Paras Defence and Space IPO: The Rs 170.77 crore IPO of Paras Defense and Space Technologies will open for subscription tomorrow, September 21. Before the opening of the IPO, its price in the primary market could be more than twice the issue price. For this IPO, the price band of shares with a face value of Rs 10 has been kept at Rs 165-175. In the primary market, its shares are priced at Rs 370 i.e. about 11 percent at a premium of Rs 195. This company does not have any listed piers in the country.
According to analysts, the order book of Paras Defense and Space is very strong and as on 30 June 2021 it was Rs 305 crore. Its product portfolio is highly diversified and includes products related to defense and space optics, defense electronics, heavy engineering and housing technology.
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Expert’s opinion
- After the issue at the upper price band of Rs 175, it will have a P/E of around 43X. According to UnlistedArenacom’s founder Abhay Doshi, the government is focusing on Make in India and increasing the budget allocation for the defense sector, which will benefit companies like Parag Defense and Space. Apart from this, due to liberalized policies and PLI scheme for drones, such companies will also get benefit. According to Doshi, the small issue size, reasonable valuations and focus on the defense sector may increase the attractiveness of investors towards this IPO. The company has a weighted average return on net worth of 11.94 per cent over the last three years and a price/earnings ratio of 31.53 at the upper price of the price band as per EPS (earnings per share) for FY21.
- Paras Defense and Space is the only company in the country to supply critical imaging components like large size optics and diffractive gratings. Apart from this, it is a private company in the indigenously made, developed and manufactured category of indigenously made, developed and manufactured company in the Indian Defense Sector in the four major segments of Defense & Space Optics, Defense Electronics, Electro-Magnetic Pulse (EMP) Protection Solutions. And supplies heavy engineering products. According to analysts at JM Financial Services, the company has strong R&D capabilities and is well positioned to take advantage of the government’s initiatives like Self-reliant India and Make in India.
- The brokerage firm Choice Broking has given it a subscribed rating because of its superior product profile and no listed peers. According to the EPS (earnings per share) of Rs 4 for FY21, it has a P/E of around 43.4 at an IPO price of Rs 175.
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Lot size of 85 shares
The lot size of 85 shares has been fixed for the IPO i.e. investors will have to invest at least Rs 14875 according to the upper price of the price band. 50% of the issue is reserved for Qualified Institutional Institutional Buyers (QIBs) and 15% for Non-Institutional Investors (NIIs). The remaining 35 per cent of the IPO has been reserved for retail investors.
Under this IPO, new shares worth Rs 140.6 crore will be issued and 17.24 lakh equity shares worth Rs 30.17 crore will be issued under Offer for Sale (OFS). Under the offer for sale, Virji Shah will sell 12.5 lakh shares, Munzar Sharad Shah 50 thousand shares, Amy Munjal Shah 3 lakh shares and Shilpa Amit Mahajan and Amit Naveen Mahajan 62245 shares. Link Intime has been appointed as the Registrar of the issue.
(Article: Surbhi Jain)
(The stock recommendations given in the story are those of the respective research analysts and brokerage firms. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)
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