Paras Defence & Space Technologies makes a blockbuster market debut, lists at a premium of 171%

• Shares of Paras Defence & Space Technologies listed on the stock exchanges at ₹475 per share, which is 171% higher than the issue price.
• The company’s initial public offer (IPO) was oversubscribed by over 304 times.
• It intends to use bulk of the IPO proceeds to purchase machinery and equipment, fund incremental working capital requirements and pay some debt.

Shares of Paras Defence & Space Technologies debuted at ₹475 per share, which is 171% above its issue price of ₹175.

The Mumbai-based defence company floated its ₹170 crore initial public offer (IPO) in September. The IPO was oversubscribed by 304 times, with non-institutional investors leading the fray.

The initial public offering (IPO) of the company has witnessed overwhelming response from the investors as even most analysts are bullish on the company’s growth prospects.

Investors have bid for 217 crore shares against the 71.40 crore shares on offer.

The company intends to utilise the net proceeds of the issue to purchase machinery and equipment, funding incremental working capital requirements, pay some debt, and for general corporate purposes.

Meanwhile, the grey market premium for the company’s shares continued to demand over 100% premium in the grey market at ₹200.

As of 10:00 a.m., Paras Defence & Space Technologies shares were trading at ₹498 per share, which is up by over 185%.

The strong premium is attributed to the company’s robust order book and its ability to benefit from the government’s ‘Make in India’ and ‘Atmanirbhar Bharat’ initiatives. It has a strong order book of ₹304 crore as of June 30, 2021. Also, analysts have recommended subscribing to the IPO for the long term on strong growth prospects.

The company derives majority of its business from government entities in the defence and space sector. As of FY21, government and private entities generated 50.8% and 32.3% revenue, while the rest was from exports.

“We have been strategically working on cutting down raw material dependence on one single country like China. I hope we can pull it down below two digits in the coming years,” said Patel.

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