Paras Defence and Space Technologies Limited Incorporated on June 16, 2009 is an Indian private sector company engaged in designing, developing, manufacturing and testing of a wide range of defence and space engineering products and solutions. It is also one of the leading ‘Indigenously Designed, Developed and Manufactured’ category private sector companies in India, which caters to four major segments of Indian defence sector i.e. defence and space optics, defence electronics, electro-magnetic pulse (“EMP”) protection solution and heavy engineering.
They are currently developing several new products and solutions, such as hyper spectral space camera, ARINC-818 based avionic display and naval periscopes, and multi and hyper spectral cameras for drones and space, UAVs, cubesats and anti-drone systems. The company has 2 manufacturing plants in Maharashtra and is in the process of expanding its current manufacturing facility at Nerul in Navi Mumbai.
Promoters & Shareholding:
Sharad Virji Shah and Munjal Sharad Shah are the company promoters.
Public Issue Details:
Offer for sale: Fresh issue of approx. 8,034,285 equity shares of INR 10 aggregating up to INR 140.60 Cr and OFS of approx. 1,724,490 equity shares aggregating up to INR 30.18 Cr.
Total IPO Size: INR 170.78 Cr.
Price band: INR 165 – INR 175.
Objective: for purchase of machinery and equipment, funding incremental working capital requirements, and repaying debts besides general corporate purposes.
Bid qty: minimum of 85 shares (1 lot) for INR 14,875 and maximum of 13 lots.
Offer period: 21st Sep 2021 – 23rd Sep 2021.
Date of listing: 1st Oct 2021.
Pros & Cons of Investing in Paras Defence & Space Technologies :
- One of the leading ‘Indigenously Designed Developed and Manufactured’ (“IDDM”) category Indian private sector company.
- Wide range of products and solutions for both defense and space applications.
- Company’s offerings are aligned with the “Atmanirbhar Bharat” and “Make in India” initiatives by the government
- Professional and experienced management team.
- One of the few players in high precision optics manufacturing for space and defense application in India.
- Strong R&D capabilities.
- The company’s revenues and margins are declining in the last 3 years.
- Significant power, and fuel requirements and any disruption to power or water sources could increase its production costs and adversely affect its operations.
- Significant working capital requirements.
Subscribe or avoid? What should I do?
India shares its land borders with 7 other countries and territorial issues and a history of conflict spanning six wars have made India’s borders with Pakistan and China some of the most dangerous flashpoints in existence. India has been primarily dependent on imports for its defence equipment’s but now the trend is changing and currently 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, this is expected have positive impact on the company and its business.
For the last 3 years average EPS of Rs 6.2, P/E ratio is around 28x. On the upper price band of Rs 175 and EPS of Rs 5.55 for FY21, the P/E ratio works out to be 31x. Hence, the company is asking P/E in the range of 28x to 31x. There are no listed peers doing similar business. Hence on basis of PE & financials the IPO appears reasonable prices. Considering all the above factors, we recommend Investors to “SUBSCRIBE” to this IPO for good returns from medium to long term and possibility of listing gains.
This article should not be construed as an investment advise, please consult your Investment Adviser before making any sound investment decision. If you do not have one visit mymoneysage.in now