Synopsis: A small-cap defence stock is in focus after announcing that its management has given the future outlook of the company.
India’s defence and drone industry is on the cusp of a massive expansion. According to sources, India’s drone sector could unlock up to $23 billion in manufacturing potential by 2030, driven by fast-growing demand from sectors such as defence, agriculture, logistics, and infrastructure.
Within this context, Paras Defence emerges as a key player, uniquely positioned to capitalize on the domestic push for indigenous defence technology and the growing need for high-precision electro-optic systems.
With a market capitalization of Rs. 5,382.83 crore, the shares of Paras Defence and Space Technologies Limited is trading at Rs. 667.25, up by 0.71 percent from its previous closing price of Rs. 662.60 per equity share.
Monopoly Position in Electro-Optics
Paras Defence is the only Indian company manufacturing electro-optic cameras for drones and UAVs, giving it a rare monopoly in a critical and fast-growing segment. Electro-optics play a crucial role in surveillance, reconnaissance, and defence applications, making Paras indispensable for both government and private clients. Its technological leadership provides a high entry barrier for competitors and positions the company as a go-to provider for advanced defence solutions. The company also holds a near-monopoly in indigenous critical imaging components for space and defence applications.
Drone Expansion and Strategic Advantage
Paras Heven Advanced Drones Private Ltd, a new subsidiary formed through a joint venture between Paras Defence and Israel-based Heven Drones, focuses on logistics and cargo drones with 10–40 kg payload capacities and integrates advanced hydrogen-powered technology for longer endurance. Supported by strong government initiatives like “Make in India” and rising defence spending, Paras Defence is well-positioned to benefit from increased procurement opportunities. It has secured international contracts, including anti-drone technology, further strengthening its strategic presence in both domestic and global markets.
Supplier of Critical Defence Components
The company manufactures and supplies mission-critical components, including submarine periscopes, avionics glass suites for aircraft, high-performance optical systems, and imaging technologies for drones, UAVs, and anti-drone devices. These components are highly specialised and difficult to source elsewhere, ensuring long-term relevance and stickiness with its customers. By catering to complex defence requirements, Paras Defence strengthens its role as a strategic partner in India’s indigenisation initiatives.
Strong and Diversified Customer Base
Paras Defence boasts a strong and diversified client portfolio across government, private, and international markets. Government clients include the Indian Ordnance Factories, ISRO, Bharat Electronics Limited, Hindustan Aeronautics Limited, Mazagon Dock, and Garden Reach Shipbuilders & Engineers. Private-sector clients include Tata Power, L&T, and Premier Explosives, while international customers feature Israel Aerospace Industries, Controp Precision Technologies, and Rafael Advanced Defence Systems. This diverse client base not only reduces business risk but also ensures sustained demand for its high-value products.
Financial Outlook
A return on equity (ROE) of about 11.5 percent, a return on capital employed (ROCE) of about 15.6 percent and debt to equity ratio at 0.08 demonstrate the company’s financial position. At the moment, the company’s P/E ratio is 76.4x higher as compared to its industry P/E 59.1x. The company has delivered strong financial performance over the last three years, with revenue growing at a CAGR of 26 percent and profits expanding at a CAGR of 32 percent.
Q2 FY26 Updates
Paras Defence and Space Technologies Limited reported Rs. 105.72 crore in revenue for the second quarter of FY26, a 21.42 percent increase over the Rs. 87.09 crore for the same period in FY25. It increased by 13.43 percent as compared to Rs. 93.19 crore in Q1 FY26.
The consolidated net profit for the second quarter of FY26 was Rs. 19.46 crore, increased by 53.28 percent as compared to Rs. 12.7 crore in Q2 FY25. The company’s net profit inclined by 36.36 percent as compared to Rs. 14.27 crore in Q1 FY26.
As of Q2FY26, the company boasts a solid order book of Rs. 1,000 crore, with an additional Rs. 2,000–3,000 crore pipeline expected to convert and be executed over the next 18–24 months. This strong visibility underscores Paras Defence’s accelerating demand momentum and long-term growth runway.
FY26 Guidance
For FY26, Paras Defence has guided for 35–40 percent revenue growth and an EBITDA margin of around 27 percent, reinforcing its strong growth trajectory and expanding strategic relevance in both domestic and global markets.
About the Company
Paras Defence and Space Technologies Limited is a Navi Mumbai–based defence and space engineering company that designs, develops, manufactures, and tests a wide range of advanced systems for military and space applications. With capabilities across hardware, optics, electronics, software, and system integration, Paras Defence serves defence, aerospace, naval, and space customers in India and internationally.
As of October 2025, the company’s shareholding pattern shows that promoters hold 53.20 percent of the total equity, Foreign Institutional Investors (FIIs) hold 5.70 percent, while Domestic Institutional Investors (DIIs) own 1.46 percent. The public shareholding stands at 39.64 percent, reflecting a healthy level of institutional and retail participation in the company.
Conclusion
Paras Defence combines a unique technological edge, critical defence offerings, a diversified client base, and strong financial performance, positioning it as one of India’s promising high-growth defence stocks. As the drone and defence sectors expand over the next decade, the company’s strategic importance and growth trajectory could make it a standout performer in India’s evolving defence ecosystem.
Written by: Akshay Sanghavi
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