Paras Defence makes stellar debut, lists at 171% premium over issue price

Post listing, the stock was locked in the upper circuit of 5 per cent at Rs 498.75 on the BSE

Paras Defence and Space Technologies (PDSTL) made a strong debut on the bourses as the stock price of the company more-than-doubled or rose 171 per cent to list at Rs 475 on the BSE on Friday over its issue price of Rs 175 per share. Post listing, the stock zoomed 185 per cent over the issue price and was locked in the upper circuit of 5 per cent at Rs 498.75 on the BSE.

Till 10:02 am, around 469,000 equity shares of the company had changed hands on the BSE. There were pending buy orders for 319,601 shares on the exchange, the data shows. In comparison, the S&P BSE Sensex was down 0.80 per cent at 58,653 points.

PDSTL has been admitted to dealings on the exchange in the list of 'T ' group of securities, the BSE said in a notice. In the T2T segment, each trade has to result in delivery and no intra-day netting of positions is allowed.

The initial public offering (IPO) of PDSTL witnessed the highest ever subscription, with the issue garnering 318 times bids. The retail portion of the issue was subscribed 113 times, while the institutional portion garnered 170 times subscription. The high networth individual (HNI) portion was subscribed 928 times, data shows.

PDSTL is one of the leading ‘Indigenously Designed Developed and Manufactured’ (IDDM) category private sector companies engaged in designing, developing, manufacturing and testing of a wide range of defence and space engineering products and solutions. The government of India’s outlays on these segments is expected to increase at 16 per cent CAGR to over USD 14.5 billion by 2031.

PDSTL is currently developing several new products, such as turnkey submarine periscope, optical/multi/hyperspectral cameras for drones/space, telescopes, anti-drone systems, etc. It has partnered with global technology providers to tap import substitution opportunities under GoI’s Atmanirbhar Bharat and ‘Make In India’ initiatives as well as tap global requirements.

Motilal Oswal Financial Services in an IPO note had said that it likes PDSTL 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, the brokerage firm had said with subscribe rating on the IPO.

"We believe the company's long-term prospects to be favourable, owing to the strong government support and an increasing private sector investment in the defence sector. Additionally, increased customer demand for the company's space optics products would boost revenue and profitability going forward," brokerage KR Choksey said in an IPO note.