Paras Defence and Space Technologies IPO opens tomorrow - Should you subscribe? Check what brokerage firm says

Ahead of the Initial Public Offer (IPO) of Paras Defence and Space Technologies opening tomorrow (September 21), a brokerage firm Marwadi Financial Services recommended investors subscribe to the three-day share sale from September 21 to 23, 2021. 

The company earlier last week had fixed a price band of Rs 165-175 per share for its Rs 171-crore initial share sale and the minimum lot subscribed should be 85 shares.

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The offer comprises fresh issuance of shares worth Rs 140.6 crore and an offer of sale (OFS) of up to 17,24,490 equity stocks by promoters and existing shareholders, the company had mentioned. Post the issue, the promoters' stake would go down from 79.4 per cent to 58.94 per cent.

Considering the FY-21 adjusted EPS of Rs 4.05 on a post-issue basis, the brokerage firm says Paras Defence Technologies is going to list at a P/E of 43.23 with a market cap of Rs 6,825 million.

Also Read: Paras Defence IPO opens tomorrow: Top 10 things to know, including key dates and how to check allotment status

It adds, there are no listed entities in India whose business portfolio is comparable with that of Paras Technologies' business, and assign ‘Subscribe’ rating to this IPO.

The company offers a wide range of products and solutions for both defence and space applications and is well-positioned to benefit from the government’s ‘Atmanirbhar Bharat’ and ‘Make in India’ initiatives, Marwadi Financial Services say in the report while explaining valuations front.

Those selling shares on the OFS are promoters – Sharad Virji Shah, Munjal Sharad Shah and individual selling shareholders are -- Munjal Shah, Shilpa Amit Mahajan and Amit Navin Mahajan.

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.

At least half of the issue size has been kept reserved for qualified institutional buyers (QIBs), 35 per cent for retail investors and the remaining 15 per cent for non-institutional investors.

The company is engaged in designing, developing, manufacturing and testing a wide range of defence and space engineering products and solutions.

Paras Defence and Space Technologies business is highly dependent on projects and programmes undertaken by the central government and associated entities, such as defence public sector undertakings and government organisations involved in space research.

Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.