The scrip got listed at Rs 475 on BSE, marking a hefty premium of 171 per cent over its issue price of Rs 175. On NSE, the scrip debuted at Rs 469, up 168 per cent.
After the solid listing pop, many investors, who have missed the bus, may be mulling an entry into the counter for long-term play. However, market experts and analysts advise them to wait and watch.
Market watchers say the fortunate bidders, who received share allotment, have made good money. Those who missed the bus, should assume that the issue never happened, they said.
Saurabh Joshi Research Analyst at Marwadi Shares and Finance said the listing was in line with expectations and investors can partially book profit and hold the rest for long-term investment.
“Although there is no listed entity in India, whose business portfolio is comparable with that of Paras Defence business, the valuations on an absolute basis still do not provide comfort for fresh investment in the near term,” he said.
After the listing, shares of Paras Defence got locked in the 5 per cent circuit at Rs 498.75, taking the overall gains to 185 per cent over the issue price. The grey market, too, was hinting at a dream debut.
Echoing the same thoughts as Joshi, Astha Jain of Hem Securities advised investors to take some money off the table and hold the rest for the long term.
“The listing was much better than our expectations, but sustaining at such astronomical valuations would be a big challenge. Investors should derisk their positions partially,” she said.
The Rs 170.78 crore IPO, which was sold from September 21 to 23, received a record-breaking 304 times response from investors. It drew bids worth close to Rs 52,000 crore.
Arun Kejriwal, Founder of KRIS Investments, said buying the stock at current valuations would be a risky bet, as the company has to justify them with good earnings. “One should buy, only if the valuations are reasonable,” he said.
“Record-breaking subscriptions led to the euphoria on the counter,” he said. “Investors should wait for the dust to settle and then evaluate the valuations before making an entry.”
The IPO saw huge subscriptions during the offer period. The quota for institutional buyers was subscribed to about 170 times, the non-institutional investors’ quota 927.70 times and retail individual investors’ portion 113 times.
The Navi Mumbai-based company is the sole Indian supplier of critical imaging components such as large-sized optics for space applications. It has two manufacturing facilities in Maharashtra.
Vikas Jain, Senior Research Analysts, Reliance Securities, who had a neutral view on the IPO, said the issue was very small and, hence, investors did not worry about valuations.