Data Patterns, one of the fastest growing companies in the defence and aerospace electronic solutions space, is still receiving strong interest from investors in the grey market, especially ahead of listing on Friday.
Its shares were available at Rs 785-815 in the grey market, a premium of Rs 200-230 or 34-39 percent over the final issue price of Rs 585 apiece, as per data from IPO Watch and IPO Central.
However, it has fallen significantly due to recent market correction amid Omicron worries. Over a week ago, when the issue was open for subscription on December 14, it was quoting at a grey market premium of 99 percent or Rs 580.
The benchmark indices had corrected more than 5 percent last week, falling over 11 percent from their record highs seen on October 19 this year.
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"Data Patterns is one of the best IPOs in 2021 as it is a pure defense and aerospace play, which provides electronics solutions catering to the indigenously developed defense products industry. Moreover, the Make In India push could play an important role in Data Pattern's growth," said Likhita Chepa, Senior Research Analyst at CapitalVia Global Research.
The company also has a sound order book from several prestigious customers like DRDO and PSUs along with international players like Leonardo MW Ltd UK, she said.
Data Patterns has mobilised Rs 588.22 crore through its public issue, which saw an overwhelming response from investors and was subscribed nearly 120 times during December 14-16.
Non-institutional investors had put in bids 254 times the allotted quota and the portion set aside for qualified institutional investors was subscribed 191 times, while the retail portion was booked 23.14 times.
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Data Patterns provides equipment for all types of defence and aerospace systems, including space, air, land, and sea. It has reported strong growth in revenue at 19 percent CAGR during FY19-FY21 and profit CAGR of 97 percent.
"The defence sector attracts a lot of fancy from investors with major budget allocation from the government. The company has maintained growth in top-line and bottom-line, has a good dividend paying track, a visible order book and looks fair on IPO pricing when compared to some of the listed peers in the sector," said Divam Sharma, Co-founder of Green Portfolio.
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He believes there is still a huge appetite for IPOs, which have a cushion of growth and profitability, and are unique opportunities in attractive sectors.
As on September 30, Data Patterns had an order book of Rs 581.29 crore, with orders from several marquee customers in the Indian defence ecosystem, including the defence ministry, BrahMos, DRDO, the Indian government space organisation, HAL, BEL and a defence public sector undertaking involved in the missile space.
The company is currently engaged in the supply of products to several prestigious defence projects in India, including the light combat aircraft, the HAL Dhruv and LUH, and the BrahMos missile programme.
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"The future multibaggers will be companies that leverage technology, which Data Patterns does. Its revenue margin improved from 5.8 percent in FY19 to 24.5 percent in FY21, demonstrating management effectiveness and technology use. Increased profits and efficiency will result from the continued use of funds to service debt and expand capacity," said Ashish Sarangi of Pickright Technologies.
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.
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