Here is why Paras Defence IPO subscribed over 16 times on the first day of bidding

#IPO - Issues Open, #Paras Defence and Space Technologies, oversubscribed 16.57 times

Paras Defence and Space Technologies‘ initial public offering (IPO) has seen an overwhelming response from investors on the first day of bidding itself — on September 21.

It was oversubscribed 16.57 times, and received bids for 11.82 crore equity shares against the offer size of 71.40 lakh shares. The bids were worth more than Rs 2,000 crore — much higher than the IPO size of Rs 170.77 crore.

The response from retail investors was quite strong as their reserved portion was subscribed 31.36 times, and that of non-institutional investors 3.77 times, while the part set aside for qualified institutional investors was subscribed 1 percent.

Paras Defence designs, develops, manufactures and tests a range of defence and space engineering products and solutions. The Navi Mumbai-based company caters to four major segments of India’s defence sector – defence and space optics, defence electronics, electromagnetic pulse (EMP) protection solutions and heavy engineering.

It is the sole Indian supplier of critical imaging components such as large size optics and diffractive gratings for space applications in India. It manufactures high-precision optics for defence and space applications such as thermal imaging and space-imaging systems. It is the only Indian company to have the design capability for space optics and opto-mechanical assemblies.

The company intends to use the net proceeds of the issue for purchasing machinery and equipment, incremental working capital requirements, repaying certain borrowings and general corporate purposes.

Among the several reasons that helped the issue receive a strong response from investors include the government’s Atmanirbhar Bharat and Make-in-India initiatives, diversified products offering with a strong customer base, small issue size, attractive valuations for long- term investors, and a healthy order book.

Also read – Paras Defence IPO: 10 things to know before deciding to subscribe

Here are key reasons highlighted by experts

Akhil Rathi, Vice President, Advisory, Marwadi Shares and Finance

a) Due to the small issue size, a strong demand was seen on the first day.

b) The company offers a wide range of products and solutions for both defence and space applications and is well positioned to benefit from the Atmanirbhar Bharat and Make-in-India initiatives.

c) Considering the FY21 adjusted EPS of Rs 4.05, on a post-issue basis, the company is going to list at a price-to-earnings (P/E) of 43.23, with a market cap of Rs 682.5 crore, which is attractive for long-term investors.

d) The order book is Rs 304.99 crore, as on June 2021, which shows revenue visibility for the company.

e) Paras Defence has a diversified product offering. It has a strong product line and its clients are secure and stable.

Gaurav Garg, Head of Research, CapitalVia Global Research

a) It is well positioned to benefit from the Atmanirbhar Bharat and Make-in-India initiatives.

b) It is a key player in high-precision optics manufacturing for space and defence application in India.

c) It has a strong and diverse customer base.

d) The company expects to generate revenues from in-house drone and space camera manufacturing, thereby lowering reliance on government orders over time.

e) With India trying to reduce its dependency on the import of defence equipment, the firm is poised to grow in the near term.

“We believe the company’s long-term prospects to be favourable, owing to the strong government support and increasing private sector investment in the defence sector. Therefore, investors can subscribe to the issue for the medium to long term,” Garg said.

Astha Jain, Senior Research Analyst, Hem Securities

a) It is a defence sector company, which is currently looking very attractive. This sector has received strong traction from investors due to the government’s increased focus on the sector.

b) The issue size is very small (approximately Rs 171 crore). Hence, the demand- supply play is on, and this makes the subscription figure looks very strong against this small-size issue.

c) No other IPO is open for subscription, which, in turn, leads to more fund diversion towards this.

d) In the past, though not strictly comparable, MTAR Technologies IPO has yielded very strong returns to investors. MTAR has given around 140 percent return from its issue price of Rs 575, which listed in March 2021.

