Paras Defence & Space Tech IPO continues to demand a premium of ₹200 in grey market

• Paras Defence & Space Technologies IPO is getting listed on stock exchanges today.
• The IPO of the Mumbai-based defence company has received huge demand from investors as the IPO was subscribed 304 times.
• Meanwhile, shares of the company have continued to demand over 100% premium in the grey market.

Shares of Paras Defence & Space Technologies will get listed on stock exchanges today, September 30. 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.

Currently, shares of the company are reportedly at a premium of ₹200 per share in the grey market, up by 114% from the price band of ₹165-170. Although the grey market premium has stuck to ₹200, it is to notice that the premium has come down by ₹20 in the last few days from ₹220.

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.

The company doesn’t have any peers in the listed space which analysts believe is an add-on. “Considering its niche product profile and technology, dominant market positioning and vast growth potential, we assign a “SUBSCRIBE” rating for the issue,” said a report by Choice Broking.

“Company has [a] wide range of products and solutions for both defence and space applications. Company being one of the few players in high precision optics manufacturing for space and defence application in India has strong R&D [research and development] capabilities with focus on innovation and is well positioned to benefit from the government’s “Atmanirbhar Bharat” and “Make in India” initiatives. Also, the company's strong order book gives good revenue visibility going forward,” said analysts at HEM Securities while recommending to subscribe to the IPO for long term.

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