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Data Patterns IPO, Should you hold or sell data patterns for long term

 Data Patterns stock buy sell or hold?

In Indian stock market, after bumper listing of companies like MTAR, Paras defence, Now Data Pattern Company had made its debuted in Indian stock market from defence sector. Company had received very good response for its IPO from QIB, NII’s & Retail investors & had subscribed nearly 119.6 times. Many investors had received shares of Data pattern in IPO allotment but many of people had not received allotment of shares in Data pattern IPO. Now two most common questions are arising in the mind of the investors & traders that

1) Should you hold or sell Data patterns after IPO listing?

2) If you had not received allotment of shares in Data pattern IPO then should you should buy Data patterns stock after its IPO listing ?

Before reaching to any conclusion on data pattern stock hold or sell after IPO listing, We have to understand the Positive & negative point of the Company.


What are the positive points about Data Patterns Company?


1) Management of the company have great experience in the field in which they are operating its business. Almost 25 years of experience in defence and aerospace electronics solutions providing industry. This company has more focus on core products like electronic hardware design and development, software design and development, environment testing and verification and engineering services ,product prototype design and development, functional testing and validation, firmware design and development, mechanical design and development. Excellent track record & products will be more in demand especially in the defence sector.

2) There is not much comparison of their products in the market but still some of the products are getting competition from big companies like MTAR techno which is listing in the Indian stock market. But there is no direct comparison of this company with MTAR Techno because MTAR Company has better valuation & size of the company.  

3) Another best thing goes in favour of Data Pattern Company that is there is not legal case against this company. It means company management is following all rules of corporate governance.

4) Company is profit making. If we will check the past financial track record of the company then from last 10 years company is making good profit. It is a very good sign for any company shareholders.  

5) Company had come up with Average valuations & Funds raised from IPO will be used to meet working capital requirements. It will help to save interest cost.

6) Company has its own land of 5.8 acres in Chennai on which manufacturing facilities are installed. There is no liability on the company for paying any rent of land. It will help the company to increase more reserves & it will also save interest cost.

7) As per the company management commentary, company has also plan to acquire an additional 2.81 acres of adjacent land for future expansion of the company.

8) Company will get more benefits of Indian government “Make in India” scheme because most of the products of the company have been manufacturing in India.

9) Company will repay its debt by using some portion of funds raised from Company IPO.

10) In FY21, Company had reported highest  EBIDTA margins, Returns on equity, ROEC as compared with other Indian defence companies of India.


What are the negative points of Data Patterns Company?


As we had discussed some reasonable positive point of the company but there are not much negative points of this company but still after our research we had find one big negative about this company which is as follow:

1) Company was established in 1985 & Company is operating it in good & demanding niche of the business but still Company size is too small. Total revenues of the company is 225cr & Market cap of the company is nearly 3000cr. This question will defiantly come into the mind of big investors once the company will list into the Indian stock market. If Company has good track record & very good management then why Size of the company could not increase in the last 25 years. Even after more demand of its products in the defence sector.

2) If the Size of the company will remain same then such kind of the companies will not come on the radar of the mutual fund companies.  It will take more years to increase its company market cap.

 Financial Performance of Data Patterns Company: (DPIL)

Financial performance of Data Pattern is really very good. As we have already discussed above that company is making profit from last ten years. Today we will discuss last 3 financial year’s performance of the company in front of Turnover & Net profit.

1) In FY19 Company had made net profit of 7.7cr against the total turnover of nearly 132.5 cr.

2) If we will talk about the FY 20, company had reported net profit of 21cr against Total turnover of nearly 160cr.

3) In FY21, there is a big jump in the Net profit of the company & Data pattern had recorded 55.6cr profit in FY21. It is a great performance by the company.

4) As per company management, in the first half of FY 22 ended Sept 2021, Company had reported net profit of 23.2cr against 97.1cr total turnover.

5) Company had reported Earnings per share of AVG. 7.7 per share in the last 3 financial years & Demanding P/E of 65.3 on the basis of FY21 earnings.


Which Indian stock market listed companies  are competitor of data pattern company ?


As per the company official documents,  DPIL has competition from companies  like MTAR Technology , Bharat Electronics , Paras Defence, Astra Microwave & Centum Electronics. If we will calculate the valuations of its peer companies those are listed on Indian stock market then P/E of 134.8, 22.4, 189.04, 52.1 & 188.6 respectively. But we personally feel that DPIL has small size of company so it is not appropriate to establish any comparison with big companies.


 Can Data Patterns Company offer dividend in the future & What is the dividend track record of Data Patterns Company?


If we will check the past track of the company then in the last 3 years Data patterns had paid dividend of 20%. It means that company has good dividend track record & Shareholders of the company may expect dividend in the future. But it all will depend on the company future financial performance.


Should you Buy or sell Data patterns, DPIL after IPO listing?


Data patterns is a very strong company & having very good future outlook. Financial performance of the company is really very good.  We maintain “Buy” Rating on Data pattern stock for long term investment point of view with the price target of 800rs+ in 1 to 2 years. New investors & traders may buy Data patterns stock, DPIL even after its IPO listing. But it is better accumulating DPIL stock in small sets.


What is the best strategy to trade in Data patterns, DPIL stock after IPO listing?


Investors & traders can follow two strategies after IPO listing of Date pattern, DPIL Stock

1) Try to lock you profit on higher levels i.e 10 to % 20% if you get listing  gains if you get above 10% to 20% Listing gains then take it as a lottery & book profit & wait for some profit booking in the stock.

2) Hold the stock for long term point of view with the strict stop loss of 15% above the IPO price 585rs. Mind it Indian stock market is trading at very higher valuations. If Indian stock market will go down then  IPO stocks will correct more than market overall correction. Therefore keep strict stop loss as suggested & try to lock your profit.


Can you buy DPIL Stock for long term?


There is nothing bad with the company & Valuations with IPO price of 585rs looks better. If you want to invest in Data patterns stock for long term then yes you can add this stock into your portfolio.

 Recommendation on Data Patterns, DPIL:

Buy DPIL stock for long term & traders should book profit on every rise of stock or trail the stoploss as suggested above. 


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