Paras Defense and Space Technologies The second day of trading during its initial public offering (IPO) continued to witness strong investor participation and demand. The public issue opened for subscription on Tuesday and saw good investor participation on the first day as well. next day, Paras Defense IPO Investors subscribed it 40.57 times more. Investors had bid for 28.96 crore equity shares IPO According to membership data on the exchanges, the size of 71.40 lakh shares. On September 20, a day before the issue opened, the company had raised Rs 51.23 crore from its anchor investors, after which the offer size was reduced to 71.40 lakh shares from the initial 97.58 lakh equity shares.
The IPO of Paras Defense was around Rs 170.78 crore. It also included a new issue and offer for sale (OFS). The fresh issue came in at Rs 140.60 crore and the OFS reached Rs 30.18 crore with a total of 1,724,490 equity shares. The public issue had a fixed price band of Rs 165 to Rs 175 per equity share, with a face value of Rs 10 per share.
In terms of gray market premium (GMP), the IPO was referred to carry a GMP of Rs 230 at the time of this article, indicating that this public issue was trading at a premium of Rs 395 to Rs 405 per equity share . Unlisted gray market.
Retail individual investors (RIIs) saw an increase in the membership of investor groups on the second day of Paras Defense IPO as they subscribed nearly 68.57 times their reserve share. Non-institutional investors (NIIs) subscribed nearly 26.32 times and qualified institutional buyers about 1.67 times their reserves.
The company aims to utilize the net proceeds from the offer for purchase of equipment, meeting working capital requirements, repayment and pre-payments for borrowings taken by the firm as well as for general corporate purposes. The promoters of this issue are Sharad Virji Shah and Munjal Sharad Shah.
As far as the post-IPO dates are concerned, the company is looking to start allotment basis on September 28, 2021. The investors who are unable to get the shares will see their money back on 29th September and will see the successful investors the next day. Those who were lucky enough to hold some shares, their demat accounts would be recognized. The listing is due on October 1, though that hasn’t been confirmed yet.
Should you subscribe?
With today being the last day of trading, the question is whether you should subscribe or not. The company has its fair share of strengths and risks just like any other. Considering the strong points, it has a wide range of products and solutions in defense and space applications. It has strong R&D capabilities as well as experienced management and is one of the top few manufacturers of optics for space and defense applications in India. Having said that, the financial performance of the company is a cause for concern.
Speaking on the financial track record of Paras Defense and Space Technologies, Choice Broking said, “The net cost of materials consumed declined by 5.9 per cent CAGR (rate higher than the top-line decline), thereby exceeding the CAGR of 6.4 per cent. Material margin over FY18-21. As a percentage of the top-line, net cost of materials consumed stood at 45.6 per cent in FY21 as compared to 52.5 per cent in FY18. However, 19.6 per cent Higher Expenditure for Employee and Other Expenses with 11% CAGR led to higher consolidated EBITDA of 1.8 percent CAGR to Rs.43.4 crore in FY21. EBITDA Margin grew by 269bps in FY2018-21 In 2011 it rose to 30.3 percent.
“Depreciation charges grew at 13.1 per cent CAGR, while higher finance cost at 19 per cent CAGR in FY18-21 due to higher financial liabilities. Consequently, the reported PAT reduced by 14.4 per cent CAGR to Rs. 15.7 crore in the financial year 2011. The PAT margin shrank 583bps during this period. PDSTL reported negative operating cash flow in two of the four fiscal years it reported. Financial liabilities grew at a CAGR of 15.6 per cent, however, the debt-to-equity ratio declined from 0.6x in FY18 to 0.5x in FY15. The average RoIC and RoE stood at 10.6 per cent and 12.9 per cent, respectively, as compared to FY 18-21.
Commenting on the rationale for the subscription, Ventura Broking said, “In our opinion, the IPO price of INR 175 per share (10.9X FY24 P/E) is not costly and the upcoming expansion plan will result in top-line performance going forward. Years. However, revenue projections (based on working capital guidance provided by the Company on pages 82 and 83 of RHP) are in our opinion too aggressive. We recommend SUBSCRIBE for listing gains. “
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