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Paras Defence and Space Tech IPO opens; should you subscribe?

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Mumbai-based Paras Defence and Space Technologies aims to raise up to Rs 171 crore through the IPO. It is offering shares for bidding in a price band of Rs 165-175.

Paras Defence and Space Tech IPO opens; should you subscribe?
Mumbai-based Paras Defence and Space Technologies' initial public offering (IPO) opened for subscription on Tuesday. Paras Defence and Space Tech - which offers a range of products and solutions for defence and space applications - aims to raise up to Rs 171 crore through the IPO. The initial share sale comprises fresh issuance of equity worth up to Rs 141 crore and an offer for sale worth Rs 30.2 crore by promoters.
The company has set a price band of Rs 165-175 for the public offer.  Paras shares will be available for bidding in multiples of 85 units, which means one lot will cost investors Rs 14,875 at the upper end of the price band.
The bidding process will conclude on Thursday, September 23. Shares are likely to be listed on stock exchanges BSE and NSE on October 1.
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Should you subscribe to the Paras Defence IPO? Here's what brokerages say:
Choice Broking
Considering the product profile, Paras Defence doesn’t have any peers in the listed space. At the upper end of the price band, the company is demanding a price-to-earnings multiple of 43.4 times its FY21 EPS of Rs 4).
The brokerage recommends subscribing to the issue citing the company's niche product profile and technology, dominant market position, and vast growth potential.
BP Wealth
Paras Defence has a wide range of products and services with strong R&D capabilities. It is well-positioned to benefit from the government’s 'Atmanirbhar Bharat' (self-reliant India) and Make in India initiatives in
the defence manufacturing sector.
The company has a diversified customer base ranging from government arms and government organisations involved in defence and space research to various defence PSUs. However, the company’s financials have been volatile over the past three years which is a cause of concern. On the valuation front, the issue is priced at a price-to-earnings of 31.5 times based on its FY21 earnings, diluted equity shares and the upper end of the price band.
The company has mentioned no listed peers.
The outlook for Paras Defence from a long-term view is encouraging, based on positive sectoral prospects, government support and the company’s expansion and diversification plans.
The brokerage recommends subscribing to the Paras IPO for a long-term horizon.
With a focus on the defence and space sector, Paras Defence has five verticals - defence and space optics, defence electronics, heavy engineering, electromagnetic pulse protection solutions and niche technologies. Paras Defence is involved in technologies such as rocket and missiles, space and space research, naval systems, land and armoured vehicles, electronic warfare and surveillance and electromagnetic shielding. The company has two manufacturing facilities in Maharashtra, located in Navi Mumbai and Thane.
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