Paras Defence and Space Technologies IPO Review

Paras defence and space technologies

Currently, World is facing  Pandemic, geo political tensions, slower economic growth rates. However, India with time is overcoming such issues and emerging as a leader among the developing countries. As per the United Nations Conference on Trade and Development(UNCTAD) report, the Indian economy is expected to grow at a rate of 7.2%, however, the acceleration in growth rate may slow down to 6.2% in 2022. Even with a growth rate of 6.2%, India will be leading the race of economic growth.

With such great potential in the Indian market, there are many companies from various sectors gearing up to go public and list them on stock exchanges, to reap the benefit of listing and be a helping hand in the growth of the Indian economy. One such company which is ready to list itself on exchanges is Paras defence and space technologies limited.

Paras defence and space technologies limited founded in the year 2009, is a leading manufacturer of optics for space and defence applications in India. It is the only company in India having the capabilities to design space-optics and optomechanical assemblies. The company is engaged in designing developing and testing a variety of space and defence engineering products and solutions. This is one of a kind company in this sector. The company has the advantage of technical products and a stable customer base that includes the government of India and government organizations like Bharat Electronics Ltd, Bharat Dynamics Ltd, and Hindustan Aeronautics Ltd. Currently it has two manufacturing units in Maharashtra. It is also in the process of expanding its current manufacturing facility at Nerul in Navi Mumbai.

The company is all set to  open gates for its IPO on 21st September, with fresh issue of equity shares worth Rs140 crores and shares worth Rs30 crores will be available for an offer for sale. Offer for sale consists of up to 1.25 million by Sharad Virji Shah, up to 50,000 shares by Munjal Sharad Shah, up to 3 lakh shares by Ami Munjal Shah, and up to 62,245 shares each by Shilpa Amit Mahajan and Amit Navin Mahajan. The price band of the IPO has been fixed at Rs165-175. The proceeds from the offer for sale will go to the promotors in their proportion and proceeds from fresh issues will be utilized by the firm for buying new types of machinery and equipment, repayment of full payment of loans and advances, funding working capital, and general corporate purposes.

On the financial front, the company looks stable, however, there is a fall in operating income. But the nature of business of the company is such, that it has the first-mover advantage. There is no company in India, which deals in a similar product line. Thus the future of the company is bright. As the entry of new firm in the similar product line isn’t that cake of walk. Further its mission is in line with the country’s mission of MAKE IN INDIA, thus government support will provide a cushion to the company.

Within a decade, the company has made a name for itself and has positioned itself as a pioneer. Post listing of the company over the exchange, it will reap the benefit of listing and will be named among listed companies and will be recognized by the public as well.

This is kind of an opportunity for a long-term investor to invest in a company, which has the advantage of product line, strong client base, and negligible competition. In the grey market, the share prices are quoted at a premium of Rs105 over the IPO price band, thus a listing gain is inevitable. However, investor’s must do their homework, before investing, because in the end, it is market and markets are subjects to risk.

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