This defence stock has zoomed 139% from its IPO price in just 10 months

In the past three months, Data Patterns has zoomed 95 per cent, as compared to an 8 per cent rise in the S&P BSE Sensex

Shares of Data Patterns (India) continued their northward march, hitting a new high at Rs 1,400, on rallying 9 per cent on the BSE in Tuesday’s intra-day trade backed by strong business outlook. The company made its stock market debut on December 24, 2021.

In the past three months, the stock has zoomed 95 per cent, as compared to a 8 per cent rise in the S&P BSE Sensex. Following the sharp rally in the past couple of months, the stock price of the company has appreciated by 139 per cent from its issue price of Rs 585 per share on the BSE.

Data Patterns is a vertically integrated defense and aerospace electronics solutions provider catering to the indigenously developed defense products industry.

Having completed all the major sub-systems in radar, electronic warfare, communications, avionics, etc. Data Patterns is now focusing on developing complete systems with in-house design to address the huge market opportunities in the Indian Defence and Aerospace segment thanks to the Atmanirbhar Bharat initiatives and defence procurement procedure being modified to enable more ‘Make in India’ defence equipment.

As per latest data shared by government on defence exports, India has exported indigenously manufactured defence equipment worth Rs 8,000 crore in the first six months of FY23 (April-September 2022).

The government said, Rs 8,000-9,000 crore more is expected to be added in second half of FY23 (October 2022-March 2023) taking the total exports to Rs 16,000-17,000 crore in FY23 (against Rs 12,815 crore in FY22 and Rs 8,435 crore in FY21). On the long term target, the government has maintained its defence exports target of Rs 35,000 crore by FY25, PTI reported quoting Defence Minister Rajnath Singh.

Meanwhile, the Defence Expo (DefExpo) 2022 is starting from today at Gandhinagar (Gujarat) for five days (October 18-22). DefExpo 22 intends to highlight the strong linkages between the Defence Research and Development Organisation (DRDO) on the one hand and industry and academia on the other. The MoD has announced that the DRDO will display a wide range of products, 430 altogether, encompassing strategic and tactical weapon systems, defence equipment and technologies. CLICK HERE FOR FULL REPORT

India intends to moderate imports and seek a larger proportion of its defence and space requirements from within. The government banned the import of 101 defence products; the DRDO announced the indigenization of 108 systems and sub-systems. The tender sizes have increased and the order books of defence product manufacturers are beginning to grow; defence players have embarked on capital investment programmes; the sectorial employment base is beginning to widen, Data Patterns said in its FY22 annual report.

A leading industry expert estimated that the market opportunity for defence electronics in India would be around $70-72 billion in a decade. This would result in the development of the next frontier of technology, comprising plasma-based rocket technology, stealth technology and deep technology to address military applications, the company said.

According to analysts at ICICI Securities, the defence electronics provides huge opportunity of around Rs 1.5 trillion crore in the next four to five years led by armed forces’ requirement of advanced systems.

The 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 pipeline in FY23 for Data Patterns. The 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, the brokerage said in its Q1 result update.

Tech outlook

Target: Rs 1,446

Support: Rs 1,383, Rs 1,308

The stock of Data Patterns has more-than-doubled investors' wealth since its listing. With a 139-per cent rise over its issue price, the stock is comfortably trading above key technical resistances. Moreover, the moving averages, coupled with momentum indicators' action, is supporting the bulls.

Today's record high of Rs 1,400 has pushed the stock above the upper end of the Bollinger band on the daily (Rs 1,308) as well as weekly (Rs 1,383) charts. 

A sustained upmove above these levels will likely take the stock towards Rs 1,446, and then to Rs 1,473 as per the monthly Fibonnaci charts. The near-term support is placed at Rs 1,383, followed by Rs 1,308, and Rs 1,182 (20-day moving average).

(With inputs from Nikita Vashisht)