The public issue of Data Patterns has received a good response from investors as it has garnered bids for 5.44 crore equity shares against the IPO size of 70.97 lakh equity shares, subscribed 7.68 times on the second day of bidding.
The company has a wide range of products focusing across the manufacturing value chain--from industrial and test automation to automated test equipment for space systems. It also develops products and sub-systems for defense and aerospace systems through DRDO.
It has an experienced management team led by Srinivasagopalan Rangarajan. The company has 818 permanent employees including 500 engineers.
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Retail investors have put in bids for 12.42 times the portion set aside for them, and the reserved portion of non-institutional investors was subscribed 5.2 times.
Qualified institutional investors bought 92 percent of the shares against their reserved portion of 19.58 lakh equity shares.
The Rs 588-crore initial public offering was subscribed 3.3 times on its first day of bidding, December 14.
The price band for the offer, which closes on December 16, has been fixed at Rs 555-585 per equity share.
Also read - Data Patterns IPO. Should you subscribe to the issue?
Yes Securities recommended to "subscribe" to Data Patterns' IPO as they see reasonable listing gains given that the company a) is an indigenous, integrated and strategic electronic solutions provider, 2) has an innovation-focused business models, 3) has an experienced management team with a skilled workforce, and 4) has a modern certified manufacturing facility, enabling it to consistently offer quality and complex components.
The company's order book stood at Rs 581.3 crore as of September has grown at a CAGR of 40 percent from Rs 181.5 crore in FY19. Its revenues increased at a CAGR of 31 percent during FY19-21, to Rs 223.95 crore.
Also read - Data Patterns (India) IPO: 10 key things to know before subscribing to the public issue
Gross margins remained healthy at 65-70 percent over the past three years. EBITDA margin grew from 19 percent in FY19 to 41 percent in FY21 owing to a better revenue mix and improved operational efficiency.
"The strong financial position and results of operations have enabled them to invest in key machining, technology, quality control, infrastructure and in R&D," said Yes Securities.
The brokerage believes Data Patterns' design and build capabilities across the value chain at competitive prices and its ability to partner with customers through the life cycle of a product will help leverage its operating efficiencies in the coming years.
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