Please refer to important disclosures at the end of this report
1
Data Patterns (India) Limited (Data Patterns), having 30 years of experience, is
among the few truly vertically integrated end-to-end operators in the Indian
defence industry. It offers products catering to the entire spectrum of defence and
aerospace platforms such as space, air, land, and sea. Its design and development
capabilities have enabled Data Patterns to develop complete systems as well as
sub-systems for various strategic defence and aerospace electronics solutions that
have found application in various platforms and programmes like Tejas LCA, HAL
LUH, BrahMos missile programme, precision approach radars and various
communications and electronic intelligence systems. Its order book has grown from
`182 Cr in FY19 to `581 Cr as on 1HFY22.
Positives: (a) Indigenous integrated & strategic defence and aerospace electronics
solutions provider benefitting from Make in India opportunity. (b) Innovation
focused business model. (c) Sound order book across product categories with
marquee customers in the defence and aerospace industry (d) Consistent track
record of profitable growth due to a scalable business model.
Investment concerns: (a) High dependence on contracts from the GoI and
associated entities like defence PSUs and ISRO. (b) Top 5 customers account for
significant portion of revenue. (c) Failure to adhere to provisions of contracts,
quality standards, or delay in timelines. (d) Working-capital-intensive operations.
Outlook & Valuation: As per the RHP, Data Patterns is one of the fastest growing
companies in Defence and Aerospace Electronics sector in India (~31% revenue
CAGR over FY19-21) with excellent margins and return ratios even during
pandemic impacted FY21. Its solutions cover the entire spectrum of defence
electronics, and it is well places to partake in land, airborne and naval defence
programmes of India, including various modernization programmes. It benefits
from strong management capabilities and its strong relations with Defence PSUs,
MOD and ISRO which have driven orderbook CAGR of ~60% since FY19. This
translates to book to bill of ~2.1x on TTM basis and as per the RHP, the company
is expected to be a major participant in at least `1,500 Cr worth of contracts over
the next three years. At `585 per share, the company is commanding TTM P/E of
36x which is lower than trailing multiples of MTAR and Astra Microwave (135x and
43x respectively). We ascribe a “SUBSCRIBE” rating to the IPO.
Key Financials
FY2019
FY2020
FY2021
1HFY21
1HFY22
131
156
224
44
96
--
19.1
43.5
--
116.8
8
21
56
(6)
23
--
173.3
164.0
--
--
19.5
27.6
41.1
4.3
39.2
1.5
4.1
10.7
(1.2)
4.5
394.1
144.2
54.6
--
--
22.8
19.8
14.6
--
--
5.8
13.7
26.7
--
--
6.9
12.3
23.6
--
--
121.4
71.8
33.3
--
--
23.7
19.8
13.7
--
--
Source: Company, Angel Research; Note: Valuation ratios at upper price band.
SUBSCRIBE
Issue Open: Dec 14, 2021
Issue Close: Dec 16, 2021
Offer for Sale: `348 cr
QIBs 50% of issue
Non-Institutional 15% of issue
Retail 35% of issue
Promoters 45.6%
Others 54.4%
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: `10.38 cr
Issue size (amount): `588 cr
Price Band: `555 - `585
Lot Size: 25 shares and in multiple thereafter
Post-issue mkt. cap: * `2,892 cr - ** `3,035 cr
Promoters holding Pre-Issue: 58.6%
Promoters holding Post-Issue: 45.6%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Fresh issue: `240 cr
Issue Details
Face Value: `2
Present Eq. Paid up Capital: `9.56 cr
Milan Desai
+91 022-4000 3600, Extn: 6842
[email protected]
DATA PATTERNS (INDIA) LIMITED
IPO NOTE DATA PATTERNS (INDIA)
LTD.
December 13, 2021
Data Patterns (India) Limited | IPO Note
Dec 13, 2021
2
Company background
Data Patterns (India) Limited is among the few vertically integrated defence and
aerospace electronics solutions provider catering to the indigenously developed
defence products industry. Its offerings cater to the entire spectrum of defence and
aerospace platforms – space, air, land and sea and they have design capabilities
across the entire spectrum of strategic defence and aerospace electronics solutions
including processors, power, radio frequencies (“RF”) and microwave, embedded
software and firmware and mechanical engineering. The company has developed
a reusable building block model leading to capabilities/competence across various
product domains which aids in achieving better margins and saving on
development time for new products. The company has developed products like
Tejas LCA, HAL LUH, BrahMos’ missile programmes, tracking radars, among
others using the abovementioned building blocks. A large number of its orders are
on single vendor basis and are typically not awarded on an open tender basis. Its
revenues are largely dependent on contracts from the GoI and associated entities
including defence public sector undertakings and government organizations
involved in space research. Its order book has grown from `182 Cr in FY19 to
`581 Cr as on 1HFY22.
Issue details
The IPO is made up of offer for sale of 0.60 Cr shares by promoter and selling
shareholders aggregating to `348 Cr and fresh issue of `240 Cr.
Pre and post IPO shareholding pattern
No of shares
(Pre-issue)
%
(Post-issue)
%
Promoter & Group
2,80,19,558
58.64
2,36,70,758
45.62
Public
1,97,64,528
41.36
2,82,15,892
54.38
Total
4,77,84,086
100.00
5,18,86,650
100.00
Source: Company, Angel Research & RHP.
Objectives of the Offer
~`61Cr for prepayment/repayment of all/portion of, outstanding
borrowings.
~`95 Cr towards funding working capital requirements.
~`60 Cr towards upgrading and expanding existing facilities at Chennai.
Balance for general corporate purposes.
Key Management Personnel
Srinivasagopalan Rangarajan is the Promoter of the company and is also the
Chairman and Managing Director. He has over three decades of experience in
business development, corporate affairs, finance, and marketing.
