RatingSUSBCRIBE Issue OfferIssue Opens onDec 14, 2021Issue Close onDec 16, 2021Total IPO size (cr)588.22Fresh issue (cr)240.00Offer For Sale (cr)348.22Price Band (INR)555-585Market Lot25Face Value (INR)2Retail Allocation35%Listing OnNSE, BSEObjects of the issue ⮚ For Repayment of borrowings ⮚ For Funding working capital requirementIssue Break-up (%)QIB Portion 50NIB Portion 15Retail Portion ⮚ 35Shareholding (No. of Shares)Pre Issue 47,784,086Post Issue 51,886,650Indicative TimetableFinalisation of Basis of Allotment 21-12-2021Refunds/Unblocking ASBA Fund 22-12-2021Credit of equity shares to DP A/c 23-12-2021Trading commences 24-12-2021
Established in 1985, Data Patterns is a defence and aerospace electronics solutions provider specializing in indigenously designed defence equipment. The firm provides equipment for all types of defence and aerospace systems, including space, air, land, and sea.
Electronic hardware design and development, software and firmware design and development, mechanical design and development, product prototype design and development, functional testing and validation, environment testing and verification, and engineering services opportunities are among the company's core competencies.
⮚ It was one of the fastest-growing firms in terms of revenues among significant Indian defence and aerospace companies between Fiscal 2019 and Fiscal 2021, according to the Company Commissioned F&S Report, with a revenue increase of 71%.
⮚ The company's strengths throughout the gamut of defence and aerospace electronics solutions from design to delivery give it a considerable competitive edge in terms of overall development time and cost, as well as competitive pricing when bidding on defence and aerospace contracts.
⮚ The company has design capabilities across the entire spectrum of strategic defence and aerospace electronics solutions including processors, power, radio frequencies (“RF”) and microwave, embedded software and firmware and mechanical engineering.
⮚ The company is upgrading and expanding its facility, with a proposed doubling of available floor area and manufacturing capacity, as well as the addition of large and heavy equipment handling capability, large radar and mobile electronic warfare system integration, and a satellite integration facility. Its testing capabilities are also proposed to be further strengthened.
Outlook & Valuation:
In the last 3 years, the company has shown strong growth in revenue where it grew at a CAGR of 19% from Rs 132.50 cr to Rs 226.55 cr over the period of FY19 to FY21, during the same period profit has grown at a CAGR of 97% from Rs 7.70 cr in FY19 to Rs 54.6 cr in FY21. The margins of the company are also expanding.
As part of the 'Make in India' initiative, the company will bid on bigger, more challenging contracts. Data Patterns increased its net profitability by approximately 158% between FY20 and FY21.
We believe that the company has enormous potential to grow rapidly thanks to the government's focus on Defense and Aerospace. The IPO is priced at a 49x PE and 13x P/BV to its FY21 earnings at an upper price band of Rs 585. Attractiveness in the defence sector is likely to boost sentiment for the IPO.
IPO Note
DATA PATTERNS (INDIA) LIMITED
KEY MANAGERIAL PERSONNEL
⮚ Srinivasagopalan Rangarajan is the Chairman and Managing Director of the Company. He has been associated with the Company since its incorporation. He holds a Bachelor’s Degree of Technology in Chemical Engineering and he has over three decades of experience in business development, corporate affairs, finance and marketing.
⮚ Venkata Subramanian Venkatachalam is the Chief Financial Officer of the Company. He is a fellow member of the Institute of the Chartered Accountants of India. He has over two decades of experience in the finance sector.
⮚ Manvi Bhasin is the Company Secretary and Compliance Officer of the Company. She is an associate of the Institute of the Company Secretaries of India. She has three years of experience in legal and secretarial matters.
⮚ Vijay Ananth K is the Chief Operating Officer and Chief Information Security Officer of the Company. He has more than two decades of experience in software engineering and product management.
⮚ Desinguraja Parthasarathy is the Chief Technical Officer of the Company. He has 32 years of experience in Product Development.
⮚ Thomas Mathuram Susikaran is the Senior Vice President-Business Development. He holds a bachelor’s degree in engineering. He has over 21 years of experience in business development and marketing.
⮚ Nandaki Devi Ramachandracharya is the Deputy General Manager and Management Representative Quality Management System. She has 22 years of experience in test engineering.
COMPETITIVE STRENGTHS
⮚ Integrated and strategic defence and aerospace electronics solutions provider based in India, well-positioned to profit from the Make in India initiative.
⮚ Innovation focused business model.
⮚ Sound order book with orders from several prestigious customers in the Indian defence ecosystem. ⮚ The modern certified manufacturing facility of international standards.
⮚ Track record of profitable growth.
⮚ The experienced management team and skilled workforce.
KEY STRATEGIES
⮚ Continue expansion of product portfolio with complex technology-based products.
⮚ Focus on repeat large volume production orders.
⮚ Improving manufacturing infrastructure and enhancing design and development capabilities
⮚ Augmenting the design and development capabilities and expanding manufacturing infrastructure
⮚ Focus on increasing revenues by leveraging core competencies and growing the services business
⮚ Focus on increasing export business
KEY CONCERNS
⮚ The company depends on a limited number of customers for major business.
⮚ Subject to strict quality requirements, customer inspections and audits, and any failure to comply with quality standards may lead to cancellation of existing and future orders
⮚ Failure to qualify for or win bids could have an adverse effect on its business.
⮚ If it does not maintain its technical information and processes discreet, it may lose its competitive advantage.
⮚ The company has significant working capital requirements.
IPO Note
DATA PATTERNS (INDIA) LIMITED
COMPARISON WITH LISTED INDUSTRY PEERS (AS ON 31ST MARCH 2021)
Name of the Company EPS (Basic) NAV P/E Operational Rev (cr) RoNW Data Patterns (India) Ltd 11.89 44.38 49 223.95 26.79% Peer Group MTAR Technologies Ltd 16.99 154.99 83.56 246.43 9.66%Astra Microwave Products Ltd 3.33 64.51 51.28 640.91 5.16%Centum Electronics Ltd 13.31 173.14 34.90 817.43 5.40%Bharat Electronics Ltd 8.62 45.39 23.49 14,108.69 18.99%
FINANCIALS (RESTATED CONSOLIDATED)
Particulars (Rs. In Millions) FY 2021 FY 2020 FY 2019Equity Share Capital 17.00 17.00 17.00Other Equity 2060.70 1517.95 1311.93Net Worth 2077.70 1534.95 1328.93Total Borrowings 332.21 605.66 601.33Revenue from Operations 2239.50 1560.98 1310.63EBITDA 945.88 472.50 269.93Profit Before Tax 745.34 284.29 103.59Net Profit for the year 555.71 210.48 77.02
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