India’s third most successful IPO expects a 4x jump in its order book; Stock up 20%

Shares of Paras Defence & Space Technologies Ltd. are locked in an upper circuit of 20% in Friday’s trading session. The stock had risen 7% in Thursday’s session as well. The stock is now closing in at its previous record high of ₹1,272, which it had made in October 2021, a few days post its listing.

In an interaction with CNBC-TV18, Amit Mahajan, of Paras Defence said that the company’s order book is expected to be at ₹2,500 crore by the end of financial year 2028. This is a jump of nearly 4x from the current order book levels of ₹600 crore. Mahajan also said that the company has a orders worth ₹1,500 crore in the pipeline.

“Currently, it (order book) is standing at more than ₹600 crore. As we proceed forward, this will keep adding up. The opportunity funnel is huge in excess of ₹1,500 crore and that would mean that our efforts currently are converting all of these opportunities, which are very high probability opportunities into order book for our company,” Mahajan said.

Paras Defence manufactures defence electronics and space application products. It offers rockets, telescopes, guns and ammunition among other special purpose machineries.

Mahajan told CNBC-TV18 that the company is likely to continue grow at a steady pace of 25% to 30% per annum with a 15% to 18% profit margin. While he does not expect much from the drone segment due to excess competition, Mahajan is very bullish on the anti-drone business and its prospects going forward.

“The good part is the raw material inflation does not affect the company like Paras because the maximum value gets added in the process of manufacturing. So as much as I tell you this, Optics and Optronic Systems is our leading vertical when it comes to revenues, at the same time, margin contribution as well. Because we have a very significant role, we have as good as, we enjoy a lot of attention from our customers and I think there are very few or some places, nobody other than Paras doing what we are trying to do. Hence we enjoy a good amount of margin,” he said.

This was the biggest single-day gain for Paras Defence since October 19, 2021. The stock is also moved in-line with other defence peers as they recover from the losses they made on June 4, the day of the Lok Sabha election results.

With today’s move, Paras Defence’s Relative Strength Index (RSI) on the charts is at 78, which indicates that the stock is in “overbought” territory, as stated if the reading goes above 70.

Shares of Paras Defence ended in a 20% upper circuit at ₹1,156.9. The stock has now more than doubled in the last 12 months, surging 109%. Paras Defence is the third most subscribed IPO in the country after Latent View Analytics (326x) and Vibhor Steel Tubes (320x). The Paras Defence IPO in September 2021 was subscribed 304x.