The initial public offering of Paras Defence and Space Technologies saw an overwhelming response as it was fully subscribed within few minutes of opening for subscription on September 21, the first day of bidding.
The Rs 171-crore public issue was oversubscribed 5.16 times. It received bids for 3.68 crore equity shares against the offer size of 71.40 lakh equity shares, the subscription data available on the exchanges showed.
The offer size has been reduced to 71.40 lakh equity shares from 97.58 lakh equity shares after the company mopped up Rs 51.23 crore from five anchor investors on September 20.
Retail investors have put in bids 10.03 times their reserved portion, while non-institutional investors have subscribed to 58 percent of their share. Qualified institutional investors have been absent so far.
Paras Defence plans to raise Rs 170.77 crore through its public issue that comprises a fresh issue of Rs 140.6 crore and an offer for sale of Rs 30.2 crore by selling shareholders including promoters. The price band for the offer, which closes on September 23, has been fixed at Rs 165-175 per share.
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"At the upper price band of Rs 175, the stock is valued at 43.23x of FY21 Earnings of Rs 4.05 (based on fully diluted post issue equity). We recommend subscribing to the issue from a listing gain perspective," said Asit C Mehta.
The brokerage further said, "India is trying to develop its indigenous manufacturing capabilities and focusing on increasing the product range of the defence equipment that it can produce locally, thereby, reducing its dependency on the import of defence equipment. Hence, the sector is poised to grow in the near term."
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"Paras defence has a diversified product offering. Paras Defence has a strong product line and its clients are secure and stable. Currently, the majority of the revenues come from defence but in the future, the company expects to derive revenues from space optics which includes revenues from in-house manufacture of drone cameras and space cameras thereby reducing dependence on government orders over the years," the brokerage added.
Paras Defence is a private company that designs, develops, manufactures and tests a range of defence and space engineering products and solutions. The Navi Mumbai-based company caters to four major segments of India’s defence sector – defence and space optics, defence electronics, electromagnetic pulse (EMP) protection solutions and heavy engineering.
It is the only Indian supplier of critical imaging components such as large size optics and diffractive gratings for space applications in the country. It is the only Indian company to have the design capability for space optics and opto-mechanical assemblies.
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.Paras Defence IPO fully subscribed on day 1, retail portion booked 10 times - Moneycontrol.com
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