Paras Defense and Space Technologies - Research Report

Paras Defence and Space Technologies is an A /T+1group Aerospace & Defense company with having Face value of Rs. 10. The company offers a wide range of Products & Solutions for Defence & Space Applications. It has five verticals of business, namely Defence & Space Optics, Defence Electronics, Heavy Engineering, Electromagnetic Pulse Protection Solutions and Niche Technologies. The company is involved in Technologies for Rocket & Missiles, Space & Space Research, Naval Systems, Land & Armored Vehicles, Electronic Warfare & Surveillance, Electromagnetic Shielding and much more. It has State-of-the-art manufacturing capabilities with one of its kind Nano-Machining setup, CNC Machining, Optical Coatings, Certified Electronic Assembly etc. It generates 51% revenue from Defence and space optics, 26% from Defence electronics and 23% from heavy engineering. Paras is India’s one & only Co. providing Turnkey EMP Protection Solutions with products such as EMP Filters, Air vents & Waveguides, EMP Racks & Cabinets, Shielded Doors, and Onsite Installation. It is India’s No. 1 company for defence and space optics offering a wide range of products and solutions such as - IR Lenses, Large Size Space Mirrors, Metal Mirrors, Diffractive Grafting, Optical Domes and Opto-mechanical assemblies.

Fundamentals (FY22-23):

CMP	Rs. 577
52 - week high	Rs. 811
52 – week low	Rs. 446
Dividend % (consolidated)	0.0%
ROCE	12.9%
Book value (Rs.)	106
Revenue (Rs.)	214 cr.
Debt to Equity	0.0
P/E ratio	62.7
EPS (consolidated)	Rs. 9.21
P/B ratio	5.45
Market Cap	2252 Cr.
Face value	Rs. 10.0

 

Financial Results:

Company’s Net Sales was Rs 65.10 crore in March 2023 up 6.3%, Quarterly Net Profit at Rs. 10.76 crore in March 2023 up 4.47% and EBITDA stands at Rs. 17.96 crore in March 2023 down 5.47% as compared to March 2022. Its EPS has increased to Rs. 2.76 in March 2023 from Rs. 2.66 in March 2022.

Key Points:

1. The Co.’s government customers include ISRO, HAL, Bharat Dynamics Ltd., Hindustan Shipyard Ltd., Electronics Corporation of India, etc. and its private customers include Tata Power, L&T, Kirloskar Brothers Ltd., TCS, Godrej & Boyce Manufacturing Co. Ltd., etc. Its international customers include Rafael Advanced Defense Systems Ltd., Israel Aeronautics Industries, Elbit Systems, Controp, Singapore Electronics, etc.
2. Paras Defence’s subsidiary Paras Anti-drone Technologies Private Ltd signed a pact with Mumbai-based Spacekawa Explorations Pvt Ltd for indigenous developments and deployment of Space intelligence, surveillance and reconnaissance (ISR) payloads, which will include RF Wideband Software defined Radio (SDRs).
3. Recently, the company has entered into a joint venture agreement with CONTROP Precision Technologies an Israeli company to manufacture, instal and provide logistics and after-sale support, etc, in the electro-optic infra-red field in keeping with Make in India initiative. Paras will hold a 30% in the venture and the remaining 70 % will be with CONTROP.
4. It has also bagged an order worth Rs 53 crore from the Ministry of Defence for the supply of Optronic Periscopes, which need to be partially delivered in FY24, with balance delivery by FY25.
5. The company has recently signed a Memorandum of Understanding (MoU) with Society of Applied Microwave Electronics Engineering Research (SAMEER) which is an autonomous R&D Laboratory under the Ministry of Electronics & Information Technology (MeitY). The objective of this MoU is to work together for Indigenous Design, Development and Manufacturing of various technologies such as Anti-Drone Systems, Atmospheric Instrumentation, Next Generation Communication Technologies including 6G, Radars and Antenna Technologies, Photonics & Optoelectronics, RFIC & MMIC Technologies, EMI/EMC Technologies and Medical Technologies.
6. Company’s subsidiary Paras Aerospace Private Limited (‘Paras Aerospace’) has received Type Certificate from DGCA (Directorate General of Civil Aviation), Drone Directorate, Govt. of India, for it’s Agri Drone – “Paras-Agricopter”.
7. Yantra India Limited (YIL), (formerly a part of Ordnance Factory Board), a Government of India Enterprise under Ministry of Defence has entered into ‘Memorandum of Understanding’ (MoU) with Paras Defence and Space Technologies Limited during the ongoing Aero India 2023 at Bangalore, to establish a framework for cooperation between YIL and Paras Defence to jointly address the requirements of Indian Defence Forces and Export Markets.
8. It  has also secured an order around Rs 64 crore for Avionics Suite for Saras MK-2 Aircraft from Council of Scientific & Industrial Research (CSIR)- National Aerospace Laboratories (NAL).
9. It has also entered into an exclusive teaming agreement with 'ELDIS Pardubice' s.r.o., Czech Republic, with an intention to provide Turnkey Anti-Drone Systems for Civilian Airports in India.

In last 1 year the stock gave a return of 1.91% as compared to the rise of Sensex and Nifty in the same period.

The company has a wide range of 33 different categories of products and solutions, with multiple variations in each category. It is also in the process of expanding its role from just being a component manufacturer to a complete subsystem manufacturer. In past few years GOI has pushed very hard on Make in India, Atmanibhar Bharat initiatives under which many Indian companies have received huge orders from other defence organizations of India as well as across the globe. Defence exports from India have expanded to more than 75 countries in the world and company derived ~13% of the revenue through exports in FY22. Company’s growth-related plans and its foray into Drone Technology will give a good effect on its finances in future backed by the GOI’s boost for indigenous development of defence Equipments in India and huge defence budget. It has good financial performance and huge standing order book positions and is almost debt free, considering all this the company can be added in portfolio for mid-term to long term period.

HET ZAVERI​

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