Data Patterns files DRHP for Rs.700 crore IPO

With the success of the Paras Defence IPO, there are likely to be more defence service companies that are likely to hit the market. The latest case is Data Patterns that has just filed its DRHP with SEBI for a proposed Rs.700  crore IPO. The IPO will comprise of Rs.300 crore raised by way of fresh issue plus an offer for sale (OFS) of 60.707 lakh shares by the promoters and other shareholders.

Promoted nearly 30 years back, Data Patterns, is a reputed defence service provider based out of Chennai. Its core strength areas include design and development across hardware, software, firmware, mechanical and product proto types. The company is also into functional testing and validation. Its solutions are used in the Tejas LCA, light utility helicopters, BrahMos Missiles, precision radars and electronic intelligence systems.

The client list of Data Patterns largely includes PSU defence companies as well as government advanced research organizations like the DRDO and ISRO. It also works with PSU defence companies like Bharat Electronics and Hindustan Aeronautics, among others. Its order book stood at Rs.178 crore in 2018 and has since grown rapidly to touch a level of Rs.582 crore in the month of August 2021.

For the financial year ending FY21, the company reported revenues of Rs. 224 crore and net profits of Rs.56 crore implying a healthy net profit margin of 25%. The profits have grown nearly 2.5 times on a YoY basis. Data Patterns has gained immensely from the government decision to in-source as much as feasible of defence orders domestically as part of its Make in India and Atma Nirbhar programs.

The promoters of the company hold 59.95% stake in the company before IPO and the company is backed financially by Florintree Capital Partners. Incidentally, Florintree Capital was floated by Matthew Cyriac, the former India head of Blackstone Capital. He was one of the early investors in the company.