Paras Defense trades at 143% premium in grey market in front of listing next week

Private defence and space engineering products and solutions provider Paras Defense and Space Technologies has seen significant expansion in its trading premium the grey market in front of its listing of shares next week.

Participants in the grey market traded Paras Defense’s shares at a premium of Rs 230-250 at the time of publishing this copy, the IPO Watch and IPO Central information showed.

This premium came about into a trading cost of Rs 405-425 in the grey market, a monstrous 131-143 percent higher contrasted with upper price band of Rs 175 per share. The trading premium was at Rs 160 on September 16.

The grey market is an unofficial trading platform for IPO shares, where the trading begins with the declaration of IPO price band till the issue officially gets listed on the bourses.

The grey market premium seems to be indicating that the organization is in strong position with its product portfolio and technology, and strong development potential.

Indeed, even the IPO had created tremendous demand from across investors as it was oversubscribed by 304.26 times, the highest subscription among IPOs launched at least since 2007.

Non-institutional investors have placed in offers 927.70 times their reserved portion and a part set aside for qualified institutional purchasers was subscribed 169.65 times. Retail investors purchased 112.81 times the portion set aside for them.

“Considering its niche product profile & technology, dominant market positioning and vast growth potential, we assign a “subscribe” rating for the issue,” said Choice Broking, adding as of June 2021, the company had an order book of Rs 305 crore, which is around 2.1x times the FY21 business.

Paras Defense is the sole Indian provider of basic imaging components like large size optics and diffractive gratings for space applications in India. It is likewise one of the leading “indigenously designed developed and manufactured” class private sector organizations in India, which takes into account the four significant segments of Indian defence sector for example defence and space optics, defence electronics, electro-magnetic pulse (EMP) protection solution and heavy engineering.

The organization launched its public issue during September 21-23, which contains a new issue of Rs 140.6 crore and a proposal available to be purchased of up to 17,24,490 equity shares by selling shareholders including promoters Sharad Virji Shah, and Munjal Sharad Shah. The price band for the offer was fixed at Rs 165-175 per share.

The net returns from new issue will be used for purchase of machinery and hardware, gradual working capital necessities, repayment of specific borrowings, and general corporate purposes.