Private defence and space engineering products and solutions provider Paras Defence and Space Technologies has seen significant increase in its trading premium in the grey market ahead of its listing of shares next week.
Participants in the grey market traded Paras Defence’s shares at a premium of Rs 230-250 at the time of publishing this copy, the IPO Watch and IPO Central data showed.
This premium resulted into a trading price of Rs 405-425 in the grey market, a massive 131-143 percent higher compared to upper price band of Rs 175 per share. The trading premium was at Rs 160 on September 16.
The grey market is an unofficial trading platform for IPO shares, where the trading starts with the announcement of IPO price band till the issue officially gets listed on the bourses.
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The grey market premium seems to be indicating that the company is in strong position with its product portfolio & technology, and robust growth potential.
Non-institutional investors have put in bids 927.70 times their reserved portion and a part set aside for qualified institutional buyers was subscribed 169.65 times. Retail investors bought 112.81 times the portion set aside for them.
“Considering its niche product profile & technology, dominant market positioning and vast growth potential, we assign a “subscribe” rating for the issue,” said Choice Broking, adding as of June 2021, the company had an order book of Rs 305 crore, which is around 2.1x times the FY21 business.
Paras Defence is the sole Indian supplier of critical imaging components such as large size optics and diffractive gratings for space applications in India. It is also one of the leading “indigenously designed developed and manufactured” category private sector companies in India, which caters to the four major segments of Indian defence sector i.e. defence & space optics, defence electronics, electro-magnetic pulse (EMP) protection solution and heavy engineering.
The company launched its public issue during September 21-23, which comprises a fresh issue of Rs 140.6 crore and an offer for sale of up to 17,24,490 equity shares by selling shareholders including promoters Sharad Virji Shah, and Munjal Sharad Shah. The price band for the offer was fixed at Rs 165-175 per share.
The net proceeds from fresh issue will be utilised for purchase of machinery and equipment, incremental working capital requirements, repayment of certain borrowings, and general corporate purposes.
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