Up 660% from IPO price, what Nirmal Bang said on this defence multibagger stock

Domestic brokerage firm Nirmal Bang has reiterated its 'Hold' rating for Paras Defence and Space Technologies, setting a revised target price of Rs 1,517. The update comes on the back of the company's robust financial performance in 4QFY25, with a 35.8% increase in revenue year-on-year, largely driven by higher execution rates. The Optics and Optronic Systems segment showed remarkable growth, contributing 51% to the total revenue, while the Defence Engineering segment accounted for the remaining 49%. According to Nirmal Bang's report dated 1 May 2025, the stock has experienced a rally of 40% since the previous assessment in April.
 

Paras Defence's EBITDA grew by 131% year-on-year during the quarter, benefiting from reduced input costs. The EBITDA margin improved significantly to 26%, up 1077 basis points compared to 4QFY24. Additionally, the adjusted PAT saw a 98% year-on-year increase, aided by higher non-operating income and a lower tax burden. Nirmal Bang revised the stock's trading multiple from 72x to a more conservative 62x, aligning it with the company's three-year average, while projecting an 11.6% upside potential.
 

The brokerage underlines the positive revenue outlook for Paras Defence, forecasting a 40-50% growth rate, alongside improving margins in the upcoming fiscal years. Despite the downgrade in trading multiples, the projected CAGR for revenue, EBITDA, and PAT during FY25-FY27 remains strong at 26%, 26%, and 25%, respectively. Paras Defence is also set to participate in the upcoming NBIE Investor Conference on 27 May 2025, aiming to provide further insights into its strategic direction.
 

Shares of Paras Defence were listed in September 2021, when the company raised a total of Rs 170.78 crore via IPO by selling its shares for Rs 175 apiece. The stock was hovering around Rs 1,340 on Friday, with a total market capitlazaiton close to Rs 5,500 crore. The stock has rallied more than 660 per cent from its IPO price.
 

Recent operational updates include Paras Defence's approval to launch 52 surveillance satellites under a ₹270 billion initiative. This move will enhance India's space monitoring capabilities, positioning the company as a key player due to its comprehensive capabilities in optical system design and manufacturing. Further, Paras Defence has divested its entire stake in Paras Green UAV Private Limited, marking a strategic shift in its business operations.
 

A strategic MoU with Israel-based MicroCon Vision, part of the Rafael Group, positions Paras Defence as the exclusive supplier of advanced drone camera technology in India. This collaboration is expected to reduce import costs by 50-60% for high-end models, potentially enhancing the affordability of advanced surveillance technologies for Indian defence forces and commercial applications. With the current foreign shareholding standing at approximately 45%, the company's strategic moves are set to create significant long-term value.