Paras Defence and Space Technologies stock made a stellar listing on the stock exchanges today, despite the overall weak market momentum. Shares of Paras Defence and Space Technologies opened for trading at Rs 475 apiece, up 171.43% or Rs 300 per share from the issue price of 175 per share. On listing, the company had a market capitalization of Rs 1,852 crore. The IPO (Initial Public Offering) of Paras Defence and Space Technologies, concluded earlier last month, saw a massive response from investors and was fully subscribed within the initial hour of sale. During the three-day bidding process, Paras Defence IPO was subscribed 304 times.
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Paras Defence and Space Technologies is among the leading ‘Indigenously Designed Developed and Manufactured’ category Indian private sector companies catering to defence and space optics, defence electronics, EMP protection solutions and heavy engineering. The issue of the company was worth Rs 170 crore on the higher end of the price band and was a mix of fresh issue of equity shares and an offer for sale (OFS) by existing shareholders.
Domestic brokerage and research firm Motilal Oswal had a ‘Subscribe’ rating on the issue given its complex/wide product portfolio, presence in niche defence space, strong client relationship and high entry barriers. “The issue is valued at 1.9x P/BV (peers avg: ~2.4x) on a post-issue basis, which is reasonable. We believe PDSTL could benefit from government impetus on the defence and space expenditure,” analysts at Motilal Oswal had said in a report earlier
The company has seen its revenue take a hit owing to covid-19 but EBITDA margins expanded during the period. Paras Defence and Space Technologies has negligible debt on its books which post IPO will further reduce to 0.2x. The company plans to use the net proceeds from the IPO to purchase machinery and equipment, fund incremental working capital requirements and repay or prepay all or a portion of certain borrowings/outstanding loan facilities availed by the company.