Paras Defence and Space Technologies Limited is an Indian private sector company engaged in designing, developing, manufacturing and testing of a wide range of defence and space engineering products and solutions. They are one of the leading 'Indigenously Designed Developed and Manufactured' ('IDDM') category private sector companies in India, which caters to four major segments of Indian defence sector i.e. defence and space optics, defence electronics, electro-magnetic pulse ('EMP') protection solution and heavy engineering. They are also the sole Indian supplier of critical imaging components such as large size optics and diffractive gratings for space applications in India. Company has five principal categories of product offerings: defence and space optics, defence electronics, EMP protection, heavy engineering for defence and niche technologies. The defence and space optics operations include manufacturing high precision optics for defence and space applications such as thermal imaging and space imaging systems. The are one of the leading providers of optics for various Indian defence and space programmes, and the only Indian company with the design capability for space-optics and opto-mechanical assemblies. The defence electronics operations include providing a wide array of high performance computing and electronic systems for defence applications, including sub systems for border defence, missiles, tanks and naval applications. The EMP protection solutions include designing, developing, manufacturing and commissioning various solutions for EMP Protection. Further, the heavy engineering for defence operations involves providing heavy engineering products and solutions, such as components for rockets and missiles along with providing mechanical manufacturing support to other verticals of the business. They specialise in high end manufacturing for defence and space applications and have been providing the customers with customised and exclusive mechanical products since the inception. Under the niche technologies division, they have identified and partnered with some of the leading technology companies around the world in order to indigenise advanced technologies in the defence and space sectors for catering to the Indian market. This also affords them an opportunity to serve as manufacturing partner for global requirements of such overseas technology companies. Company has two manufacturing facilities in Maharashtra, located at Nerul in Navi Mumbai and Ambernath in Thane. The Nerul facility is an advanced nanotechnology machining centre for producing high quality optics and ultra-precision components and is engaged in manufacturing of Optics, Design, Development, Manufacturing and Integration of Electronics and EMP protection products and solutions. The Ambernath facility is engaged in manufacturing of heavy engineering products such as flow-formed motor tubes, vacuum brazed cold plates, titanium structures and assemblies, large and heavy dynamic structures with built -in automation for strategic applications, indigenously designed and manufactured flow-forming machines and mechanical racks, cabinets and consoles for various defence applications. The manufacturing facilities at Nerul and Ambernath have been accredited with quality management system certificate for compliance with ISO 9001:2015 requirements while the Nerul Facility has been accredited with AS9100D certification. They are also in the process of expanding the manufacturing facility located at Nerul in Navi Mumbai, Maharashtra. As per financial performance, PDSTL has posted total income/net profits of Rs.152.53 cr. / Rs. 25.06 cr. (FY18), Rs. 157.16 cr. / Rs. 18.53 cr. (FY19), Rs. 149.05 Cr . / Rs. 20.25 cr. (FY20) and Rs. 144.61 Cr . / Rs. 16.09 cr. (FY21) . So company has posted almost static results over last couple of years. They have posted an average EPS of Rs. 6.21 and average RoNW of 11.94% for last three fiscals. As on June 30, 21 company's order book is Rs 304.99 Cr. Issue is priced at a P/BV of 3.17 as per NAV of 55.23 on 31.03.21. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 42 Which looks very aggressively priced. As per RHP, there are no listed peers in market. On BRLM's front, ANAND RATHI ADVISORS LIMITED associated with this IPO, and not handled any IPOs in last three fiscal years. As per financials, Paras Defence and Space Technologies has shown almost static results, RoNW is 9.12% and P/E is 42, which looks aggressively priced. Company is in defense and space technology sector and caters mostly Government companies and due to that its growth is dependent on Government policies. Recently launched Atma Nirbhar Bharat and Make In India initiatives by GoI will help such Indian companies. so, we give NEUTRAL rating for this IPO.
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