On May 5, 2025, the stock of Paras Defence and Space Technologies Ltd (NSE: PARAS) experienced a decline of 0.58%, settling at ₹1,340.00 in early trading. This drop came after a gap-up opening at ₹1,372.20, which investors could not sustain, leading to profit booking following a significant rally in recent weeks.
The stock's previous close was ₹1,347.80, and it reached a high of ₹1,380.00 and a low of ₹1,326.40 during the day. The company has seen its shares fluctuate within a 52-week range from ₹681.50 to ₹1,592.70, and its current market capitalization stands at ₹5,410 crore with a price-to-earnings (P/E) ratio of 98.08.
Several factors contributed to this recent pullback. Traders are locking in gains after the stock’s impressive performance, and the high valuation risk due to a P/E ratio of 98 makes it susceptible to corrections without new catalysts. Additionally, the broader defence sector has shown signs of weakness, and there have been no fresh orders or announcements to stimulate further growth.
Technical analysis indicates support levels at ₹1,330 and ₹1,300, while resistance levels are at ₹1,360 and ₹1,380. The short-term bias appears cautious, with the stock likely remaining rangebound unless it breaks above ₹1,380 with substantial trading volume.
Despite the recent volatility, Paras Defence continues to attract long-term investors, buoyed by strong defence spending trends. Investors are particularly keen on upcoming developments such as new defence contracts, collaborations with the Defence Research and Development Organisation (DRDO), and visibility of export orders for the fiscal year 2026.
In a significant announcement, Paras Defence revealed plans for a stock split and a dividend, aiming to enhance shareholder value. The company will split one equity share of a face value of ₹10 into two shares of ₹5 each. This move is designed to make shares more affordable and attractive, encouraging greater retail participation and improving liquidity in the market. This will be the first-ever stock split for Paras Defence, expected to be completed within two months post-approval by the company’s members.
Additionally, Paras Defence declared a final dividend of ₹0.50 per equity share for the financial year ending March 31, 2025, which will be paid after the stock split is finalized. This also marks the company's first-ever dividend payout, reflecting its commitment to returning value to shareholders.
Last week, the stock closed at ₹1,347.80 on April 25, 2025, down by 1.3% on the Bombay Stock Exchange (BSE). Paras Defence has outperformed industry giants like Hindustan Aeronautics Limited (HAL) and Bharat Electronics Limited (BEL) in recent trading sessions, with a remarkable 34% gain year-to-date, compared to 6-8% increases for its larger competitors. Notably, Paras Defence shares have surged by an astonishing 670.17% from its initial public offering (IPO) price of ₹175, which was launched from September 21 to 23, 2021, and witnessed overwhelming subscription of 304.26 times.
The company’s revenue outlook appears promising, with projections of a 40-50% growth rate for FY26. According to Nirmal Bang's analysis, the compound annual growth rate (CAGR) for revenue, EBITDA, and profit after tax (PAT) is expected to be strong at 26%, 26%, and 25% respectively for the period FY25-FY27. The brokerage has recommended a HOLD rating but has raised its target price to ₹1,517.
Paras Defence boasts a state-of-the-art manufacturing setup with a workforce exceeding 600 employees, capable of offering turnkey solutions from design to commissioning of various defence systems. The company’s focus on technology development and research and development (R&D) distinguishes it as a true indigenous design, development, and manufacturing (IDDM) player in the Indian defence sector.
In the backdrop of heightened geopolitical tensions, particularly between India and Pakistan, the demand for defence capabilities has surged. This environment has created a conducive atmosphere for defence companies like Paras Defence, which recently reported a net profit of ₹19.70 crore for Q4, marking a substantial 97% increase from ₹10 crore in the same quarter last year. The revenue for this period rose to ₹108.20 crore, up from ₹79.70 crore year-on-year.
Moreover, Paras Defence's order book has reached ₹900 crore, with expectations to surpass ₹1,000 crore soon. The company has set a target of ₹1,500 crore for its order book, reflecting its ambitious growth strategies.
In conclusion, Paras Defence and Space Technologies is well-positioned to leverage the increasing defence spending in India. With its strategic initiatives, including the stock split and dividend declaration, along with robust financial performance, the company is poised for continued growth and remains an attractive option for investors seeking exposure to the burgeoning defence sector.
