Paras Defence offer bought 16.6x on Day 1

The IPO of Paras Defence and Space Technologies was subscribed 16.6 times on Tuesday, the first day of the issue. Most of the bids, so far, have come from retail investors. Experts said retail investors are enthused by the high grey market premium commanded by Paras.

On Monday, the company allotted shares worth ~51 crore to anchor investors. The price band for the IPO is ~165-175 per share. At the top-end, Paras Defence will have a market capitalisation of ~683 crore on a post-diluted basis.

The IPO comprises ~140.6 crore fresh fundraise and ~30.2 crore secondary share sale. “The IPO is valued at 43x FY21 earnings, which does not look to be appealing. While the company states there are no comparable peers for it, other defence companies like Hindustan Aeronautics and Bharat Dynamics are trading at discounts despite generating healthy cash flows and enjoying healthy free cash flow yield,” said a note by Reliance Securities.