Data Patterns IPO Review: All you need to know

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KNOW THE COMPANY:

Data Patterns (India) is a company engaged in supplying electronic systems in the defence and aerospace sectors. The company was established in 1985 in Chennai. The company initially started with the development and production of critical products required in the defence and aerospace industry’s mission and instrumentation. It is an integrated company that now provides solutions across the sea, land, air and space industries. The company also provides software, mechanical, firmware, and product prototype services besides testing.

The company also manufactures profile radars, data buoy subsystems, doppler weather radars and tsunami warning systems.

Data Patterns (India) Limited is backed by Matthew Cyriac, the former Blackstone head. The company has a team of 760 technicians, 450 Engineers well diversified in the Software, Design and Engineering segment. The company has its manufacturing plant in Chennai, spread over a land of 5.75 acres. The product and service of the company are used in many platforms such as Tejas Light Combat Aircraft, BrahMos missile programme and Light Utility Helicopter. It also developed the first nanosatellite of the country, “NiUSAT”.

OBJECTS OF THE IPO ISSUE:

  • Prepayment of all or significant part of the loan on the company on a consolidated basis.
  • To accomplish corporate targets.

BASIS OF THE IPO OFFER:

  • Data Patterns India is an Indigenous maker of strategic defence, aerospace electronics solutions. The company has a high margin business and has strong profitability on books. 
  • Currently, the company will benefit from the Make in India and PLI Scheme initiative.
  • Data Patterns India Limited is a significant focus on innovation and Research & Development.
  • The company has a strong order book in its different product portfolio categories.
  • Data Patterns India has been associated with many top-tier companies in defence and aerospace.
  • The company has a highly innovative, modern and internationally accredited manufacturing plant.
  • The company has a growing and scalable business model with successful expansion and financial results. Has a proven track record of successful expansion.
  • Data Patterns India has an excellent team of Promoter base and Management.

DATA PATTERNS IPO DETAILS:

Data Patterns Limited has its headquarters in Thane, Maharashtra. The company recently got approval from SEBI to float its IPO in the market. The company earlier submitted its DRHP with the SEBI. The company’s IPO is a combination of an OFS and the Issue of a new equity share. The IPO through the Issue of fresh equity is Rs. 240 crores, and an OFS of 59.52 lakh equity shares have been brought forward by the promoters and other selling stakeholders. The company also stated that they would also carry out a Pre-IPO placement offer of Rs. 60 crores.

The company stated that the funds raised from the Issue of fresh equity would be used for repayment of debt, upgradation and expansion, funding its working capital, and general corporate purposes.

The selling stakeholders through the OFS are as follows:

Srnivasagopalan Rangarajan19.67 lakh equity shares
Rekha Murthy Rangarajan19.67 lakh equity shares
Sudhir Nathan75,000 equity shares
G.K. Vasundhara4.15 lakh equity shares
IPO Opening Date14 December 2021
IPO Closing Date16 December 2021
Issue TypeBook Building Type
Face ValueRs. 2/ Equity Share
IPO PriceRs. 555 – Rs. 585
Market Lot1 lot of 25 equity shares
Min Order Quantity25 equity shares
Listing AtBSE, NSE
Issue SizeRs. 588.22 crores
Fresh IssueRs. 240 crores
Offer for Sale59.52 lakh equity shares corresponding to Rs 348.22 crore.
Basis of Allotment Date21 December 2021
Initiation of Refunds22 December 2021
The Credit of Shares to Demat Account23 December 2021
IPO Listing Date24 December 2021
Basis of Allotment Type% Of the allotment in the IPO Offer
Qualified Institutional Buyer50
Non-Institutional Investor15
Retail35

WEAKNESS AND THREATS:

  • The primary threat to the company is at their Design, Engineering and production facility. It is facing a slowdown which has led to a negative impact on the financial parameter of the company.
  • The expansion and growth plan of Data Patterns India is still a precarious plan. The company needs to re-evaluate this plan for a better operational and financial profile and results.
  • COVID-19 pandemic, which led to a lockdown and the restrictions in Industry, supply chain disruption led to a tremendous blow on the company’s operational performance.
  • The company is engaged in the business where it needs to follow strict guidelines of the statutory, regulatory authorities, a grant of the permits, and quality assurance tests.
  • The company mentioned in their DRHP that it should not be valued based on the number of orders they received in the past. It signifies the uncertainty in their order boom in the future.
  • Data Patterns India limited stated that it is vulnerable to the availability and pricing of the required raw materials. It has led to a negative impact on the company in the past also. The company is also in need of a high amount of fuel and power requirements. Any disruption on this front will hamper the company’s growth rate.
  • The company is also vulnerable to any security breach, especially cyber security attack, failure of their I.T. support, ERP – Enterprise Resource Planning and Database mismanagement.
  • The business operation of the company is highly Working-capital-intensive.
  • Data Patterns India Limited is susceptible to changes in their crucial client’s sourcing policy. The majority of their revenue is from the PSUs in Defence and Aero-Space sectors such as ISRO, HAL, DRDO and Armed forces. 
  • Any change by the GoI in the CAPEX plan and the budget allotment to the Defence and Aero-Space sector will lead to a change in the operation of these PSU’s which will hamper the revenue and the business operation the company.

