Data Patterns India made a stellar debut on the bourses as the stock opened with a massive 47.69 percent gains on December 24 following strong IPO subscription. Healthy financials with sound orderbook and huge growth potential amid Make in India opportunity boosted investors' sentiment.
The stock started off trade at Rs 864, against issue price of Rs 585, on the BSE, while the opening price on the National Stock Exchange was Rs 856. This was the 62nd listing on the bourses in current calendar year.
The public offer of the defence and aerospace electronics solutions provider had a strong demand from investors, oversubscribing by 120 times. The demand from non-institutional investors was higher than others as they bought shares 254 times their reserved portion. Qualified institutional investors portion was booked 191 times, while the part set aside for retail investors was subscribed 23.14 times.
Data Patterns, among the few vertically integrated defense and aerospace electronics solutions providers, is catering to the indigenously developed defense products industry. The company has a robust order book which grew at 40 percent CAGR over FY18-1HFY22. Its orderbook stood at Rs 581.3 crore as of September 2021.
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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. It had registered a growth in revenue at a CAGR of 31 percent during FY19-FY21, and profit grew at a CAGR of 169 percent during the same period, while EBITDA margin expanded from 19.5 percent in FY19 to 41.1 percent in FY21.
All the brokerages had given a thumbs up to Data Patterns IPO, given the growth potential on strong orderbook in coming years, healthy financials, innovation focused business model, and large market opportunities in Indian defence & aerospace.
"We like Data Patterns given its vertically integrated business model, well-diversified portfolio, robust order book and strong client relationship along with consistent financials. 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," said Motilal Oswal.
While assigning subscribe rating to the IPO, ICICI Direct said, "Data Patterns' innovation focused business model, large market opportunities in Indian defence & aerospace, strong order book across product categories, consistency in profitable growth due to scalable business model are likely to help improve its growth and margins in the long run.