Data Patterns (India) Limited, started in 1985, is a defence and aerospace electronics solutions including processors, power, radio frequencies ('RF') and microwave, embedded software and firmware and mechanical engineering. Company's 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.. Company has diversified the products and solutions mainly due to its design and development capabilities, and qualified and experienced workforce. As on September 30, 2021, they had 818 employees with more than 500 qualified engineers, including 416 members in Design & Engineering department. Company design and development capabilities have allowed them to develop complete systems as well as sub-systems for various strategic defence and aerospace electronics solutions. These systems have found applications on various platforms and programmes such as the Tejas Light Combat Aircraft ('LCA'), the Light Utility Helicopter ('LUH'), BrahMos missile programme, precision approach radars and various communications intelligence ('COMINT') and electronic intelligence ('ELINT') systems. DPL had invested in and developed a reusable building block model leading to capabilities / competence across various product domains. This approach has allowed them to achieve better margins due to spreading out of development costs over multiple programmes, in addition to saving on development time for new products. Several of the existing products or their component modules or building blocks are pre-approved by the customers, especially defence-sector public sector undertakings ('DPSUs') and government ministries and departments, also allowing them the benefit of reduced lead times for development of new products. For example, they have developed products using these building blocks for the LCA, the LUH, BrahMos' missile programme, including land and air based missile launch systems and automatic test equipment, tracking radars, weather radars, automatic test equipment and nano satellites for the Indian government space organisation, DRDO's radars and Electronic Warfare systems, and onboard equipment for various aircraft, missiles and torpedoes and Airborne Early Warning and Control Systems ('AWACS'). These products are already qualified, certified and incorporated into the end platforms by the customers Company has an order book of Rs 5,812.98 million as on September 30, 2021, which has increased from Rs 1,786.98 million as on April 1, 2018 at a CAGR of 40.08%, indicating a scalable business model. Further, 8.07%, 14.76%, 7.13% and 9.16% of the total revenue from operations for the six months ended September 30, 2021, Fiscal 2021, Fiscal 2020 and Fiscal 2019, respectively, being contributed by the global clients. As per financial performance, Data Patterns (India) Limited has posted total income/net profits of Rs 132.51 Cr / Rs 7.70 Cr (FY19), Rs 160.19 Cr / Rs 21.05 Cr (FY20), Rs 226.55Cr / Rs 55.57 Cr (FY21) and Rs 97.17 Cr / Rs 23.21 Cr (H1 F22). So company has posted good growth, over last couple of years. They have posted an average EPS of Rs. 7.72 and average RoNW of 18.94% for last 3 fiscals. Issue is priced at a P/BV of 12.64 as per NAV of 46.28 on 30.09.21.If we attribute latest earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 54.62 and if we annualise H1 FY22, then on fully diluted equity post issue P/E is 65.39 which looks fully priced. As per RHP, Comparison between listed peers are shown in above table. On BRLM's front, two lead managers are associated with this IPO, and have handled around 49 IPO in last three fiscals. From last 10 IPOs, one is opened below issue price and remaining are opened above issue on the day of listing. As of now, four are trading below issue price and other are trading above issue price. ( As on 09.12.21) As per financials, DPL has shown good growth, RoNW is 26.79% and P/E is respectively 55 and 65 as per FY21 and annualised FY22 earnings. GoI is very keen to promote Make In India in defence sector and due to this, defence sector has seen good growth and expected to do well in future also. Company has good order-book and it indicates, the growth may continue in future also. Performance of BRLM is good. So, we are giving SUBSCRIBE rating to this IPO.
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