Florintree Capital-backed defence supplier Data Patterns files IPO papers

Chennai-based Data Patterns (India), the supplier of electronic systems to defence and aerospace sectors, has filed Draft Red Herring Prospectus with the capital markets regulator Sebi for fund raising through initial public offering.

The public issue comprises a fresh issue of Rs 300 crore and an offer for sale of 60,70,675 equity shares by promoter and individual selling shareholders. The offer for sale consists of a sale of up to 19.67 lakh shares each by Srinivasagopalan Rangarajan and Rekha Murthy Rangarajan, 75,000 shares by Sudhir Nathan, 4,14,775 equity shares by GK Vasundhara, and 16.46 lakh shares by other existing shareholders.

The company is expected to raise around Rs 600-700 crore through its public issue, as per the market sources.

Data Patterns intends to utilise net proceeds from the fresh issue for repaying debt, working capital, and upgradation and expansion of its existing facilities.

The defence and aerospace electronics solutions provider may consider a pre-IPO placement of up to Rs 60 crore. If the pre-IPO placement is undertaken, then accordingly the fresh issue will get reduced, as per the DRHP filing.

Srinivasagopalan Rangarajan and Rekha Murthy Rangarajan-promoted Data Patterns with more than three decades of experience in the defence and aerospace electronics space caters to the entire spectrum of defence and aerospace platforms – space, air, land and sea.

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Its core competencies include design and development across electronic hardware, software, firmware, mechanical, product prototype besides functional testing and validation, environment testing and verification and engineering services opportunities.

The systems and sub-systems designed and developed by the company are used on various platforms and programmes such as the Tejas Light Combat Aircraft (LCA), the Light Utility Helicopter (LUH), BrahMos missile programme, precision approach radars and various communications intelligence (COMINT) and electronic intelligence (ELINT) systems.

Data Patterns works closely with government organisations involved in defence and space research (including Defence Research and Development Organisation - DRDO) to various defence PSUs such as Bharat Eletronics and Hindustan Aeronautics.

Its orderbook has increased from Rs 178.7 crore to Rs 497.98 crore during FY18-FY21 at a CAGR of 40.72 percent. As of July 2021, the order book stood at Rs 582.3 crore.

The company's profit in FY21 increased to Rs 55.57 crore from Rs 21.05 crore in FY20 and in the same period, revenue grew from Rs 156.09 crore to Rs 223.95 crore.

During FY19-FY21, Data Patterns recorded the highest growth in revenues, EBITDA margin, return on capital employed (ROCE) and return on equity (ROE) amongst key Indian defence and aerospace companies, with a growth in revenues of 71 percent during this period, as per the F&S Report.

Promoters have 59.95 percent shareholding in the company including founders Srinivasagopalan Rangarajan and Rekha Murthy Rangarajan. Investor Florintree Capital Partners LLP headed by former Blackstone head Matthew Cyriac holds 12.83 percent stake in the company.

IIFL Securities and JM Financial are the book running lead managers to the issue.