Paras Defence investors jump with joy as shares surge 185% on stock market debut

by 5paisa Research Team 01/10/2021

Paras Defence and Space Technologies Ltd made a spectacular stock-exchange debut with its shares listing at a premium of 171% and then climbing higher.

Shares of Paras Defence began trading on the BSE at Rs 475 apiece versus the IPO price of Rs 175. This is a jump of 171%. The shares then climbed further to the maximum permissible limit of Rs 498.75 apiece, or up 185% from the IPO price. The company now commands a market valuation of Rs 1,945 crore.

The blockbuster debut comes after the IPO of the defence and space products supplied was subscribed 304 times. The IPO received bids for 217.26 crore shares for the 71.40 lakh shares on offer. In other words, it got bids worth more than Rs 38,000 crore.

Investors across segments made a beeline for the company’s shares. Qualified institutional buyers (QIBs) had bid for 169.65 times the number of shares reserved for them. The quota for non-institutional investors was covered 928 times. Retail investors had bid for 113 times the shares reserved for them.

The defence engineering company’s IPO opened on September 21 and closed two days later. It had set a price band of Rs 165-175 a share for the IPO.

The Paras IPO comprised a fresh issue of shares worth Rs 140.6 crore and an offer for sale of up to 17.24 lakh shares by its existing shareholders including the promoters Sharad Virji Shah, Munjal Sharad Shah and Ami Munjal Shah.

The founders—chairman Sharad Virji Shah and managing director Munjal Sharad Shah—hold a 59.53% stake in Paras Defence. The total promoter and promoter group stake in the company is 79.4%.

Ahead of the IPO, Paras Defence mopped up Rs 34 crore through a pre-IPO sale.

The company plans to use the money raised from the fresh issue to buy machinery and equipment. It also plans to fund working capital requirements, repay debts and use the money for general corporate purposes.

Paras Defence’s business and financials

The company designs, develops, manufactures and tests a range of defence and space engineering products. It caters to four major segments—defence and space optics, defence electronics, electro-magnetic pulse (EMP) protection solutions, and heavy engineering.

It is also the sole Indian supplier of critical imaging components such as large-sized optics for space applications. It has two manufacturing facilities in Maharashtra, located at Nerul in Navi Mumbai and Ambernath in Thane.

Paras gets most of its revenue from defence public-sector undertakings and government organisations involved in space research. Its customers include Bharat Electronics Ltd, Hindustan Aeronautics Ltd, Bharat Dynamics Ltd, Hindustan Shipyard Ltd and Tata Consultancy Services Ltd.

The company’s consolidated total income was Rs 144.6 crore for the year ended March 31, 2021, down from Rs 149 crore and Rs 1,57.17 crore for the previous two years.

Its consolidated profit after tax fell to Rs 15.78 crore in 2020-21 from Rs 19.66 crore the year before and Rs 18.97 crore in 2018-19. The company had an order book of Rs 305 crore as of June 30, 2021.

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