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Data Patterns (India) Ltd.

About the Company

Data Patterns (India) is a vertically integrated defence and aerospace electronics solutions provider catering to the indigenously developed defence products industry. It is one of the fastest-growing companies in the defence and aerospace electronics sector in India. It has proven in-house design and development capabilities and experience of more than three decades. Its offerings cater to the entire spectrum of defence and aerospace platforms – space, air, land and sea. It has design capabilities across the entire spectrum of strategic defence and aerospace electronics solutions including processors, power, radio frequencies and microwave, embedded software and firmware and mechanical engineering. Its core competencies include electronic hardware design and development, software design and development, firmware design and development, mechanical design and development, product prototype design and development, functional testing and validation, environment testing and verification and engineering services opportunities. It has 818 employees with more than 500 qualified engineers, including 416 members in the design & engineering department. Its manufacturing facility consists of a 100,000 square feet factory built on 5.75 acres of land in Chennai, which has facilities for design, manufacturing, qualification and life cycle support of high-reliability electronic systems used in defence and aerospace applications.

Objects of the Issue

* Prepayment or repayment of all, or a portion, of certain outstanding borrowings availed by the company

* Funding working capital requirements

* Upgrading and expanding its existing facilities in Chennai

* General corporate purposes

Valuation

Globally, Frost & Sullivan estimates that the defence expenditure will continue to rise in the medium term at a rate of 1.5% amounting to USD 2,130 billion in 2026, largely influenced by the top 15 spenders. Frost & Sullivan expects that countries will look at spending the available resources more efficiently through indigenization, diversification of supply chains, and looking at new more cost effective equipment sources. The Indian defence industry is rapidly evolving into a self-sustaining one with companies and defense public sector units (DPSU) moving towards specialising in defence primes, integrators and component suppliers. The government’s latest policies seek to build greater self-reliance in Indian defence R&D and manufacturing through a combination of the Aatmanirbhrar Bharat mission, DAP 2020, Offsets and the Defence Production and Exports Policy.

Data Patterns stands to benefit from favourable policies given that it is an indigenously integrated and strategic defence & aerospace electronics solutions provider. Its in-house development, manufacturing capabilities led by innovation and design and development efforts are its key strengths. Moreover, it has a sound order book of Rs. 581 cr with orders from several marquee customers in the Indian defence ecosystem including the Indian government defence ministry, BrahMos, DRDO, the Indian government space organisation, HAL, BEL and a DPSU involved in the missile space. Its financial performance has been healthy with revenue and PAT growth of 31% and 169% over FY19-21. Going forward, the company intends to continue the expansion of its product portfolio with complex technology-based products. It plans to augment its design and development capabilities and expand its manufacturing infrastructure. It aims to focus on repeat large volume production orders and increase its services and exports business. At the upper price band, the company is valued at 64x FY22 post issue annualized EPS. We are constructive on the company’s long term growth prospects.

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SEBI Registration number is INZ000174330

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