The initial public offer (IPO) of Paras Defence and Space Technologies has been subscribed 9.55 times on September 21, the first day of bidding.
According to the subscription data available on the exchanges till 13:30 IST, the offer has received bids for 6,81,84,365 equity shares against the IPO size of over 71,40,793 equity shares.
The IPO 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.
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.
The company has allotted 29,27,485 equity shares to anchor investors at Rs 175 apiece, valuing the transaction at Rs 51.23 crore, according to a circular uploaded on the BSE website.
Proceeds of the fresh issue would be used to fund capital expenditure requirements, to support incremental working capital needs and repayment or prepayment of loans availed by the company.
Half of the issue size has been reserved for qualified institutional buyers (QIBs), 35 per cent for retail investors and the remaining 15 per cent for non-institutional investors.
“We like PDSTL given its complex/wide product portfolio, presence in niche defence space, strong client relationship and high entry barriers. The issue is valued at 1.9x P/BV (peers avg: ~2.4x) on a post issue basis, which is reasonable. We believe PDSTL could benefit from government impetus on the defence and space expenditure. Hence we recommend Subscribe,” said Motilal Oswal.
“Considering the FY-21 adjusted EPS of Rs 4.05 on the post-issue basis, the company is going to list at a P/E of 43.23 with a market cap of Rs 682.5 crore. There are no listed entities in India whose business portfolio is comparable with that of the company’s business. We assign a “Subscribe” rating to this IPO as the company offer a wide range of products and solutions for both defense and space applications and is well-positioned to benefit from the Government’s “Atmanirbhar Bharat” and “Make in India” initiatives.
“We believe a strong order book, robust order pipeline, higher exports and higher contribution from better margin businesses like defence optics would auger well for PDS in the long term. In terms of valuation, it is priced at ~31x P/E on FY21 EPS (| 5.6/share) at the upper price band i.e., Rs 175,” said ICICI Direct.
The company is engaged in designing, developing, manufacturing and testing a wide range of defence and space engineering products and solutions. Anand Rathi Advisors is the book running lead manager to the issue. The equity shares of the company would be listed on BSE and NSE.
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