March 25, 2023
analysis123 analysis123
DATA PATTERNS, Raises Rs 500 crore growth capital…
Call & Research Report by ICICI Securities
Sector: Aerospace & Defence
CMP Rs. 1290, Target Rs. 1555 (21% upside potential)
Target Period: 12 Months
Data Patterns (India) (DPIL) is a vertically integrated defence and aerospace electronics solutions provider catering to the indigenously developed defence products industry.
• The company delivered revenue, PAT CAGR of 18.9%, 40.7%, respectively, in FY19-22. FY22 revenues increased 39% YoY with EBITDA margin at 45.4%. FY22 PAT increased 69% YoY to Rs 94 crore
Fund raising of Rs 500 crore through QIP
• The board has approved the allotment of 40.97 lakh shares through QIP at an issue price of Rs 1220.31 per share (FV at 2), aggregating to Rs 500 crore
• Issue price is at a discount of 5% on the floor price and 7.1% discount to Monday’s closing. Promoter holding post the issue will be diluted to 42.4% from 45.8% with EPS dilution at 7.3%
• Net proceeds to be utilised mainly towards funding working capital requirements, investment in product development, debt repayment & capex
What should investors do? DPIL is well placed to deliver revenue, PAT CAGR of 29.3%, 28.5%, respectively, over FY22-25E. We believe that fund raising for working capital and product development would benefit the company in faster execution of existing contracts and in bidding for more contracts
• We upgrade the stock from HOLD to BUY
Target Price & Valuation: We value Data Patterns at Rs 1555 i.e. 42x on FY25E EPS
Key triggers for future price performance:
• Strong order inflows with healthy pipeline of orders worth Rs 2,000-3,000 crore in the next two to three years provides strong visibility
• Defence electronics provides an opportunity of ~Rs 1.5 lakh crore in the next four to five years led by armed forces’ requirement of advanced systems
• Fire control system for BrahMos missile, avionics for LCA, RWR for fighter aircraft, ELINT for airborne and ground platform and radar subsystems are key orders in the pipeline in FY23 for DPIL
• Large part of electronic components (used in Indian defence platforms) are supplied by foreign OEMs. As indigenisation efforts continue, future procurement will see a large portion of defence electronics sourced locally
To study next Research Analysis.. Click
To Study our Small Cap Calls… Click
For Mutual Fund Guidance, Click chanakyaMFguidance.com
https://www.analysislibrary.com/idfc-first-bank-stock-analysis/