Choice Equity Broking IPO report on Paras Defence and Space Technologies
Paras Defence and Space Technologies Ltd. (PDSTL), which provides defence and space engineering products & solutions is coming up with an IPO to raise around Rs. 170cr, which opens on 21st Sept. and closes on 23rd Sept. 2021. The price band is Rs. 165 – 175 per share. The issue is a combination of fresh and OFS. The company will not receive any proceeds from the OFS part of the issue. Of the net proceeds from the fresh issue, Rs. 34.7cr will be used for the purchase of machinery & equipments, Rs. 60cr will be utilized to fund the working capital requirements and another Rs. 12cr will be used to repay/pre-pay certain debt availed by the company. In the last 6-7 months, the company has undertaken the pre-IPO placement of total 0.255cr equity shares for cash consideration aggregating to Rs. 34.4cr. However, the size of the fresh issue has not been reduced by the company. The shares were offered in the range of Rs. 125 – 160 per share.
Valuation and Outlook
Considering the product profile, PDSTL doesn’t have any peer in the listed space. At higher price band of Rs. 175, PDSTL is demanding a P/E multiple of 43.4x (to its FY21 EPS of Rs. 4). Considering its niche product profile & technology, dominant market positioning and vast growth potential, we assign a “SUBSCRIBE” rating for the issue.
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