Paras Defence Q1 Review - Strong Results, Expensive Valuations Fully Factor Growth Potential: Nirmal Bang

Nirmal Bang Report

Paras Defence And Space Technologies Ltd. reported very strong results in what is a seasonally weak quarter, with revenue/Ebitda/profit after tax growing by 73%/123%/147% YoY.

The performance exceeded our estimates by 62%/94%/133% after factoring in the delivery of one Submarine Periscope in Q1 FY25.

Key takeaways

Revenue guidance:

The company maintained revenue growth of 25- 30% in FY25, Ebitda margins of 25-30% and net margins of 15-18% We have assumed numbers at the lower end of the scale as we await pick up in execution.

Execution to keep pace with order inflow:

The execution pace is expected to range from 50% to 60% in FY25. For FY26, an order book of Rs 6-7 billion will be two times of the revenue in FY26.

Segment-wise performance:

The revenue split defence electronics and optics and optronics systems in Q1 FY25 was 54:46. The breakup is likely to remain the same In Q2; however, it will reverse to 46:54 in Q3 and 50:50 in Q4 FY25. The company will deliver 1 (already delivered in Q1 FY25 - Rs 300 million) -1-2-1 submarine periscopes in Q2, Q3 and Q4 FY25.

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