Data Patterns IPO subscribed over 4 times — Analysts too seem bullish on it

• Data Patterns, an electronic solutions provider for the defence and aerospace segment, is planning to raise ₹588 crore through the IPO.
• The IPO has been subscribed 4.31 times as of 11 a.m., on the second day of subscription.
• Shares of the company are commanding a premium of ₹550 in the grey market.

Chennai-based Data Patterns, an electronic solutions provider for the defence and aerospace segment, has received a great response on the first day of the initial public offering (IPO) bidding process. The IPO has been subscribed 4.31 times as of 11 a.m., on December 15.

The company is looking to raise ₹588 crore through the IPO with a price band of ₹555 to ₹585 per share.

Incorporated in 1985, Data Patterns is an integrated defence and aerospace electronics solutions provider that caters to requirements across space, air, land and the sea.

While analysts are very bullish on the service provider to defence sector, the company’s shares are commanding a huge premium of ₹580 in the grey market.

Brokerages	Recommendation
YES Securities	Subscribe
Angel One	Subscribe
Investmentz	Subscribe for listing gains
Swastika Investmart	Subscribe
Nirmal Bang	Subscribe
IndSec Research	Subscribe

As on September 30, 2021, Data Patterns had an order book of 581.30 crore, with orders from several marquee customers including the Indian government defence ministry, BrahMos, Defence Research and Development Organisation, the Indian government space organisation, Hindustan Aeronautics, Bharat Electronics etc.

“Data Patterns has a proven track record of operational excellence as well as an order book that gives good visibility for the near term. Hence, we recommend subscribing to the issue only for listing gains,” said a report by Investmentz.

Analysts at Swastika Investment believe “attractiveness in the defence sector is likely to boost sentiment for the IPO”.

“We believe rising government’s expenditure on defence and modernisation of armed forces will benefit companies like Data Patterns. Advancing ahead, Data Patterns plans to upgrade and expand its existing facilities at Chennai and strengthen its position in India’s growing market,” said a report by IndSec Research while assigning a subscribe rating to the issue.

Data Patterns is among the top two players -- in terms of profitability -- providing solutions to the defence sector, first being Bharat Electronics.

Peer company	Profit in FY21	Market cap	% returns in 2021
Data Patterns	₹55 crore	₹3,035 crore *	-
MTAR Technologies	₹46 crore	₹7,265 crore	117%
Astra Microwave Products	₹28 crore	₹2,233 crore	107%
Centum Electronics	₹12 crore	₹778 crore	36%
Bharat Electronics	₹2,099 crore	₹51,131 crore	65%
Paras Defence and Space Technologies	₹15 crore	₹2,930 crore	47%

*Implied market cap, Source: Draft Red Herring Prospectus (DRHP)

“The strong financial position and results of operations have enabled them [Data Patterns] to invest in key machining, technology, quality control, infrastructure and in research & development,” said analysts at YES Securities.


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