September 23, the final day of bidding. Total bids received were worth more than Rs 38,000 crore at upper price band of Rs 175 per share.
Retail investors, which remained at the forefront to support the issue, have put in bids 112.81 times their reserved portion, while a part set aside for non-institutional investors (NII or HNIs) is subscribed 927.70 times.
Qualified institutional buyers, including FIIs, domestic financial institutions and mutual funds, bought 169.65 times shares against their reserved portion.
The company plans to mobilise Rs 170.77 crore through its public issue, of which it already garnered Rs 51.23 crore from anchor investors before the issue opening, at higher end of price band of Rs 165-175 per share.
Paras Defence is one of the leading ‘Indigenously Designed Developed and Manufactured’ (IDDM) category private sector companies engaged in designing, developing, manufacturing and testing of a wide range of defence and space engineering products and solutions.
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"We like Paras Defence given its complex/wide product portfolio, presence in niche defence space, strong client relationship and high entry barriers," said Motilal Oswal. "The issue is valued at 1.9x price-to-book value (peers average: around 2.4x) on a post issue basis, which is reasonable."
The brokerage believes the company could benefit from government impetus on the defence and space expenditure. Hence it recommended subscribe.
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Further given the current buoyant market and high interest for defence stocks, the issue could see listing gains as well, said the brokerage.
Motilal Oswal further said optics was the major focus area for Paras Defence with revenue from this segment having increased from 30 percent in FY19 to 45 percent in FY21. "It is the only Indian company with the design capability for space optics and opto-mechanical assemblies. It constitutes around 67 percent of the order book (orderbook Rs 305 crore) and would be key focus area along with drones."
Paras Defence shares traded at a premium of Rs 230-250 in the grey market, the IPO Watch and IPO Central data showed. This resulted into a trading price of Rs 405-425 per share, higher by 131-143 percent compared to upper price band of Rs 175 per share.
After closing the public issue on Thursday, the IPO share allotment will get finalised by September 28 and refunds to unsuccessful bidders will start on September 29.
The shares will get credited to eligible investors' demat accounts by September 30 and its equity shares will start trading on the BSE and NSE with effect from October 1.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.