Data Patterns surges 24% in 3 days after govt eases space FDI norms

Since February 16, in past eight trading days, the market price of Data Patterns has zoomed 37% after the Singapore sovereign wealth fund GIC acquired over 6% stake valued at Rs 650 crore.

Shares of Data Patterns (India) rallied 8 per cent to hit a record high of Rs 2,550 on the BSE in Monday’s weak intra-day trade.

The stock surpassed its previous high of Rs 2,484 touched on September 1, 2023. In comparison, the S&P BSE Sensex was down 0.5 per cent at 72,781 at 12:31 PM.

In the past three days, the stock of the aerospace and defence company has surged 24 per cent after the government last week eased Foreign Direct Investment (FDI) norms in the space sector by allowing 100 per cent overseas investment in making components for satellites, as part of efforts to attract overseas players and private companies into the segment.

The satellite sub-sector has been divided into three different activities with defined limits for foreign investment in each such sector, according to an official statement.

Prior to the new norms, FDI in the space sector was allowed up to 100 per cent in the area of satellite establishment and operations through government route only.

Meanwhile, since February 16 that is in the past eight trading days, the market price of Data Patterns has zoomed 37 per cent after the Singapore sovereign wealth fund GIC acquired over 6 per cent stake valued at Rs 650 crore in the company via open market.

On February 16, GIC Private Limited on account of Government of Singapore (GOS) and the Monetary Authority of Singapore (MAS) bought a total 3.54 million equity shares representing 6.32 per cent stake in Data Patterns via the open market. 

Florintree Capital Partners, led by Mathew Cyriac, had divested its entire 10.71 per cent stake in Data Patterns, amounting to nearly Rs 1,100 crore.

Data Patterns works closely with the defence PSUs such as Hindustan Aeronautics and Bharat Electronics as well as government organisations involved in defence and space research like Defence Research and Development Organisation (DRDO) and Indian Space Research Organisation (ISRO).

The company’s core competencies include design and development across electronic hardware, software, firmware, mechanical, product prototype besides its testing, validation and verification.

Its involvement has been across radars, electronic warfare suites, communications, avionics, small satellites, automated test equipment, COTS and programmes catering to tejas light combat aircraft, light utility helicopter, BrahMos and other communication & electronic intelligence systems.

The company has strategically aligned itself to leverage favorable industry conditions, particularly in the anticipated tailwinds from government policies, driving a 15 per cent CAGR in India's defense production.

Projections further suggest that the defense outlay in India is expected to grow at a CAGR of 12 per cent, reaching $147 billion over FY25-29 period.

The management said the organization is well-positioned to capitalize on this growth, aligning with a broader government strategy aimed at advancing the aerospace and defense industries.

This anticipated growth is backed by initiatives such as Atmanirbhar Bharat, positive intergenerationalist and the defense modernization plan and a robust order pipeline for the Indian defense industry.

The company is capitalizing on promising opportunities in radar, electronic warfare and satellite markets.

Data expansions in the export markets were actively pursuing various prospects in collaboration with domestic competitors and we see such active participation in contracts worth Rs 2,000 crore to Rs 3,000 crore over the next three to four years, the management said in Q3FY24 earnings call.

Defence platforms Modernisation, through indigenisation, drives the company business to new heights. The company builds the products against imported products.

The company has a long rich history of participating in defence modernization. It is involving in defence modernization programme such as: Arudhra Radar, Ashwini LLTR, Dharashakti programme, MI 17 Upgrades, Dornier Upgrades, Aerostat upgrades, Lightweight EW requirements, Airborne surveillance radar, Radar Warning Receivers, Next Gen completely wide open for LCA Mk IA and Sukhoi 30 platforms etc.

These programs will drive the company's core business in the short to medium term. The company is actively exploring export market, supplied UK & Europe and expects more orders from other countries. It has strategically positioned itself from component/sub system level to whole system level, said brokerage Choice Broking.