Data Patterns IPO aggregating to Rs. 588 crore comprises a fresh issue of shares worth Rs 240 crore and an offer-for-sale (OFS) of 59.52 lakh equity shares by promoters. Data Patterns (India) supplies electronic systems to the defence and aerospace sectors. It has strong domain competency in Radars, Electronic Warfare, Communication systems,, Avionics & Satellite Systems.
Data Patterns IPO Details:
| Issue Opens | Tuesday, 14th December, 2021 |
| Issue Closes | Thursday, 16th December, 2021 |
| Issue Details | Fresh Issue of Equity shares upto ₹ 240 Cr |
| + Offer for Sale of upto 5,952,550 Equity Shares | |
| Face Value | ₹ 2/- Per Share |
| Issue Size (₹ Cr) | ₹ 570 – 588 Cr |
| Bid Lot | 25 shares |
| Price Band | ₹ 555 – 585 |
| QIB | 50% of the offer |
| NIB | 15% of the offer (88.23 Cr) |
| Retail | 35% of the offer ( ~ 3 519 290 Shares, ₹ 205.88 Cr) |
| Appl. for 1x Retail | 1.4 Lac |
Updates :
ANCHOR ISSUE:
- Data Patterns (India) Limited mobilized ₹176.46 crore from 23 anchor investors.
- The anchor book was subscribed by domestic mutual funds including HDFC Mutual Fund, ICICI Prudential MF, Axis MF, Kotak MF, Aditya Birla Sun Life MF and Tata MF.
- HDFC Life Insurance Company, Tata AIA Life Insurance Co Ltd, Nomura Funds, White Oak Capital and Enam also took part in the anchor book.
Data Patterns (India) Limited IPO Review: Presentation as video
About Data Patterns IPO
- Promoted by Srinivasagopalan Rangarajan and Rekha Murthy Rangarajan.
- Has graduated from a small parts to electronic subsystem supplier to now complete systems supplier.
- Strong domain competency in Radars, Electronic Warfare, Communication systems, Avionics & Satellite Systems.
- Largest number of products designed in India for all platforms (land, air and sea)
- Major products or product groups of the company comprises
- (i) Radars (ii) Underwater electronics / communications / other systems, (iii) Electronic warfare suite, (iv) BrahMos programme, (v) Avionics, (vi) small satellites, (vii) ATE for defence and aerospace systems, (viii) Commercial off the shelf (COTS).
Data Patterns IPO: Financials
| Particulars / (₹ In Cr) | 2021(06) | 2020(06) | 2021(12) | 2020(12) | 2019(12) |
| Revenue from Contract | 96.45 | 44.48 | 223.95 | 156.1 | 131.06 |
| Revenue Growth (%) | 116.84% | – | 43.47% | 19.11% | – |
| EBITDA as stated | 38.55 | 3.34 | 94.59 | 47.25 | 26.99 |
| EBITDA (%) as stated | 39.67% | 7.28% | 41.75% | 29.50% | 20.37% |
| Net Profit | 23.21 | -6.38 | 55.57 | 21.05 | 7.7 |
| Net Profit (% ) | 23.88% | -13.90% | 24.53% | 13.14% | 5.81% |
| EPS (₹ ) | 4.97 | -1.36 | 11.89 | 4.5 | 1.65 |
| RONW(%) | 10.73% | -4.34% | 26.79% | 13.74% | 5.81% |
| Equity Share Capital | 9.35 | 1.7 | 1.7 | 1.7 | 1.7 |
| Net worth | 216.32 | 146.93 | 207.47 | 153.19 | 132.59 |
| Post IPO Equity cr | 10.38 | ||||
| FV in Rs | 2 | ||||
| IPO Price in Rs. | 585 | ||||
| EPS ( FY22 ann) | 8.94 | ||||
| PE( based on Fy21 ann) | 65.41 | ||||
| PE (TTM) | 37.50 | ||||
| Market Cap | 3036 | ||||
| Market Cap / Sales | 13.56 |
Salient Points
- 60% of issue is offer for sale (OFS). Promoter stake 59% à 46%
- Rs. 240 cr fresh issue (i) Rs. 61 cr debt repayment, (ii)Rs. 95 cr working capital (iii) Rs. 60 cr capex •Rs. 60 cr pre-IPO placement, Rs. 577 per share, in previous month, to 3 funds.
- Data Patterns has design capabilities across the entire spectrum of strategic defence and aerospace electronics solutions •Covers processors, power, radio frequencies and microwave, embedded software and firmware, mechanical engineering. •All competence required for product development under one roof
- 100% in-house design and manufacturing capability •Development orders from DRDO, ISRO •BEL & ECIL are customers from many decades
- Associated with Tejas LCA, LUH, BrahMos missile program, precision approach radars and various communications and electronic intelligence systems.
Cons
- 50 % of the company’s revenues are from public sector undertakings and defence-related organizations. Change in government policies/capex plans for the sector could hurt growth. Ø
- Equity Shares of promoter, Srinivasagopalan Rangarajan, aggregating to 26.20% of the paid-up capital of the Company have been pledged with SBI.
- The company has significant working capital requirements
Data Patterns IPO: Assessment
- Company’s design and build capabilities across the spectrum of strategic defence and aerospace electronics solutions at competitive prices.
- Ability to partner with customers through the life cycle of a product, from conception till deployment, subsystems to complete systems.
- Order book of Rs. 581 cr = 2.5x FY21 revenues.
- Large orders expected in Radar products sold earlier.
- 70-75% production contracts, 20% development contracts, 10% after sales.
- Development contracts rose from Rs.30 cr, in mar21 to 123 cr. as of 30.9.21
- Development contracts production Contracts Service Contracts Repeat production orders
- Current order book for development contracts healthy order outlook
- Recorded the highest growth in the revenues of 71%. (Fy19-21).
- Company doubling capacity from IPO proceeds of Rs. 60 cr, to support growing order book.
- Highest EBIDTA margin, ROCE,ROE amongst key Indian defence & aerospace companies in FY21.
- Has been adding end-to-end capabilities to build and deliver complete systems.
- Company may be at an inflexion point and may be able to leverage its operating efficiencies in the coming years
- Benefit from the Make in India opportunity & high entry barriers
- Data Patterns IPO reported a TTM PAT of Rs 85.16 crore on sales of Rs 275.92 crore.
- The TTM EPS based on post issue equity is Rs 16.4 and PE works out to 35.7 times. P/BV works out to 6.6 times.
- Defence PSUs like Bharat Electronics, Hindustan Aeronautics are quoting at PE of 22 & 12.5 respectively.
- Niche pvt players like MTAR Technologies, Paras Defence, Astra Microwave, quoting at a PE of 130, 321, 44 respectively.
Data Patterns IPO: Apply or Not
- Risk : Very Low
- Expected Reward : High to very High
- Reported GMP : Rs. 500 plus
- Listing Gains : Excellent prospects
- Hold for Long Term : Yes unless listing is too tempting
- Subscription : Expected to be very High
- I intend to apply in this IPO.
- Above are my views only. Please do your own diligence
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.