Here are the complete details about Paras Defence & Space IPO | Apply or Avoid
Now a days every country trying to adopt Drone and anti drone technologies in their defence. as well the government of india also trying to adobt this drone technology and spending a lot on this, also government of india giving descent allocation in the budgets. Government of India also focusing on advancing defence and space technologies. There is a big need for every country to advance their defence and drone technologies as its plays key role in establishing peaceful environment in the country. These all things will drive this IPO Paras defence and Space technology positively. Here is the complete analysis about business structure, Positives, Negatives, Products they manufacture and financials in detail.
About Paras Defence & Space IPO:
Paras defence & space technologies ltd is a 12 year old company as it’s found in 2009. This company mainly works and operates on five types business segments. They are Defence & Space optics, Defence electronics, EMP protection, Heavy Engineering for defence and Niche technologies.
1. Defence & Space Optics :
In this business segment this company manufactures Night vision devices, IR lenses that were used in Imaging Cameras, Optical Domes for missiles, Gyro Blocks, Diffractive Cratings, Multi fold lenses, Optical Reflectors, Ultra precision manufacturing, lens barrel and etc. all these products will be used in the advancing of defence and space technologies.
2. Defence Electronics :
In this business segment this company manufactures the electronics those would be helpful in creating advanced controlling and to build accessing environment. the products are like control systems, computing consoles, rugged displays, big computers and servers, software development, data/image/video processing and magnetic sensing products. these all products will be helpful in bringing advanced technology in the defence and space technologies.
3. Heavy Engineering for defence :
In this business segment this company manufactures heavy engineering products for defence, they are flow formed tubes, radar cooling assemblies, titanium manufacturing, special metal manufacturing, heavy structures, special purpose machines, cabinets and rugged tripods,
4. EMP Protection solutions :
In this business segment company manufactures EMP shielded rooms and control centres, EMP shielded rooms and cabinets, EMP protection filters, chambers, shielded screen doors and EMP projects.
5. Niche Technologies :
Company has strong growth view on this segment and company expecting good demand for these products in the future, In this business segment company manufactures capsule size drones, large space mirrors, military winches, avionic suites, HPEM systems and many more.
along with these products company also working on several advanced technologies and produts those can advance defence and space technologies in their R & D centres, currently they are working on the programs like rocket & missiles, naval systems, space research, land & armoured vehicles, surveillance systems and many more which can bring advanceness in Defence and Space industry.
Financials :
Currently this company is having Rs 304 crores worth of order book. in this order book, they got 67% of orders from Defence & Space optics, 23% of orders from Defence Electronics and 10% of orders from Heavy engineering products, Company is having 341 full time employees. The company has two production units and two R&D units.
The company generated 119.16 cr worth of revenues from domestic market and 24.18cr worth of revenues from international market. company has total equity of 206.63cr and the company has total debt of 93.67 cr, so that the debt to equity ratio is 0.45. if you look at revenues that company generated from it’s operations in the period of 2019 – 2021, revenues dropped 3.65%, if you look at the Operating EBITDA from 2019 – 2021 they have delivered 0.66% of growth, which is very slight. They have showed 254 bps growth in operating EBITDA margin, from 2019 – 2021, PAT dropped -8.77%, as they have showed 127 bps drop in PAT margin. They have almost showed drop in both revenues and profits. If you look at the company’s cash flows they are generating negative cash flows from both it’s operations ans investing as they have invested in plants and equipment. Company saying that the increment of working capital is the main reason for negative cashflows. If you look at the return ratios of the company, ROE is 9.12% and ROCE is 12.11%. there is volatility in PAT as well in return ratios from last three years.
Valuations :
The company quoted their IPO price 31.53 times to it’s Price to earning multiple and 3.16 times to it’s Price to book multiple.
Growth Prospects :
As government of india is continuously improving the budget allocation year by year to advance the defence related technology and spending more money in adopting drones and anti drones related technology. Recently the indian government has brought new drone policy which could helps to improve the drone usage. It would be positive that along with indian government so many other countries have been looking to improve their defence technology. As company is also exporting their products, it can also cater the global demand.
IPO details :
IPO type : Book Building
IPO size in Crs : 170.78 crs
Fesh Issue : 140.6 crs
OFS : 30.18 crs
Face Value : 10 rs
Price Band : 165 – 175
Lot Size : 85 shares per lot
Minimum (1 lot) : Rs. 14,875
Maximum (13 lots) : Rs. 193375
Listing Exchanges : BSE & NSE
Allotment Proportion : QIB – 50%, NII – 15%, Retail – 35%
Tentative Dates :
Issue opens on : 21/09/2021
Issue closes on : 23/09/2021
Allotment date : 28/09/2021
Refund Date : 30/09/2021
Shares credits on : 30/09/2021
Listing Date : 01/10/2021
Key Risks :
Company has not been mentioned their cash conversion cycles, if it is too long like more than a year, it would be not good for the company. As they are generating negative cash flows from it’s operations, we should keep track this parameter, if it continues in further, it would be also a key risk. who ever wants to hold for long term they should keep track this. Also there is small income tax issues but bot big negative, i am including this just for your information.
Grey Market Premium :
The demand for this company in the grey market is running very strong. there might be chances for the compant to list with 90 – 100% gains.
Conclusion :
As company is looking good, we can apply Paras Defence & Space IPO for short term gains as grey market premium is running very strong. Also we can apply it for long term as company is working on latest technology which has strong growth potential. but keep track the parameters mentioned in key risks.
Disclaimer : All stocks analysis and presentations are purely based on my personal view. So please do your own research before investing into any stock else take an advice from your financial Advisor.