Paras Defence IPO opens this week. GMP suggests issue may see strong demand

Market


The IPO of Paras Defence and Space Technologies opens on September 21 and concludes on September 23. Paras Defence IPO comprises fresh issuance of shares worth 140.6 crore and an offer of sale (OFS) of up to 17,24,490 equity stocks by promoters and existing shareholders. The defence tech player has fixed a price band of 165-175 a share for its 171-crore initial share sale.

Paras IPO allocation and listing dates

According to brokerages, share allocation in Paras Defence IPO may be finalized on September 28 while listing may happen on October 1. Investors can bid for a minimum of 85 equity shares and in multiples of 85 equity shares thereafter. Half of the issue size has been reserved for qualified institutional buyers (QIBs), 35% for retail investors and the remaining 15% for non-institutional investors. Link Intime India Private Ltd is the registrar of Paras Defence public issue and will manage share allocation and refund. 

Paras Defence share GMP

Analysts see strong demand for the issue, going by the current grey market premium. According to market observers, Paras Defence and Space Technologies is currently commanding a steep GMP or grey market premium of 210 to 215 per share.  

The company has a strong order book of around Rs. 305 crore as on June 30, 2021 with a well diversified product portfolio in defense and space optics, defense electronics, heavy engineering and niche technologies, says Abhay Doshi, co-founder, UnlistedArena.com. 

“However, on the operational front, top and bottom line growth seems to be muted. At the upper band of Rs.175, post fresh issue the asking PE comes around 43X. The government focus on ‘Make in India’ and higher budgetary allocation for defense sector may prove beneficial to such companies. Also, liberalised policies and PLI scheme for drones will further benefit such companies,” he said. 

“Small issue size, reasonable valuations and focus on defense sector may generate huge fancy in the IPO,” he added. 

Paras Defence, which offers a wide range of products and solutions for defence and space applications, operates in five verticals:  defence and space optics, defence electronics, heavy engineering, electromagnetic pulse protection solutions and niche technologies.

Proceeds of the fresh issue would be used to fund capital expenditure requirements, support incremental working capital needs and repayment or prepayment of loans availed by the company. Anand Rathi Advisors is the book running lead manager to the issue. 

Meanwhile, the share allocation in Sansera Engineering IPO, which was subscribed 11.47 times, will be finalised this week. The 1,283-crore IPO received bids for 13,88,39,000 shares against 1,21,09,166 shares on offer, according to data available with the BSE. (With Agency Inputs)

 

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