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Data Patterns lists at over 45% premium; should you buy, sell or hold?

Data Patterns lists at over 45% premium; should you buy, sell or hold?

Data Patterns is among the few vertically integrated defence and aerospace electronics solutions providers catering to the indigenously developed defence products industry.

Data Patterns makes a stellar debut Data Patterns makes a stellar debut

Shares of Data Patterns made a stellar debut on bourses with a premium of over 45 per cent. The scrip listed at Rs 856.05 on the National Stock Exchange (NSE) against the issue price of Rs 585. Likewise, shares of the company kicked off the trading at Rs 864 on the BSE. Market watchers retained their bullish view on the company after a strong listing.
 
Data Patterns is among the few vertically integrated defence and aerospace electronics solutions providers catering to the indigenously developed defence products industry. Earlier, the IPO, which opened for subscription on December 14, was subscribed 119.62 times on the last day of the bidding process on December 16.
 
Post listing, CapitalVia Global Research believes that the stock may cross Rs 1,100 levels in the next few quarters. “Investors who intend to hold the stock for the long term should try to accumulate stock in any healthy dip around Rs 725-755,” the brokerage said.
 
In terms of financials, revenue, EBITDA and profit after tax of the company have grown at a CAGR of 31 per cent, 90 per cent and 169 per cent over FY19-21, while its EBITDA margins expanded from 19.5 per cent in FY19 to 41.1 per cent in FY21.
 
The growth was supported by a robust order book which grew at 40 per cent annually over FY18-1HFY22 and provides strong revenue visibility. It generates strong cash flows and will become debt-free post IPO, according to market watchers.
 
Commenting on the robust listing, Santosh Meena, head of research, Swastika Investmart said, “Data Pattern’s IPO saw a bumper response from investors. This demonstrates that aerospace and defence are highly sought-after sectors currently. This led to the IPO debuting at Rs 856, a 46 per cent premium to the issue price. In the long run, the stock will be a wealth generator in the next 3-5 years, while short-term investors should keep a stop loss of Rs 790 on a closing basis.”
 
He further added that the company can grow rapidly and exponentially by taking advantage of the government's ‘Make In India’ initiative in the near future.

Also read: Newly-listed tech companies using IPOs as exit window for existing investors, flags SEBI chief