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Data Patterns (India) Limited IPO (Data Patterns IPO) Details

Add to Calendar 2021-12-14 12:00 AM 2021-12-16 12:00 AM Asia/Kolkata Data Patterns (India) Limited IPO (Data Patterns IPO) Details Data Patterns India

Issue Details

Dates: 14th December, 2021 to 16th December, 2021

Price Band: Rs. 555 to Rs. 585 per share

Minimum Lot: 25 shares

Minimum Application Amount: Rs. 13,875 to Rs. 14,625

Total Issue Size: Up to Rs. 588.2 crores (OFS of Rs. 348.2 crores)

Objects of the offer

· Prepayment or repayment of all, or a portion, of certain outstanding borrowings availed by the company

· Funding working capital requirements of the company

· Upgrading and expanding the existing facilities at Chennai

· General Corporate Purposes

 

Corporate Profile &Business overview

Data Patterns (India) Limited (“Data Patterns”) is among the few vertically integrated defence and aerospace electronics solutions provider catering to the indigenously developed defence products industry. With net profitability growth of approximately 164% between Fiscal 2020 and Fiscal 2021, they are one of the fastest growing companies in the Defence and Aerospace Electronics sector in India.

 The company’s capabilities across the spectrum of defence and aerospace electronics solutions from design to delivery allows it significant competitive advantage in terms of overall development time and cost and also allows it to offer competitive pricing whenbidding for defence and aerospace projects. They believe that platform specific products and products certified for ongoing programmes allow it to be the preferred OEM supplier for such qualified product requirements, driving growth and revenuevisibility over many years.

 With an order book of Rs. 581.30 crore as on September 30, 2021, which has increased from Rs. 178.70 crore as on April 1, 2018 at a CAGR of 40.08%, indicating a scalable business model. Company’s ability to obtain prospective orders on the on-going programmes are favourable as typically such processes have limited indigenous competition, and high entry barriers due to the development and qualification cycle of both product and platform.

 Financials

 

Particular (Rs. Crs)

H1FY22

FY21

FY20

FY19

Revenue from Operations

96.45

223.95

156.1

131.06

EBITDA

38.55

94.59

47.25

26.99

EBITDA Margin (%)

39.67%

41.75%

29.5%

20.37%

PAT (from continuing operations)

23.21

55.57

21.05

7.70

PAT Margin (%)

23.88%

24.53%

13.14%

5.81%

RoE (%)

10.73%

26.79%

13.74%

5.81%

Net Cash Flowsfrom Operating Activities

10.14

54.30

15.23

(4.49)

Between Fiscal 2019 and Fiscal 2021, Data Patterns was amongst the highest growing companies in terms of revenues amongst key Indian defence and aerospace companies as captured in the Company Commissioned F&S Report. The company’s revenue has grown at a CAGR of 30.72% from FY19-21. The revenue mix for H1FY22 is comprised of sale of product (90.65%) and sale of service (9.35%).

 The company’s EBITDA margins for Financial Years 2019, 2020 and 2021 were 20.37%, 29.5% and 41.75%, respectively, with EBITDA growing at a CAGR of 87.21% from FY19-21.

 PAT in Financial Years 2019, 2020 and 2021 were Rs. 7.70 crores, Rs. 21.05 crores and Rs. 55.57 crores,respectively, growing at a CAGR of 16.64% during this period, with PAT margins of 5.81%, 13.14%, and 24.53% respectively.

 

Key Strengths

· Indigenous integrated and strategic defence and aerospace electronics solutions provider which is well positioned to benefitfrom the Make in India opportunity

· Sound order book across product categories supplying to marquee customers in the defence and aerospace industry

· Consistent track record of profitable growth due to a scalable business model

· Modern certified manufacturing facility of international standards

Key Risks

· Equity Shares of one of the promoters, Srinivasagopalan Rangarajan, aggregating to 26.20% of thepaid-up capital of the Company have been pledged with State Bank of India.

· Decline or reprioritisation of the Indian defence or space budget, reduction in orders, termination of existing contracts, delay of existingor anticipated contracts or programme may have material impact on the business of the company

· Company depends on a limited number of customers such as DRDO, Defence PSUs such as MoD, BrahMos Aerospace and the Indian government space organization for a significant portion of its revenue

· The company has significant working capital requirements


Valuation & Conclusion

 

Company

RoE

Basic EPS

P/E*

P/S

MTAR Technologies Ltd

9.66%

16.99

140.74

30.110

Astra Microwave Products Ltd

5.16%

3.33

78.53

3.451

Centum Electronics Ltd

5.4%

13.31

42.41

0.903

Bharat Electronics Ltd

18.99%

8.62

23.85

3.594

Paras Defence and Space Technologies Ltd

7.64%

5.55

131.77

19.933

Data Patterns Ltd

10.73%

11.89

49.20**

13.552

 

*P/E has been calculated based on the closing market price of equity shares on NSE on December 10, 2021.

**P/E has been calculated as per the upper price band of the issue

 From valuation perspective, Data Patterns seems reasonably priced at a P/E of 49.2x and a P/S of 13.55x when compared to its listed peers. The company also has a consistent track record of improving financial metrics. It has posted a stellar performance in FY21 and H1FY22 with robust growth in EBITDA and PAT margins. The company has a strong order book with client profile of several marquee customers in the Indian defence ecosystem. Through a combination of the Aatmanirbhar Bharat mission, DAP 2020 and other favourable policies, the government is aiming to increase self-reliance in Indian defence R&D and industry. With over three decades of presence in the defence and aerospace electronics space, Data Patterns is well positioned to tap the growing opportunity in the industry. Additionally, with a small issue size and increased affinity for defence-related counters on the market at the moment, this IPO offers an attractive investment opportunity. Considering the above factors, we advise investors to ‘SUBSCRIBE’ to this IPO.

  

Issue Detail

  • Issue Open: Dec 14, 2021
  • Issue Close: Dec 16, 2021
  • Issue Type: Book Built Issue
  • Face Value: Rs. 2 per equity share
  • Price Band: Rs. 555 to Rs. 585 per equity share
  • Bid Lot:25 Shares
  • Minimum Order Quantity:25 Shares
  • Listing At: NSE, BSE
  • Issue Size: Rs. 588.22 Cr.

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