Paras Defence customers include Bharat Electronics, Hindustan Aeronautics, Bharat Dynamics, Hindustan Shipyard, Electronic Corporation of India, Tata Consultancy Services, Solar Industries India, Alpha Design Technologies and Astra-Rafael Comsys.

Foreign customers include Advanced Mechanical and Optical Systems of Belgium, Tae Young Optics Company of South Korea, and Green Optics of South Korea.

The public issue will close on September 23. The price band has been fixed at Rs 165-175 per share.

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Internet Explorer Channel Network
News Related

OTHER NEWS

FIIs consistently increase their holding in these 5 stocks, surge over 150% in 2021 so far

In 2021 so far, the foreign institutional investors (FIIs) have invested a net of around Rs 66,024 crore in the Indian equities. They were net buyers in 8 out of 10 months ... Read more »

25% of mid-career professionals in digital skills programme secure jobs before completing it

SINGAPORE – A six-month programme to help mid-career professionals with no digital-related background to take up business technology roles has seen an average of one in four participants securing jobs ... Read more »

Renault says chip shortage will lower production more than forecast

French carmaker Renault said on Friday its production losses in 2021 because of a global semiconductor chip shortage would be far larger than previously forecast, but maintained its profit outlook ... Read more »

How to usher payment revolution for millions without a smartphone

The heart of India doesn’t beat to the tunes of a glitzy edgy smartphone. Away from the world of an instant dopamine hit, Instagram hashtags and Snapchat filters, the true ... Read more »

Enkei Wheels Standalone September 2021 Net Sales at Rs 119.23 crore, up 57.24% Y-o-Y

Reported Standalone quarterly numbers for Enkei Wheels (India) are: Net Sales at Rs 119.23 crore in September 2021 up 57.24% from Rs. 75.83 crore in September 2020. Quarterly Net Profit ... Read more »

21st Cen Mgt Consolidated September 2021 Net Sales at Rs 192.55 crore, up 300960% Y-o-Y

Reported Consolidated quarterly numbers for 21st Century Management are: Net Sales at Rs 192.55 crore in September 2021 up 300960% from Rs. 0.06 crore in September 2020. Quarterly Net Profit ... Read more »

21st Cen Mgt Standalone September 2021 Net Sales at Rs 0.66 crore, up 55% Y-o-Y

Reported Standalone quarterly numbers for 21st Century Management are: Net Sales at Rs 0.66 crore in September 2021 up 55% from Rs. 1.48 crore in September 2020. Quarterly Net Loss ... Read more »

Rajneesh Karnatak takes over as Union Bank of India Executive Director

Next on the list of lenders offering lowest interest rate on education loans is, expectedly, another public sector giant. Union Bank’s interest rates start at 6.8 percent, with the EMI ... Read more »

New Zealand Rural Land Company buys six South Island dairy farms for $61.4 million

NZX-listed New Zealand Rural Land Company has bought six dairy farms in Maniototo for $61.4 million. NZRL announced to the market this afternoon that it had entered into a unconditional ... Read more »

Maharashtra reopening: Imagicaa, one of India's biggest theme parks, expects to reach pre-COVID-19 levels by FY23

After a long hiatus, theme parks in Maharashtra will reopen after the state government allowed amusement parks to restart operations from October 22. One of India’s biggest theme parks, Imagicaa, ... Read more »

Five infrastructure mutual funds that delivered 97-118% returns in the last one year

In the massive market rally from March 2020, infrastructure stocks have been major beneficiaries and participants. Naturally, mutual funds that invest exclusively in such stocks have delivered spectacular returns. The ... Read more »

Tesla warns drivers flagged for "improper usage" of dropping full self-driving feature, Elon Musk confirms

File image: Elon Musk Billionaire Elon Musk has confirmed that Tesla will send just one warning to drivers who do not use its advanced driver assist system responsibly before removing ... Read more »

