Defence and aerospace electronics solutions provider Data Patterns is likely to debut with more than a 45 percent premium on December 24 on the back of expected growth potential in the defence sector with the Make In India opportunity, a strong order book, healthy financials, and a stellar IPO subscription, say experts.
The company has garnered Rs 588.22 crore via its initial public offering, which comprised a fresh issuance of shares worth Rs 240 crore, and an offer for sale of Rs 348.22 crore from selling shareholders.
The maiden public issue received an enthusiastic response from investors, with the offer being subscribed nearly 120 times. Non-institutional investors had put in bids 254 times their allotted quota and the portion set aside for qualified institutional investors was subscribed 191 times, while the retail portion was booked 23.14 times.
Click Here To Read All IPO Related News
Data Patterns enjoys a strong competitive edge in the field of defence electronics and systems. “A strong order book from prestigious clients and a solid pipeline of projects will support earnings. It has an innovation-focused business model and a very diversified high-end technological advanced products portfolio. It has a track record of profitable growth and is well-positioned to benefit from the Make in India opportunity. The valuation is also reasonable,” said Aankur Saraswat, Research Analyst at Trustline Securities.
Considering all these factors, Saraswat feels the listing price could be around Rs 845, including a gain of Rs 260, i.e., a 44 percent premium over the issue price of Rs 585 per share.
Also read: MedPlus Health Services lists at 30% premium, what should investors do now?
Astha Jain, Senior Research Analyst at Hem Securities, expects Data Patterns to list at a premium of more than 50 percent.
With stability in the equity markets after the recent correction, the grey market premium for Data Patterns has also increased to the 44-48 percent range from 34-39 percent in the previous session.
This resulted in a trading price of Rs 845-865 per share in the grey market, which is an absolute grey market premium of Rs 260-280 against the issue price of Rs 585, according to IPO Watch and IPO Central.
Also read - Supriya Lifescience share allotment. Check allotment status online, latest GMP, listing date
Recording net profit growth of approximately 164 percent between FY20 and FY21, Data Patterns is one of the fastest growing companies in the defence and aerospace electronics sector in India, and enjoys excellent margins and return ratios.
Between FY19 and FY21, the company recorded revenue growth at a CAGR of 31 percent, profit growth at a CAGR of 169 percent and operating profit growth at a CAGR of 90 percent, thanks to a robust orderbook, which expanded at a 40 percent CAGR between FY18 and the first half of FY22.
The company had an orderbook of Rs 581.29 crore as of September 2021, with orders from several marquee customers, including the Defence Ministry, DRDO, ISRO, HAL, BEL and a Defence PSU in the missile space.
“I believe this IPO will give at least a 50 percent return as the grey market premium is more than Rs 250, which is fair enough looking at the business model and future growth,” said Likhita Chepa, Senior Research Analyst at CapitalVia Global Research.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
