The Initial Public Offering (IPO) of Data Patterns, defense and aerospace electronics solutions provider, continued to attract more investors on the last day of the bidding with bids for 84.89 crore equity shares against IPO size of 70.97 lakh equity shares. The issue was subscribed 119.62 times on December 16.
The company has developed end-to-end capabilities, to cater to the entire spectrum of defence and aerospace platforms including processors, power, radio frequencies and microwave, embedded software and firmware and mechanical engineering. As of September 2021, its order book stood at Rs 580 crore (2.6x orderbook/sales), having grown at 40 percent CAGR since FY18.
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Retail investors continued to provide strong support to the offer from day one, subscribing 23.14 times the allotted quota.
Non-institutional investors have put in bids 254.22 times the portion set aside for them, while the reserved portion of qualified institutional buyers was subscribed 190.86 times.
The company will garner Rs 588 crore through its public issue that opened for subscription on December 14. The price band for the offer is Rs 555-585 per equity share.
"We like Data Patterns given its vertically integrated business model, well-diversified portfolio, robust order book and strong client relationship along with consistent financials," said Motilal Oswal.
The company clocked revenue growth at a CAGR of 31 percent during FY19-FY21, EBITDA (earnings before interest, tax, depreciation and amortisation) grew at a CAGR of 90 percent, and profit 169 percent in the same period, while its EBITDA margin expanded from 19.5 percent in FY19 to 41.1 percent in FY21.
"The issue is valued at 55x FY21 P/E (on a post issue basis), versus 167x for MTAR and 138x for Paras Defense. We believe it could benefit from the government impetus on the defense/ aerospace expenditure. Hence we recommend Subscribe," the brokerage added.