Nifty may move in 18,450-18,000 range over short term until cycle turns upside

Representative Image Ashish Kyal, Founder & CEO at Waves Strategy Advisors Nifty tops can be captured by understanding a simple cyclical behaviour and time concept. So far, we have focused ... Read more »

Why mutual funds are making a dash for electric vehicles with new scheme launches

Newer theme-based mutual funds (MFs) have been hitting the stands in recent times. Electric vehicles seem to be the flavor the season, as more Indian auto-makers launch electric vehicles (EV). ... Read more »

Denied first, paid later: How an insurer made a motorbike's engine capacity the moot point in an accident claim settlement

Consider this: you use your bike to commute regularly and buy a personal accident policy to protect your family’s financial future in case of your death while riding the two-wheeler. ... Read more »

China Evergrande makes payment before deadline, official media says

Troubled property giant China Evergrande made an interest payment to foreign bondholders one day before a deadline that threatened to put the company into default, an official newspaper reported Friday. ... Read more »

ITI Pharma & Healthcare fund NFO review: Should you invest in it?

ITI Pharma and Healthcare Fund (IPHF) is the latest new scheme to be rolled out. This is the sixth mutual fund (MF) focused on the healthcare and pharmaceuticals sector to ... Read more »

Gold Prices Today: Yellow metal likely to remain volatile amid rising festival demand

Gold inched higher in the morning trade in the Indian market and was poised for a second weekly gain on October 22, as a softer dollar provided some respite against ... Read more »

Savers given chance to put their money towards government green projects - but experts say returns are 'paltry'

A green government bond will fund plans such as zero-emission buses but its 0.65% annual rate of return falls well short of savings deals available elsewhere and will look even flimsier if interest rates go up. Read more »

Evergrande financial crisis | Struggling Chinese developer makes bond payment: Report

Image: Reuters Evergrande, the troubled Chinese developer whose struggle to avoid a multibillion-dollar debt default has rattled global financial markets wired $83.5 million on October 22 to make an overdue ... Read more »

Median price of 5-room HDB resale flats in Queenstown now $926,000 in record year for market

Resale prices rose 2.9 per cent in July-September from the previous three months. SINGAPORE – HDB resale prices hit a record-high in the third quarter and saw the fastest nine-month ... Read more »

Who should pay the world's climate debt?

New research suggests that developed countries should pay almost double the amount proposed under the Paris Agreement to offset their historical emissions. Read more »

Asian Paints after Q2 earnings: Should you buy, sell, or hold the share?

Despite an impressive growth in revenue, a sharp fall in profits because of higher raw material costs, has kept investors worried about their holdings in Asian Paints. Asian Paints on October 21 ... Read more »

Nissan ex-chair Carlos Ghosn set on restoring reputation

Carlos Ghosn, the former auto industry superstar whose career screeched to a halt with his arrest three years ago, isn’t about to settle into quiet retirement. The former head of ... Read more »

RIL Q2 Preview: Double-digit growth likely in earnings parameters, driven by retail, digital segments

Billionaire Mukesh Ambani-owned Reliance Industries is expected to clock double-digit growth in key earnings parameters for the September quarter on a year-on-year basis, driven by the retail and digital segments. ... Read more »

Curfew to end in 17 tourist provinces Prelude to reopening to vaccinated foreigners on Nov 1

The road outside the Grand Palace in Bangkok has been almost empty of traffic at night since curfew was announced, to control the spread of Covid-19. (Photo: Pornprom Satrabhaya) The ... Read more »

Government to consider PME task force recommendations for workplace fairness

The remarks were made in response to nine proposals put out by a PME task force led by NTUC and SNEF. SINGAPORE – Proposals from the labour movement and employer’s ... Read more »

Buy USDINR; target of : 75.15 : ICICI Direct

ICICI Direct’s currency report on USDINR US dollar rose by 0.24% yesterday amid upbeat economic data from US and surge in US treasury yields. US unemployment claims fell to a ... Read more »

