Paras Defence and Space Technologies share price made a bumper debut on October 1 as it listed with a massive 171 percent premium over issue price, which was largely on expected lines.
The stock opened at Rs 475 on the BSE and at Rs 469 on the NSE, against issue price of Rs 175 per share.
Just before the listing, the grey market premium for the stock was at Rs 230-235 or 131-134 percent, which translated into a share price of Rs 405-410 per share against issue price of Rs 175, the IPO Watch and IPO Central data showed.
The maiden public offer of defence and space products and solutions provider had a tremendous response from investors as it was subscribed 304.26 times, receiving bids for 217.26 crore equity shares, against the IPO size of 71.40 lakh shares, garnering bids worth more than Rs 38,000 crore.
Investors across segments strongly participated in the issue as qualified institutional buyers (QIBs) bought 169.65 times the portion set aside for them, the reserved portion of non-institutional investors was subscribed 927.70 times, and retail investors had put in bids 112.81 times the portion reserved for them.
The company mopped up Rs 170.77 crore through its public issue that was comprised a fresh issue of Rs 140.6 crore and an offer for sale of Rs 30.2 crore by selling shareholders. The net proceeds from fresh issue are going to be utilised for buying machinery and equipment, incremental working capital requirements, and for repaying certain borrowings.
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All the brokerages had recommended to subscribe the issue given the wide range of products and solutions in defence and space segments, expected benefits from Government's 'Atmanirbhar Bharat' and 'Make in India' initiatives, and its strong orderbook.
"Considering its niche product profile & technology, dominant market positioning and vast growth potential, we assign a “subscribe” rating for the issue," said Choice Broking.
Arihant Capital Markets believes 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 government 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."
Incorporated in June 2009, Paras Defence is primarily engaged in designing, developing, manufacturing and testing of a variety of defence and space engineering products & solutions, offering 5 major category of products – 1) defence & space optics, 2) heavy engineering, 3) defence electronics, 4) electro magnetic pulse (EMP) protection solution, 5) niche technologies.
It is the only Indian company having designing capability for space optics and opto-mechanical assemblies. It is a leading optics provider for Indian defence and space programs. It has an orderbook of Rs 305 crore.
On the earnings front, its revenue grew at CAGR of (-around 4 percent) and profit growth was at a CAGR of (-8.8 percent) during FY19-FY21, but EBITDA (earnings before interest, tax, depreciation and amortisation) growth was satisfactory at a CAGR of 0.7 percent in the same period.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.