Paras Defence IPO: Listing gain, long-term? Should you subscribe? Check Anil Singhvi’s strategy for this issue

As the Initial Public Offer (IPO) of Paras Defence and Space Technologies opened today (September 21), Zee Business Managing Editor in his preview has suggested to subscribe this share sale for bumper listing gains and with a long-term perspective.

The three-day IPO of Paras Defence will remain open between September 21 to 23, 2021. The price band has been fixed at Rs 165-175 per share for its Rs 171-crore IPO. It comprises fresh issuance of shares worth Rs 140.6 crore and OFS of up to 17,24,490 equity stocks by promoters and existing shareholders.

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Positives

Singhvi says the sector, such as defence and aerospace, gets huge interest from the market as being a unique business model and it can’t be done without deep domain knowledge.

In this regard, the managing editor says, the promoters of this company are quite experienced and professional. He adds the best part about this IPO is people will certainly queue to apply for this IPO as a business model is unique and the IPO size is small.

आज से खुलेगा Paras Defence & Space Technologies का IPO...

₹170 करोड़ का IPO, प्राइस बैंड ₹165-175 रुपए...

अनिल सिंघवी से जानिए पैसा लगाएं या नहीं?#EditorsTake #ParasDefence #ParasDefenceIPO @AnilSinghvi_ @NSEIndia @BSEIndia pic.twitter.com/nXdU9rhfT3

— Zee Business (@ZeeBusiness) September 21, 2021

Negatives

The Market Guru is concerned with a very small base of the company. "It’s difficult to understand that such a unique business model has revenue of mere Rs 150 crore, similarly, the order book is also Rs 300 crore," pointed the Singhvi. 

Moreover, the financials of the company are not impressive and makes one a little uncomfortable, however, the management has assured growth and planning capex would be done after this IPO, the managing editor said in his preview. 

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

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. 

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.