Top cryptocurrency news on October 22: Major developments in Bitcoin, cryptos and regulations

Cryptocurrency (Representative image) [content][quote]Market Buzz[/quote][title]Bitcoin trading above Rs 48 lakh[/title][circularimage][/circularimage][body]Cryptocurrencies traded mostly in the red so far on October 22. The global crypto market cap stood at $2.58 trillion, 1.51 percent down over the last day. ... Read more »

Asia tech shares jump, China property stocks rally as Evergrande makes payment

Cyclical stocks dragged amid worries that central bankers will need to tighten monetary policy into slowing growth. TOKYO (REUTERS) – Tech stocks climbed in Asia on Friday (Oct 22) following ... Read more »

COP26 | If not net-zero, then what?

(Image: Shutterstock) On October 30, world leaders will gather at Glasgow, Scotland for the 26th UN Climate Change Conference of the Parties (COP26). The summit that was postponed last year ... Read more »

Moschip Tech Consolidated September 2021 Net Sales at Rs 38.02 crore, up 59.55% Y-o-Y

Reported Consolidated quarterly numbers for Moschip Technologies are: Net Sales at Rs 38.02 crore in September 2021 up 59.55% from Rs. 23.83 crore in September 2020. Quarterly Net Profit at ... Read more »

Trident Consolidated September 2021 Net Sales at Rs 1,691.59 crore, up 44.09% Y-o-Y

Reported Consolidated quarterly numbers for Trident are: Net Sales at Rs 1,691.59 crore in September 2021 up 44.09% from Rs. 1,173.98 crore in September 2020. Quarterly Net Profit at Rs. ... Read more »

Asian Paints Consolidated September 2021 Net Sales at Rs 7,096.01 crore, up 32.63% Y-o-Y

Reported Consolidated quarterly numbers for Asian Paints are: Net Sales at Rs 7,096.01 crore in September 2021 up 32.63% from Rs. 5,350.23 crore in September 2020. Quarterly Net Profit at ... Read more »

Asian Paints Standalone September 2021 Net Sales at Rs 6,151.85 crore, up 35.9% Y-o-Y

Reported Standalone quarterly numbers for Asian Paints are: Net Sales at Rs 6,151.85 crore in September 2021 up 35.9% from Rs. 4,526.71 crore in September 2020. Quarterly Net Profit at ... Read more »

Trident Standalone September 2021 Net Sales at Rs 1,662.57 crore, up 41.93% Y-o-Y

Reported Standalone quarterly numbers for Trident are: Net Sales at Rs 1,662.57 crore in September 2021 up 41.93% from Rs. 1,171.44 crore in September 2020. Quarterly Net Profit at Rs. ... Read more »

Budget 2021: More than 100 MPs urge Rishi Sunak to cut duty for draught beer

In a letter to Rishi Sunak, a group of Tory backbenchers call on the chancellor to maintain a freeze on alcohol duties when he delivers his budget on Wednesday. And they have also want the chancellor to introduce a cut in duty for draught beer. Read more »

Cryptocurrency Prices Today: Bitcoin down 0.53%, price above Rs 48 lakh on October 22

Bitcoin (Image: Reuters) Cryptocurrencies are mostly in the red on October 22. The global crypto market cap is $2.58 trillion, a 1.51 percent decrease over the last day. The total ... Read more »

Buzzing Stocks: RIL, Zee Entertainment, HDFC Life Insurance and other stocks in news today

Results on October 22: Reliance Industries, HDFC Life Insurance Company, Yes Bank, Apollo Pipes, Bharat Seats, Crompton Greaves Consumer Electricals, Dodla Dairy, Federal Bank, Gland Pharma, Hindustan Zinc, Inox Leisure, ... Read more »

Chinese real estate giant Evergrande makes long-awaited interest payment

The company has missed three deadlines in recent weeks for interest payments on loans that should have been paid by September 23. The group had until Saturday, October 23 at ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic