Incorporated in 1985, Data Patterns (India) Limited has established itself as a leading solutions provider to the indigenously developed defence products industry. It is among the few vertically integrated players providing solutions related to defense and aerospace electronics.
The company has decided to launch its maiden initial public offering (IPO) on December 14.
Here are 10 key things to know before subscribing to the public issue:
1. IPO Date
The company is set to launch its IPO for subscription on December 13, and the offer will close on December 16.
2. Price Band
The price band for the offer has been fixed at Rs 555 – 585 per equity share of face value Rs 2/- each.
3. Offer Details
The public issue comprises a fresh issue of Rs 240 crore and an offer for sale of 59,52,550 equity shares by selling shareholders. The OFS includes sale of up to 19,67,013 equity shares by Srnivasagopalan Rangarajan (founder promoter), up to 19,67,012 equity shares by Rekha Murthy Rangarajan (founder promoter), up to 75,000 equity shares by Sudhir Nathan, up to 4,14,775 equity shares by G.K. Vasundhara and up to 15,28,750 equity shares by existing shareholders.
The issue will fetch the company Rs 588.22 crore. 50% of the net issue is reserved for qualified institutional buyers, 15% for non-institutional bidders and 35% of the net issue is reserved for retail investors.
The promoters currently hold 57.08 percent in the company. Their holding will come down to 44.99 percent after this issue.
The company which is backed by marquee investor Florintree Capital Partners has undertaken a pre-IPO placement of 10,39,861 equity shares at a price of Rs 577.0 per share aggregating to Rs 60 crore.
Anchor book of the company, if any, will open for bidding on December 13, a day before issue opening.
4. Objectives of the Issue
The company intends to utilize the net proceeds from the fresh issue to the extent of Rs 60.8 crore for prepayment / repayment of certain outstanding borrowings availed by the company. Rs 95.2 crore will be used for funding its working capital requirements and Rs 59.8 crore will be used for upgrading and expansion of its existing facilities at Chennai and general corporate purposes.
5. Lot Size and Investor’s Reserved Portion
Investors can bid for a minimum of 25 equity shares and in multiples of 25 shares thereafter. Retail investors can invest a minimum of Rs 14,625 for a single lot and their maximum investment would be Rs 1,90,125 for 13 lots.
6. Company Profile & Industry
It is one of the fastest-growing companies in the Defence and Aerospace Electronics sector in India offering products to the entire spectrum of defense and aerospace platforms - space, air, land, and sea. Its core competencies include electronic hardware design and development, software design and development, firmware design and development, mechanical design and development, product prototype design and development, manufacturing, functional testing and validation, environment testing and verification, and engineering services.
The Indian defence industry is rapidly evolving into a self-sustaining one with companies and Defence PSUs moving towards specializing into defence primes, integrators and component suppliers.
The space industry is expanding with new entrants offering services like launch services, satellite operations and downstream services which were earlier provided by the Indian government space organizations. With Defence PSUs focusing on specialization & integration and subcomponent manufacture being outsourced to the private industry, there is a plethora of opportunities for the private sector.
7. Financials
Between FY19 and FY21, the company recorded the highest growth in the revenues of 71% amongst the major Indian defence and aerospace companies. In FY21, its EBIDTA margin, ROCE and ROE was the highest compared to its peers.
The company reported revenues of Rs 131 crore in FY19 which increased to Rs 156 crore in FY20,a YoY growth of 19.1 percent. Revenues for FY21 came in at Rs 224 crore thereby growing a YoY growth of 43.5 percent.
Revenues for the six months ended September 30, 2021, jumped 117 percent to Rs 96.5 crore from Rs 44.5 crore in the corresponding period last year.
Net Profit in FY19, FY20, FY21 and six months ended Sep’21 stood at Rs 7.7 crore, Rs 21.05 crore, Rs 55.6 crore and Rs 23.2 crore, respectively.
Net margins have shown consistent growth and was 5.8 percent in FY19, 13.1 percent in FY20, 24.5 percent in FY21 and 23.9 percent for six months ended Sep’21.
8. Key Risks
Any cost overruns in defence projects, delays in delivery or failures to meet contract specifications may result in liquidated damages and have an adverse effect on its business, financial condition and results of operations.
Import purchases constituted about 74.5 percent and 63.7 percent of total purchases in H1FY22 and FY21. Due to this, the company is exposed to forex risk and high cost of acquisition. Higher lead supply time associated with imports or shortage of material might result in higher levels of inventory which will strain working capital as well as operations.
The company generates more than 50 percent of its revenues from various public sector undertakings and defence-related organizations. Any significant change in government policies/capex plans for defence related projects will hurt growth.
9. Promoters & Management
Srinivasagopalan Rangarajan is the Chairman & Managing Director who has been associated with the company since incorporation.
Rekha Murthy Rangarajan is the Whole-time Director, associated with the company since incorporation.
Mathew Cyriac is the Nominee Director while Sabitha Rao, Vadlamani Venkata Rama Sastry, Sowmyan Ramakrishnan and Prasad Raghava Menon are the Non-executive, Independent Directors of the company.
Key Managerial Personnel
Venkata Subramanian Venkatachalam is the Chief Financial Officer and Manvi Bhasin is the Company Secretary and Compliance Officer of the company.
Vijay Ananth K is the Chief Operating Officer and Chief Information Security Officer while Desinguraja Parthasarathy is the Chief Technical Officer of the company.
10. GMP, Listing & Allotment Date
The public issue is commanding a premium of Rs 500 per share in the grey market as per IPO watch.
The allotment of shares will get finalized by December 21 and unsuccessful investors will get refunds by December 22. The successful investors will get shares in their demat accounts by December 23.
Data Patterns’ shares will list on the BSE and National Stock Exchange on December 24.
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