Paras Defence shares still a buy after 53% surge in three sessions? Stock at record high

Shares of Paras Defence and Space Technologies Ltd. surged as much as 18% on Tuesday, extending their gains for the fifth straight session. The stock was locked in a 20% upper circuit on Friday, following a 7% surge last Thursday.

The stock has surged after the Abu Dhabi Investment Authority (ADIA) acquired a 1.44% stake in the company through bulk deals on Friday. The stake was acquired at an average price of ₹1,120.71 per share.

Prior to this, the ADIA did not have any stake in Paras Defence.

Even in Tuesday's trading session, Paras Defence has seen 7.06 lakh shares or 1.8% of the total equity change hands at an average price of ₹1,252 per share. The transaction is valued at ₹88.7 crore. Buyers and sellers in today's transaction are not determined yet.

With this move the stock has risen 53% in the last three trading sessions. The stock is now trading at a record high.

In an interaction with CNBC-TV18 last Friday, the management of Paras Defence said that the company's order book is likely to grow to ₹2,500 crore by the end of financial year 2028, compared to the current figure of ₹600 crore.

The management also said that they expect to continue growing at an average pace of 25% to 30% annually.

Paras Defence shares took support at their 50-Day Moving Average recently, post which they have continued to surge higher.

The stock was also in focus last week after Defence Minister Rajnath Singh said that India is targeting defence exports worth ₹50,000 crore in the next five years.

Paras Defence, on the charts is now in overbought territory, with Relative Strength Index (RSI) at 84. An RSI reading above 70 indicates that the stock is in overbought territory.

"With climatic volumes surpassing its 2021 high, Paras may scale higher in the upcoming weeks, reaching ₹1,540 and perhaps ₹1,765 in the coming weeks. The base currently appears to be raised around ₹1,120, where one may follow the trend and trail their stop losses even for new long positions," said Sacchitanand Uttekar of Tradebulls Securities.

"Paras Defence witnessed an inverse head and shoulder breakout around ₹800 levels and has currently achieved the targets of the pattern. It is suggested to book profits," said Gaurav Bissa of InCred Equities.

Shares of Paras Defence are trading 16.4% higher currently at ₹1,347. With Tuesday's surge, the stock has also crossed the market capitalisation of ₹5,000 crore.