Last Updated on May 24, 2022 by Anjali Chourasiya

There are other ways to make money, but the IPO has become the most recent. Everyone wants to make quick money. Therefore it’s become a common activity. When it comes to IPOs, another fascinating firm named Data Patterns is ready to open for subscription tomorrow (14 December). The firm is a defence and aerospace electronic solutions provider. Because investors value enterprises that contribute to the progress of the country, it’s critical to investigate what makes this IPO so notably different. Let’s dive deeper.

About Data Patterns

Data Patterns (India) Limited is one of the few vertically integrated defence and aerospace electronics solution providers for the domestically manufactured defence goods sector. Data Patterns is one of India’s fastest-growing firms in the Defence and Aerospace Electronics industry, with net profit growth of roughly 164% between FY 2020 and FY 2021 (From the F&S Report). 

This company has shown in-house design and development capabilities, as well as more than three decades of expertise (including through its former subsidiary) in the defence and aerospace electronics arena. Its products and services cover the whole gamut of defence and aerospace platforms, including space, air, land, and sea.

Global defence spending is predicted to rise to $ 2,031 bn. by 2025 as a result of greater geopolitical instability, even as nations suffer economic challenges as a result of the COVID 19 disruption. The defence budget has undergone structural changes, including higher allocations for modernisation funding and the adoption of a non-lapsable fund. 

The money available to participants in the defence sector from FY 2022 through FY 2031 is anticipated to be $ 339 bn. Furthermore, FY 2021 was marked by an 18.6% overspend beyond the anticipated capital allocation as a result of the emergency purchases made in response to the face-off with China.

Promoters of the company

  • Srinivasagopalan Rangarajan and Rekha Murthy Rangarajan are the promoters of this company.

About Data Patterns IPO

  • This is the maiden IPO consisting of a fresh issue of shares worth Rs. 240 cr. an offer for sale of shares worth Rs. 348.22 cr. via the book building process.
  • The issue size is Rs 588.22 cr. at the top of the price range.
  • The opening date for this IPO is 14 December 2021, and the closing date is 16 December 2021.
  • Data Patterns IPO is likely to be listed on the BSE and NSE.
  • The face value of each share is Rs. 2.
  • The set price band of this IPO is Rs. 555 – Rs. 585.
  • The allocation is expected to be finalised by 21 December, and refunds will be initiated by 22 December. Meanwhile, credit of shares in the Demat account is expected by 23 December.
  • One lot consists of 25 shares and is worth Rs. 14,625 at the upper range of the pricing band.

Book running lead managers and registrar of the Data Patterns IPO

The joint global coordinators and lead managers of the Data Patterns IPO are JM Financial Limited and IIFL Securities Limited.

The issue’s registrar is Link Intime India Pvt. Ltd.

Reservation of Data Patterns IPO for various investor categories

  • 35% is the maximum subscription amount reserved for retail investors.
  • 15% is reserved for the Non Institutional Individuals (NII).
  • 50% is reserved for the Qualified institutional buyers (QIBs), wherein 60% is for anchor investors, 1/3rd of which shall be reserved for domestic mutual funds only.

Objects of the Data Patterns IPO

  • The sum of Rs. 54.25 cr. will be utilised to prepay or repay all or a portion of the company’s outstanding borrowings.
  • The sum of Rs. 95.19 cr. will be utilised to fund the company’s working capital requirements.
  • The sum of Rs. 62.68 cr. will be utilised to upgrade and expand its existing facilities in Chennai.
  • General corporate purposes.

Financials of Data Patterns

  • As of 31 March 2021, it has posted earnings per share (EPS) of Rs. 12. 
  • As of 31 March 2021, the net asset value (NAV) stood at Rs. 44.38.
  • As of 31 March 2021, it has posted a return on net worth (RoNW) of 26.79%.
  • As of 31 March 2021, it reported an EBITDA of Rs. 94.58 cr.

Following are the financials for 2019, 2020, and 2021

Peer comparison

According to the offer paperwork, the company’s listed peers include MTAR Technologies Ltd., Astra Microwave Products Ltd., Centum Electronics Ltd., and Bharat Electronics Ltd. They are not, however, genuinely comparable on an apple-to-apple basis.

Strengths of the company

  • Data Patterns is a strategic defence and aerospace electronics solutions supplier, well-positioned to capitalise on the “Make in India” opportunity.
  • It has a business model that focuses on innovation.
  • Has a solid order book with orders from several prestigious clients in the Indian defence ecosystem.
  • Its modern certified manufacturing facility meets international standards.
  • Has a proven track record of profitable growth.
  • It has an experienced management team and a skilled workforce.

Risks of the Data Patterns

Investments in equities and equity-related securities are risky. Before making an investment choice in an IPO, you should carefully consider the risk factors.

  • Its business is largely dependent on contracts from the Government of India (GoI) and associated entities, including defence public sector undertakings and government organisations involved in space research. A decline or reprioritisation of the Indian defence or space budget, reduction in orders, termination of existing contracts, delay of existing or anticipated contracts or programmes or any adverse change in the GoI’s defence or space-related policies may have a material adverse impact on the business.
  • It depends on a limited number of customers for a significant portion of our revenue. The loss of any of its major customers due to any adverse development or significant reduction in business from the major customers may adversely affect the business, financial condition, results of operations and future prospects.
  • Any failure to comply with the provisions of the contracts entered with its customers, especially the GoI Entities, could have an adverse effect on the business, financial conditions and results of operations. 
  • The loss, shutdown or slowdown of its Design and Engineering and manufacturing facility may have a material adverse effect on the business, results of operations and financial condition.
  • It is subject to government regulations, and if it fails to obtain, maintain or renew the statutory and regulatory licenses, permits and approvals required for the business, its results of operations and cash flows may be adversely affected.

Data Patterns is one of the fastest-growing companies in the Defence and Aerospace Electronics sector in India. (Source: Company Commissioned F&S Report). If you are interested in this investment opportunity, make sure to conduct thorough research before subscribing to the Data Patterns IPO. To ensure a seamless experience while subscribing to Data Patterns IPO, read the article on how to subscribe to an IPO.

Ayushi Mishra