Paras Defence & Space Technologies makes space cameras and it just made the best listing post-IPO this year

• Those who got shares of Paras Defence and Space Tech in the IPO nearly tripled their money within a few minutes of the listing.
• There are other defence equipment makers in the country, but none of those listed have the kind of product portfolio Paras has.
• Half of the company’s ₹1,433 crore revenue at the end of March 2021 came from government projects.

The initial public offering (IPO) from the Navi Mumbai-based defence equipment maker was hot right from the word go. The listing for Paras Defence & Space Technologies was even better.

Those who got shares in the IPO nearly tripled their money within a few minutes of the listing before the exchanges put a stop on the trading because the share price had surged more than what the bourses allow on the opening day.

List of companies in 2021 that made a blockbuster debut on stock exchanges with at least 100% gains on listing day

Companies	% returns
Tatva Chintan Pharma Chem	100%
G R Infraprojects	105%
Clean Science and Technology	100%
Paras Defence & Space Technologies	171%

It was hardly a surprise because people were already paying a ₹200 premium to get the shares in the grey market. These are some of the interesting facts about Paras Defence that make it such a hot stock.

There are other defence equipment makers in the country, but none of those listed have the kind of product portfolio Paras has. It makes stuff for defence and space optics ⁠— such as space cameras, infrared devices, diffraction gratings which help in improving image resolutions ⁠— defence electronics, electro-magnetic pulse (EMP) protection solution and heavy engineering.

So much so that Paras supplies inputs even to some of its listed peers.

Other defence stocks	Key products	Share price change on Oct 1
Bharat Electronics	Military communications, naval systems, electronic warfare systems, telecommunications, sound and vision broadcasting, opto-electronic	-0.3%
Hindustan Aeronautics	Fighter jets, helicopters, jet engine and marine gas turbine engine, avionics among others	-1.08%
Bharat Dynamics	Surface to air missiles (SAMs) for the Indian Armed Forces, anti-tank guided missiles (ATGMs), underwater weapons, launchers, countermeasures and test equipment.	0.78%
BEML	Machines such as hydraulic excavators, bulldozers, wheel loaders, wheel dozers, dump trucks, motor graders, pipe layers, tyre handlers, water sprinklers and backhoe loaders	-1.52%

Two thirds of its current orderbook, worth ₹300 crore, is for these cameras and related products.

The company has been a part of most of the earth observation and space exploration missions since 2018, said ICICI Direct report citing a Frost and Sullivan Report.

The Indian government is increasingly pushing the Ministry of Defence to buy ‘made in India’ products as well as pushing Indian defence equipment makers to export.

According to Motilal Oswal, the government outlay to buy products where Paras Defence is a player is expected to rise more than four times, from $3.2 billion allocated in the year ending March 2021 to over $14.5 billion, in the next decade.

Half of the company’s ₹1,433 crore revenue at the end of March 2021 came from government projects. Another one third came from the private sector. The rest was from exports.

The company has raised ₹170 crore from the IPO and wants to invest the money in new equipment.

Some of Paras Defence’s products under development include:

Turnkey Submarine Periscope	It is a high performance sighting system designed to perform under extreme submarine environments making it a magical marvel.
Optical/Multi/Hyper Spectral Cameras	Drone payload cameras are high end imaging cameras providing exceptional imaging capabilities under dynamic moving conditions. It is used in various applications like homeland security, agriculture, industrial, etc.
Large Sized Flow formed tubes	Paras is proactively investing in one of its kind manufacturing setup to manufacture large sized flowform tubes which are used in space rockets.
Optical Solar Reflectors	OSRs are used for radiators on spacecraft.
Complete Avionic Suite with Autopilot	Complete Avionic Suite (Glass Cockpit) for FAR - 23 Aircraft
Large Deployable Antenna	For space application
CFRP Structures	Used for space application

Source: Motital Oswal

However, if one had to evaluate the company on some of the traditional metrics like return on equity or return on capital employed, it may not seem as attractive. Since Paras Defence’s performance involves a lot of innovation and development, it’s working capital cycle is long, over 300 days, according to analysts. And the existing cash flow doesn’t cover it.

Most of its contracts have a fixed price and so, the company runs the risk of cost overruns if it isn’t efficient. The company’s profit margin was a little over 12% in the financial year 2019 and has fallen since then, due to the effect of the pandemic, to a little over 11%.


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