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Paras Defence: From being oversubscribed 304 times to up more than 370%, why India is betting big on it

With Space sector opening up to private players and government upping its ante to strengthen the defence force, it is an exciting time for an investor in India.

What would be your reaction if you were told that your money grows 5% everyday? Yes, you read that right, 5% upward everyday.

Paras Defence and Space Technology is a company that got listed in the stock market just recently. The IPO was subscribed over 300 times, which in itself was a record in Indian equity market. For the retail investors category, it was subscribed by 113 times. For the non institutional investors, it was subscribed by nearly 928 times, while for institutional investors, it was subscribed 170 times.

The IPO had a relatively moderate issue size of ₹170 crore which included fresh issue of shares worth ₹140 crore and existing 1.7 million shares worth around ₹30 crores.

The fervour and excitement of the investors in the company has strong reason, since the company has a background in defence and space technology, a forte which is pretty new to the conventional businesses listed in the market.

The IPO price band of Paras Defence was ₹165-₹175 for a lot of 85 shares with a face value of ₹10 each. The cut off amount for 1 lot was ₹14,875. The IPO closed accepting applications on 23rd September 2021. The shares were listed on 1st October and the company opened at ₹469 per share on National Stock Exchange (NSE) at 170% premium and immediately reached the upper circuit at ₹492.

The stock (NSE:PARAS) was consistently trading throughout the day today at the high of 659.80 till the time market closed at 3:30 PM. For reference, if any investor received an allotment of 1 lot of 85 shares, they would have invested ₹14,875 on 23rd September 2021. If they are holding on the shares today on 11 October 2021, the value is around ₹56,000 with a bumper profit of ₹41,000.

Major stock market investors and analysts have a neutral to positive outlook on the listing. Their observations vary from partial holding to full profit booking depending on the investor interests.

Ever since PM Narendra Modi was elected in 2014, Government of India has pushed for strengthening of India’s armed forces. Upgrading of equipments, providing better technologies and expanding the buying capacities for defence materials, the positive outlook for a defence company cannot be ignored. That, combined with initiatives of the central government like Make In India gave a fresh boost to India’s internal markets all across the sectors. The central government’s impetus on Aatmanirbhar Bharat has also shown a magnificent interest in this sector.

That’s not all. Earlier in the day today Prime Minister Modi too laid emphasis on bringing in reforms in the sector. He was speaking at the launch of Indian Space Association. PM Modi said that India’s approach to space reforms is based on four pillars: freedom to private sector in innovation, role of government as an enabler, to make youth future-ready and to see the Space sector as a resource for the progress of common man.

He pointed out how while earlier Space sector was largely government owned and control, past few years there has been a paradigm shift by bringing in bringing in innovation in Space sector and gave the mantra of cooperation between government and startups. He said that it is no longer time for linear innovation but an exponential one. Which is why the government need not play role of handler but an enabler. “Today Govt is sharing its expertise and providing launch pads for private sector. Today, the facility of ISRO is being opened for private sector,” PM Modi had said.

Paras Defence shows promise in lots of areas providing solutions for heavy engineering, space optics, defence electronics, niche technologies. The areas of expertise are in rocket/missile programs, space and related programs, naval systems, land and armoured vehicles, electronic warfare and surveillance, electronic pulse protection, etc. The company is now looking to substitute imports under the central government’s Make In India program, and also focus on hot technologies like UAVs that can help the armed forces crucially.

The enthusiasm of investors didn’t go unnoticed. BSE informed that market regulator Securities and Exchange Board of India (SEBI) has restricted intraday trading in this stock for 10 days. The step is usually taken by both the exchanges and SEBI to protect investor interests from speculative trading and price movement disruptions.

The vigour and frenzy on this stock shows that the investor is ready to scale up and invest more, thus inviting businesses to innovate and generate more wealth, which indirectly pushes the economy ahead.

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OpIndia Staff
OpIndia Staff
Staff reporter at OpIndia

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