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IPO oversubscribed 304 times, 171% jump on listing, but what exactly does Paras Defence do?

On 1 October, Paras Defence and Space Technologies made an unprecedented debut on bourses as its stock price rose 171% to list at Rs 475 on BSE, over its issue price of Rs 175 per share.

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New Delhi: Paras Defence and Space Technologies (PDSTL) has created history in the Indian stock market with its initial public offering (IPO) subscribed 304 times, a first for any company.

On 1 October, it made an unprecedented debut on the bourses as the stock price of the company rose 171 per cent to list at Rs 475 on the BSE over its issue price of Rs 175 per share.

While the company is lesser known among the final users, that is the Army, the Navy and the Air Force, it has five verticals — Defence & Space Optics, Defence Electronics, Heavy Engineering, Electromagnetic Pulse Protection Solutions and Niche Technologies.

One key factor that has driven the company’s IPO success is its diversification — from defence to space — and the belief that the defence sector is poised for tremendous growth in the years ahead as the armed forces undertake mega modernisation projects, a source in the defence and security establishment told ThePrint when asked about its stock market performance.

The company calls itself India’s most progressive Tier 2 defence engineering company, offering the widest range of defence products and solutions.

The company’s customer base ranges from defence public sector undertakings such as Bharat Electronics Limited (BEL), Bharat Dynamics Limited (BDL) and Hindustan Aeronautics Limited (HAL) to private entities like Tata Consultancy Services Limited, Alpha Design Technologies Limited, and Larsen and Toubro, among others.

However, government organisations involved in space research and BEL are the most significant customers in terms of value of orders, the offer document filed with SEBI says.

Of the company’s total order book of about Rs 158 crore as of December 2020, the Defence and Space Optics vertical has the majority with Rs 106 crore.

“The company is not a direct supplier to the armed forces per se. it is more like a supplier to the main companies on which the orders are placed by the MoD,” a source explained when asked about the firm’s dealing with the armed forces.

The company is now offering full-fledged surveillance cameras too, a sector that the armed forces are focusing on.


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Future orders

In the defence area, the company is betting on electromagnetic pulse protection solutions, a sector that will grow with the new-age weapons being designed and made.

The other sectors it is focusing on are the electronic and optical segments.

According to consultancy and research firm Frost & Sullivan, Indian defence electronics are becoming increasingly embedded into global defence supply chains. Currently, electronic components made in India are used in Israeli UAS and European combat aircraft. Defence electronics make up 25-35 per cent the cost of most platforms used by the Indian armed forces.

It added that the market for defence electronics will grow to approximately $7.03 billion in 2029, from approximately $1.94 billion in 2020. The cumulative market opportunity for this segment will be in the order of approximately $39 billion.

While the company is mainly invested in the defence sector, the real money spinner for them is the space sector where it is involved in research across multiple missions and is one of the few Indian private companies to do so on a larger scale. It is the sole Indian supplier of diffraction gratings used in hyper spectral imagers, large size optics.

According to the firm, as a supplier to government organisations involved in space research, it has been a part of most of the earth observation and space exploration missions since 2018.

It has entered into teaming agreements with various German technology companies for unfurlable and deployable antennae, subsystems and for services of parts, subassembly or assembly made out of carbon fibre reinforced polymers for space applications.

Besides the Indian market, the company also does business with Israel and South Korea and intends to provide products and solutions to markets in the United States and Europe.

It has also received orders from the United States and United Arab Emirates for manufacturing IR Lens and Electro-Mechanical Masts, respectively.

Industry sources explained that the big push is based on the understanding that the company will garner future contracts because of the government’s Make in India drive.

Some of the products listed in the Import Embargo List of the Defence Ministry such as EMP Racks, EMP filters used for protection of data and power lines within a rack/shelter/room against electromagnetic pulse or interference are currently manufactured by the firm.

However, the flip side is that many other companies are also coming up with similar products and are emerging as direct suppliers to both the defence ministry and also original equipment manufacturers, the sources said.

(Edited by Paramita Ghosh)


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