Paras Defence extends rally post strong debut; zooms 246% over issue price

The company's capital structure, liquidity position and coverage metrics strengthen post the equity infusion of Rs 140 crore through the recent IPO in September 2021, ICRA said

Shares of Paras Defence and Space Technologies (PDSTL) continued their upward movement as they hit 5 per cent for the fourth straight day on Thursday. The shares hit a high of Rs 606.10 on the BSE today, building on gains logged on debut day (October 1, 2021).

Till 02:01 pm, a combined 140,996 equity share had changed hands and there were pending buy orders for 950,000 shares on the NSE and BSE.

With the past four days' rally, the stock price of PDSTL has zoomed 246 per cent as against its issue price of Rs 175 per share. The stock has been admitted to dealings on the exchange in the list of 'T ' group of securities, the BSE said in a notice. In the T2T segment, each trade has to result in delivery and no intra-day netting of positions is allowed.

PDSTL is one of the leading ‘Indigenously Designed Developed and Manufactured’ (IDDM) category private sector companies engaged in designing, developing, manufacturing and testing of a wide range of defence and space engineering products and solutions. The government of India’s outlays on these segments is expected to increase at 16 per cent CAGR to over $14.5 billion by 2031.

PDSTL is currently developing several new products, such as turnkey submarine periscope, optical/multi/hyperspectral cameras for drones/space, telescopes, anti-drone systems, etc. It has partnered with global technology providers to tap import substitution opportunities under GoI’s Atmanirbhar Bharat and ‘Make In India’ initiatives as well as tap global requirements.

On Monday, October 4, 2021, PDSTL announced that the rating agency ICRA has assigned 'A-' rating to the cash credit facility on long term scale, obtained from Kotak Mahindra Bank and the outlook is Stable.

"The assigned rating to PDSTL favourably factors in the healthy order book position at Rs 305 crore as on June 30, 2021, which translates to a comfortable OB/OI ratio of 2.1 times the operating income of FY2021, thereby providing medium term revenue visibility," ICRA said in rating rationale.

The rating favourably factors in the strengthening of the company’s capital structure, liquidity position and coverage metrics post the equity infusion of Rs 140 crore through the recent IPO in September 2021. Apart from part prepayment of the debt outstanding, the proceeds from the IPO are proposed to be used for funding incremental working capital requirements, capital expenditure, and for extending support to group companies, it added.

PDSTL’s long tenure presence in the defence and space sector has helped it to establish strong relationships with its customers as well as suppliers. The Company has developed a strong management and execution team comprising of several ex-employees of Bharat Electronics Limited (BEL), The Defence Research and Development Organisation (DRDO) among others, it said.