Rekha Murthy Rangarajan is the Whole-time Director of the company. She has
been associated with the company since its incorporation. She has over two
decades of experience in administration, facility maintenance, human resource
and development, process engineering and special projects.
Venkata Subramanian Venkatachalam is the Chief Financial Officer of the
company. He is a fellow member of the Institute of the Chartered Accountants of
India. He has over two decades of experience in the finance sector.
Data Patterns (India) Limited | IPO Note
Dec 13, 2021
3
Exhibit 1: Consolidated Profit & Loss Statement
Y/E March (` Cr)
FY2019
FY2020
FY2021
1HFY21
1HFY22
Total operating income
131
156
224
44
96
% chg
--
19.1
43.5
--
116.8
Total Expenditure
106
113
132
43
59
Cost of Materials and Components
49
56
70
16
21
Employee benefits expense
38
42
48
21
28
Other expenses
19
15
13
5
9
EBITDA
26
43
92
2
38
% chg
--
68.9
113.2
--
1,880.1
(% of Net Sales)
19.5
27.6
41.1
4.3
39.2
Depreciation& Amortization
6
5
6
3
3
EBIT
20
38
86
(1)
35
% chg
--
91.4
129.4
--
--
(% of Net Sales)
15.0
24.1
38.6
(1.9)
36.1
Finance costs
11
13
15
7
5
Other income
1
4
3
1
1
(% of Sales)
1.1
2.6
1.2
3.2
0.8
Recurring PBT
9
24
72
(8)
30
% chg
--
173.0
195.6
--
--
Exceptional item
-
-
-
-
-
Tax
3
7
19
(0)
8
PAT (reported)
8
21
56
(6)
23
% chg
--
173.3
164.0
--
--
(% of Net Sales)
5.9
13.5
24.8
(14.3)
24.1
Basic & Fully Diluted EPS (`)
1.5
4.1
10.7
(1.2)
4.5
Source: Company, Angel Research
Data Patterns (India) Limited | IPO Note
Dec 13, 2021
4
Exhibit 2: Consolidated Balance Sheet
Y/E March (` Cr)
FY2019
FY2020
FY2021
1HFY21
1HFY22
SOURCES OF FUNDS
Equity Share Capital
2
2
2
2
9
Other equity
131
152
206
146
207
Shareholders’ Funds
133
153
208
147
217
Total Loans
67
66
37
57
56
Other liabilities
31
21
37
43
38
Total Liabilities
231
241
282
247
310
APPLICATION OF FUNDS
Property, Plant and Equipment
29
28
29
28
35
Right-of-use assets
7
5
3
4
2
Capital work-in-progress
-
-
-
-
2
Intangible assets
0
0
1
0
1
Non Current Investments
-
-
-
-
-
Other Non-Current Asset
39
46
34
39
60
Current Assets
202
216
261
241
255
Inventories
87
79
74
91
87
Investments
-
-
-
-
-
Trade receivables
103
116
156
109
135
Cash and Cash equivalents
1
5
14
18
12
Other current assets
12
15
18
22
21
Current Liability
46
55
47
65
45
Net Current Assets
155
161
215
176
209
Total Assets
231
241
282
247
310
Source: Company, Angel Research
Data Patterns (India) Limited | IPO Note
Dec 13, 2021
5
Exhibit 3: Consolidated Cash flows
Y/E March (`cr)
FY2019
FY2020
FY2021
1HFY21
1HFY22
Operating profit
10
28
75
(6)
31
Net changes in working capital
(29)
(26)
(19)
27
(27)
Cash generated from operations
15
16
18
8
7
Direct taxes paid (net of refunds)
(1)
(3)
(19)
(0)
(0)
Net cash flow from operating activities
(4)
15
54
29
10
Purchase of Assets
(1)
(1)
(6)
(2)
(9)
Interest received
1
3
2
1
1
Others
0
0
1
-
(2)
Cash Flow from Investing
0
1
(3)
(0)
(10)
Repayment (long term borrowings)
(2)
1
9
5
(1)
Repayment (short term borrowings)
17
(0)
(37)
(13)
20
Share issue expenses
-
-
-
-
(3)
Interest paid
(11)
(13)
(15)
(7)
(5)
Interest on Lease liabilities
(2)
(2)
(2)
(1)
(1)
Dividend Paid
(0)
(0)
(0)
-
(11)
Cash Flow from Financing
2
(15)
(44)
(17)
(1)
Inc./(Dec.) in Cash
(2)
1
7
12
(1)
Opening Cash balances
2
0
2
2
9
Closing Cash balances
0
2
9
14
8
Source: Company, Angel Research
Data Patterns (India) Limited | IPO Note
Dec 13, 2021
6
Key Ratios
Y/E March
FY2019
FY2020
FY2021
Valuation Ratio (x)
P/E (on FDEPS)
394.1
144.2
54.6
P/CEPS
223.9
114.4
49.7
P/BV
22.8
19.8
14.6
EV/Sales
23.7
19.8
13.7
EV/EBITDA
121.4
71.8
33.3
Per Share Data (Rs)
EPS (Basic)
1.5
4.1
10.7
EPS (fully diluted)
1.5
4.1
10.7
Cash EPS
2.6
5.1
11.8
Book Value
25.6
29.6
40.0
Returns (%)
ROE
5.8
13.7
26.7
ROCE
6.9
12.3
23.6
Turnover ratios (x)
Receivables (days)
287
270
254
Inventory (days)
300
257
204
Payables (days)
55
56
33
Working capital cycle (days)
532
471
425
Source: Company, Angel Research
Data Patterns (India) Limited | IPO Note
Dec 13, 2021
7
Research Team Tel: 022 - 40003600 E-mail: [email protected] Website: www.angelone.in
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