Stock of this recently listed defence company has zoomed 101% in 12 days

In the past three trading days, the stock of Paras Defence has surged 58 per cent after the scrip was shifted under B Group from T2T segment with effect from October 18, 2021.

Shares of Paras Defence and Space Technologies (PDSTL) were locked in the 10 per cent upper circuit, at Rs 1,003, on the BSE on Wednesday, in an otherwise weak market, on the back of huge volumes.

In the past three trading days, the stock of the defence company has surged 58 per cent after the scrip was shifted under B Group from T2T segment with effect from Monday, October 18, 2021. In the T2T segment, each trade has to result in delivery and no intra-day netting of positions is allowed.

Meanwhile in the past 12 trading days, the market price of PDSTL has more-than-doubled or has advanced 101 per cent from the level of Rs 498.75. It had listed at a premium of 185 per cent over its issue price of Rs 175 per share. Currently, the stock is trading 473 per cent higher than its issue price on the BSE.

The trading volumes on the counter jumped an over three-fold with a combined 6.82 million equity shares, representing 17.5 per cent of the total equity of PDSTL, changing hands on the NSE and BSE. There were combined pending buy orders for around 140,000 shares, the exchanges 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 a wide range of defence and space engineering products and solutions.

On Monday, PDSTL announced that the board has approved the incorporation of an Associate Company in association with Krasny Defence Technologies, which is a prominent player in the field of defence equipment maintenance and wholesome refits of Indian Naval and Indian Coast Guard Ships (ICGS).

The proposed associate company shall be engaged in the field of maintenance, servicing and repairs of defence equipment and naval vessels. PDSTL and Krasny Defence Technologies shall subscribe a 47.50 per cent stake each in the proposed associate company.

According rating agency ICRA, PDSTL’s long tenure presence in the defence and space sector has helped it to establish strong relationships with its customers as well as suppliers. The Company has developed a strong management and execution team comprising of several ex-employees of Bharat Electronics Limited (BEL), The Defence Research and Development Organisation (DRDO) among others.

"The healthy order book status of the company provides adequate revenue visibility in the near to medium term. While the client concentration risk remains with top three clients contributing to 71 per cent of the total order book as on March 31, 2021 and top five clients accounting for 63 per cent of revenue in FY2021; thrust on make in India in defence augurs well for PDSTL. The client profile comprises of mostly government organizations with repeat orders received over the years, which mitigates the counter party credit risk to a large extent," ICRA said in rating rational.