Paras Defence and Space Technologies Limited

Industrials — Aerospace & Defense · NSE

₹1,302.00+₹40.90 (+3.24%)

DalalBaazaar Score

68 / 100

🟢 Good

Verdict

NEUTRAL

Risk

High

Driven by high debt relative to equity, negative free cash flow, small-cap size, which brings sharper price swings.

In simple words: Strong business and financial position, with both sales and profits growing well. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:59 pm

Understanding the Business

Company site ↗

The 60-second version of Paras Defence and Space Technologies Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Paras Defence and Space Technologies Limited designs, develops, manufactures, and tests defense and space engineering products and solutions in India and internationally.

IndustryAerospace & Defense

SectorIndustrials

Employees617

Annual revenue₹476 Cr

How does it make money?

Turns over ₹476 Cr a year. Of every ₹100 of sales, about ₹18 reaches shareholders as profit, with ₹27 left at the operating level before interest, tax and depreciation. Each of its 617 employees supports ₹77.2 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹77.2 lakh

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., SIEMENS LTD, ABB INDIA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 16.0% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE15.2%

What is the outlook?

1 analysts covering the stock expect revenue to grow about 25.4% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+25.4%

Analysts1

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +116% while net margin moved +13% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+116%

Margin effect+13%

DalalBaazaar Score

68/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.55 — historically steadier than the index
✗ Small Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

76/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

39/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

111.1x

3Y Median

155.4x

40 monthly readings · mean 156.8x · range 74.3x–309.6x

Sector Median

88.8x

median of 3 sector peers

🟢Current valuation is approximately 29% below its 3y median of 155.4x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 25% above the peer median of 88.8x.

vs. its own history

Cheap

155.4x median over 40 months · -29%

vs. sector peers

Expensive

88.8x median of 3 peers · +25%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

81.9x

PEG

3.20

What's Good / What's Bad

🟢 What's Going Well3

Return on equity is rising
ROE has improved from 8.7% to 12.1%.
Return on capital is rising
ROCE has improved from 11.8% to 16.0%.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

5 items require attention · 3 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 85% over 3 years, from ₹15 Cr to ₹27 Cr.
🔴High leverageFinancial
Debt/Equity of 3.73x — earnings must service borrowings before shareholders see anything.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹13 Cr in the latest year.
🟡Receivables growing faster than salesFinancial
Receivables up 142% against revenue up 116% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 29% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 3.73x. Interest is payable whether or not the business has a good year.
Sales are being booked faster than collected
Receivables are up 142% against revenue up 116%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 25% above the peer median. That premium needs a reason that persists, or it closes.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
3 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 22% a year✓ 29.2% CAGR
Latest reported year was 37.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 25%✓ 26.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹13 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 13%✓ 16.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

6 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 3 neutral · 4 weak

Market Cap

₹10,492 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

111.1x

Expensive

Expensive — verify against sector peers

P/B Ratio

14.45x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹11.72

Profitable

Profitable on a per-share basis

ROE

12.1%

Moderate

Moderate capital efficiency

ROCE

16.0%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

3.73x

High

High leverage

Revenue Growth (YoY)

37.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

42.5%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.08%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹13 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

78.4x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

21.4%

Good

Healthy core-business profitability

Net Margin

18.5%

Good

Strong bottom-line conversion

Current Ratio

3.23

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.55

Defensive

Steadier than the market

52W Range Position

72%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1311.9 / 1371.7

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

46.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹221 Cr	₹253 Cr	₹365 Cr	₹476 Cr	+29.2%
EBITDA	₹60 Cr	₹54 Cr	₹101 Cr	₹128 Cr	+29.1%
EBITDA Margin	27.0%	21.3%	27.6%	26.9%	—
PAT (Net Profit)	₹36 Cr	₹32 Cr	₹63 Cr	₹88 Cr	+34.7%
EPS	₹4.63	₹4.11	₹8.01	₹10.93	+33.2%
ROE	8.7%	7.2%	9.9%	12.1%	—
ROCE	11.8%	9.4%	13.3%	16.0%	—
Total Debt	₹15 Cr	₹66 Cr	₹24 Cr	₹27 Cr	+22.8%
Free Cash Flow	₹20 Cr	-₹72 Cr	₹10 Cr	-₹13 Cr	—

🟢 Revenue has grown at 29.2% a year over 3 years.

🟢 EBITDA has grown at 29.1% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 26.9% over 3 years.

🟢 PAT (Net Profit) has grown at 34.7% a year over 3 years.

🟢 EPS has grown at 33.2% a year over 3 years.

🟢 ROE has risen from 8.7% to 12.1% over 3 years (+3.4 pts).

🟢 ROCE has risen from 11.8% to 16.0% over 3 years (+4.2 pts).

🔴 Total Debt has grown at 22.8% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹20 Cr to -₹13 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹965 Cr

Total Liabilities

₹240 Cr

Cash & Equivalents

₹25 Cr

Operating Cash Flow

₹25 Cr

Capex

-₹38 Cr

Shareholding (proxy)

Institutional Holding

7.7%

Insider Holding

56.1%

Corporate Actions

Dividend Rate

₹1

Ex-Dividend Date

28 Aug 2026

Analyst Consensus

Recommendations

0 Buy · 0 Hold · 1 Sell

Target Price (Mean)

₹820

-37.0% vs CMP

Target Range

₹820 – ₹820

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%

Recent News

1 mixed5 general

With EPS Growth And More, Paras Defence and Space Technologies (NSE:PARAS) Makes An Interesting Case

Simply Wall Street, 31 Aug

Paras Defence zooms 163% from March low; hits 52-week high on huge volume

Business Standard, 18 Aug

Paras Defence And Space Technologies Ltd. (PARAS) Share Price Hits Fresh 52-Week High

Univest, 21 Aug

Defence Stocks Rally After MoD’s 6th Positive Indigenisation List: Paras Defence, Zen Technologies, GRSE, HAL, Data Patterns in Focus

India Infoline, 18 Aug

Paras Defence and Space Technologies (PARAS.NS) Rises 2.39%: Defence & Space Tailwinds Keep Stock in Focus - Merger Arbitrage

https://www.siam.in/, 02 SeptM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Multibagger Paras Defence shares rocket 28% in just 3 sessions. What’s behind the stellar rise?

The Economic Times, 19 Jun

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Growth · Profitability

MiddlingFinancial Health

WeakValuation · Risk

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 3 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