IPO Alert: Data Patterns files papers for an initial public offering

The Indian defense electronics market is estimated to have grown at a CAGR of 4.5% between 2016 and 2020. The market, which is cumulatively worth around $1.88 billion so far this year, is expected to grow to approximately $6.99 billion by 2030, with an encouraging market opportunity.

Data Patterns (India) Limited, recently filed preliminary papers with capital market regulator SEBI to raise ₹6-7 billion through an initial share sale.

The public issue comprises a fresh issue of shares worth ₹3 billion and an offer for sale of 60,70,675 shares by promoters and individual shareholders. The company may consider a pre-IPO placement aggregating up to ₹600 million. If such placement is undertaken, the amount raised will be reduced from the fresh issue.

Data Patterns plans to utilize up to ₹542 million from the net proceeds towards pre-payment or scheduled repayment of its loans. The company will use ₹952 million from the net proceeds towards funding its working capital requirements. Further, it will deploy ₹627 million for upgrading and expanding its existing facility in Chennai. The remainder of the amount will be used for general corporate purposes.

Defense & Aerospace

Data Patterns is a vertically integrated defense and aerospace electronics solutions provider catering to the indigenously developed defense products industry. It has design capabilities across the entire spectrum of strategic defense and aerospace electronics solutions, including processors, power, radio frequencies & microwave, embedded software & firmware, and mechanical engineering.

The Chennai-based company’s areas of involvement include setting up of radars, underwater electronics/communication, electronic warfare suites, avionics, small satellites, automated test equipment, and programs catering to ‘Tejas’ light combat aircraft, light utility helicopter, ‘BrahMos’ and other communication and electronic intelligence systems.

Data Patterns works closely with defense PSUs such as Hindustan Aeronautics Ltd and Bharat Electronics Ltd as well as government organizations involved in defense and space research, like DRDO.

Key Numbers

In fiscal 2021, Data Patterns’ revenue from operations was at ₹2.26 billion, against ₹1.60 billion in the same quarter of the previous year. Net profit for the period stood at ₹556 million as compared to ₹210 million in the previous year.

The business is largely dependent on contracts from the Indian government and associated entities, including defense public sector undertakings and government organizations involved in space research.

A decline in or reprioritization of defense/space budget, reduction in orders, termination of existing contracts, delay of existing/anticipated contracts, or changes in government policies may have a material adverse impact on the business.