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Paras Defence consistently hits upper circuit to trade at record high; Sunil Singhania, Mukul Agrawal earn 246% returns

Experts are bullish on the company, which operates in a niche segment with high entry barriers, and advise investors to buy the stock on declines

October 07, 2021 / 05:06 PM IST
 
 
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Paras Defence and Space Technologies shares, which listed on October 1, have hit the upper circuit limit in each trading session since, more than tripling returns for investors, including Sunil Singhania and Mukul Agrawal, from the initial public offering price of Rs 175 per share.

The stock gained 5 percent to Rs 606.10 at the close on the BSE on October 7, a jump of 246.3 percent from the IPO price. On its debut on October 1, the shares rallied 185 percent to close at Rs 498.75, the biggest listing gain for a company since 2011.

Shares of the defence and space products and solutions provider have been hitting the 5 percent upper circuit every day. The shares are among those in the trade-to-trade segment, where gains and losses are capped at 5 percent.

Marquee investors in Paras Defence include Sunil Singhania, the founder of Abakkus Asset Management who owns a stake in the company through Abakkus Emerging Opportunities Fund-1, and Mukul Mahavir Prasad Agrawal.

Abakkus held 314,286 shares and Agrawal had 904,286 shares in Paras Defence when the company filed the red herring prospectus. Abakkus bought an additional 665,805 shares through the anchor book on September 20.

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Abakkus now holds 2.51 percent of the company’s paid-up equity and Agrawal has 2.32 percent. Paras Defence’s market capitalisation was Rs 2,363.79 crore on October 7.

Nippon Life India Trustee, HDFC Trustee Company and Ashoka India Equity Investment Trust together held 5.42 percent of the shareholding in the defence company, as per the shareholding pattern in September. They had bought the maximum shares in the anchor book.

Among institutional investors, Jaya Chandrakant Gogri had 1.95 percent, and Amit Mahajan and Shilpa Mahajan held 1.79 percent each.

Experts are bullish on the stock, given the company’s orderbook of Rs 305 crore and the government’s focus on the defence segment through its Aatmanirbhar Bharat and Make in India initiatives.

“Eyeing the strong orderbook, diversified product portfolio and strong client relationship, the company is going to perform exceptionally well in the coming years,” said Santosh Meena, head of research at Swastika Investmart.

Paras Defence operates in a niche segment with high entry barriers.

“The company’s fundamentals are strong, where one should continue to remain invested for the long term. New investors should wait for the dip and then make their positions accordingly around Rs 500 levels,” he said.

Paras Defence caters to four major segments – defence and space optics, defence electronics, electromagnetic 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.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before making any investment decisions.
Sunil Shankar Matkar
first published: Oct 7, 2021 05:06 pm

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