Data Patterns IPO trading at 100% premium in grey market after issue sees stellar response. All you need to know

Data Patterns IPO

The shares of Data Patterns, Defence and Aerospace electronics solutions provider, were trading at a premium of Rs 585 apiece in the grey market, a day after its public issue closed for subscription, as per data from IPO Watch.

That translates to a premium of 100 percent to the issue price at the upper end of Rs 555-585 per share.

The issue of the defense and electronics solutions provider, which was open for subscription on December 13-15, was subscribed 119.6 times. While retail investors bid 23 times their allotted portion, qualified institutional buyers and non-institutional investors bid for a whopping 190 and 254 times the portion of shares reserved for them, respectively.

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The company will raise Rs 588 crore through the public issue. Of this, Rs 240 crore as a fresh issue will be utilized for capex expenditure, debt repayment and funding of working capital requirement.

Several brokerages including Angel One, ICICI Direct, Motilal Oswal, Nirmal Bang and Yes Securities had a “subscribe” rating on the issue.

Motilal Oswal Securities is bullish on the company on the back of its vertically integrated business model, well-diversified portfolio, robust order book and strong client relationships.

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“The issue is valued at 55x FY21 P/E (on a post issue basis), v/s. 167x for MTAR and 138x for Paras Defense. We believe it could benefit from the government impetus on the defense/ aerospace expenditure,” the brokerage said.

Frost & Sullivan estimates global defence expenditure will continue to rise in the medium term at a rate of 1.5% to $2,130 bn in 2026.

There has been a structural shift in India’s defence budget with increased allocation for modernisation funds and approval of non-erasable fund, noted ICICI Securities. “The fund available to the defence industry participants during FY22-31 is estimated at $339 bn. The Indian defence budget has been growing at ~7% in the past five years,” it said.

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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 company will finalise the basis of share allotment on December 21, after which unsuccessful bidders will get refunds on December 22, while successful bidders will receive shares in their demat accounts on December 23.

Data Patterns is expected to list on the BSE and the National Stock Exchange on December 24.

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