STRENGTHS AND GROWTH ASPECTS:

  • Data Patterns (India) Limited is the fastest emerging and growing company in the country in the Defence and Aerospace segment sector.
  • FY20 and Fy21 registered a net growth of 165% in profit. 
  • The company has an excellent in-house design and development facility with an experienced and skilful team backed by a team of professionals in the Management and technical aspect of the company’s business operation.
  • Data Patterns India Limited has a diversified product portfolio and renders its service in various land, sea, and air sectors.
  • The company has a solid financial profile with high margins, best ROCE, ROE and EBITDA margins in the last three years in its sector of operation.
  • The company’s business strategy is such that it helps them expand their profitability ratio by distributing their expenses across different verticals of operation.
  • Data Patterns India has a solid customer base in association with DRDO, ISRO, HAL, BEL and many other GoI PSU’s. The order book of the company is robust and well equipped till FY25.
  • The company has adequate liquidity, which is marked by sufficient cash accruals.
  • The company has received many awards in the past for their electronics solutions in wind profile radars, data buoy subsystems, doppler weather radars and tsunami warning systems. The company also received an award from GoI under the Make in India Initiative. 
  • Data Patterns is one of the biggest beneficiaries of the Make in India, Atmanirbhar Bharat Abhiyaan and PLI scheme been launched by the GoI. 
  • The company’s order book registered growth with 41% CAGR over the last four years. The current value of their order book is Rs 582.30 crore.
  • Data Patterns stated that their focus is on retaining significant volume in their production orders and augmenting design with particular emphasis on expanding their business operation on the International Level.

FINANCIAL TRENDS:

   Earnings Per Share (Rs)45.2526.1473.09
   CEPS(Rs)66.3649.6333.70
   DPS(Rs)2.002.000.00
   Book NAV/Share (Rs)784.43741.595.78
   Tax Rate (%)24.6417.0044.94
   Core EBITDA Margin (%)17.1515.888.00
   EBIT Margin (%)15.4313.0817.98
   Pre-Tax Margin (%)7.794.7464.17
   PAT Margin (%)5.873.9449.06
   Cash Profit Margin (%)8.617.4715.14
   ROA (%)2.861.8356.54
   ROE (%)5.933.5865.54
   ROCE (%)11.118.4831.04
   Asset Turnover(x)0.490.465.02
   Sales/Fixed Asset(x)2.061.8213.26
   Working Capital/Sales(x)0.991.00-0.67
   Fixed Capital/Sales(x)0.490.55-11.71
   Receivable days323.84386.79-16.27
   Inventory Days225.48219.662.65
   Payable days107.38112.48-4.53
   EV/Net Sales(x)0.190.26-27.46
   EV/Core EBITDA(x)1.041.57-33.66
   EV/EBIT(x)1.231.99-38.52
   EV/CE(x)0.090.12-25.14
   Net Sales Growth (%)16.121.92740.99
   Core EBITDA Growth (%)26.9614.3687.69
   EBIT Growth (%)36.9920.1683.52
   PAT Growth (%)73.0965.1712.15
   EPS Growth (%)73.0965.1712.15
   Total Debt/Equity(x)0.450.3527.31
   Current Ratio(x)2.102.081.05
   Quick Ratio(x)1.381.361.46
   Interest Cover(x)2.021.5728.66
 
ParticularsFor the year with ending with amount in Crores
31-Mar-2131-Mar-2031-Mar-19
Total Assets328.37295.36277.43
Total Revenue226.55160.19132.51
Profit After Tax55.5721.057.70

PROMOTERS:

  • Srinivasa Gopalan Rangarajan
  • Rekha Murthy Rangarajan
Pre-Issue Share Holding58.36%
Post Issue Share Holding

CONTACT DETAILS:

Data Patterns (India) Limited
Plot H9, Fourth Main Road,
SIPCOT IT Park, Siruseri,
Chennai 603103, Tamil Nadu, India
Tel: +91 44 4741 4000
E-mail: manvi.bhasin@datapatterns.co.in
Website: www.datapatternsindia.com

REGISTRAR:

Link Intime India Private Limited
C-101, 1st Floor, 247 Park
Lal Bahadur Shastri Marg
Vikhroli (West) Mumbai 400 083
Maharashtra, India
Tel: +91 22 4918 6200
E-mail: datapatterns.ipo@linkintine.co.in
Website: www.linkintime.co.in

LEAD MANAGER(S):

  • JM Financial Limited
  • IIFL Securities Limited
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