Rating Rationale
January 22, 2025 | Mumbai
Data Patterns India Limited
Ratings reaffirmed at 'Crisil A/Positive/Crisil A1'; Rated amount enhanced for Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.775 Crore (Enhanced from Rs.750 Crore)
Long Term RatingCrisil A/Positive (Reaffirmed)
Short Term RatingCrisil A1 (Reaffirmed)
Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil A/Positive/Crisil A1’ ratings on the bank facilities of Data Patterns India Limited (DPIL).

 

The ratings continue to reflect the established track record and presence of DPIL in defence equipment segment and a strong financial risk profile. These rating strengths are partially offset by working capital-intensive operations and susceptibility to changes in defence sourcing policies.

Analytical Approach:

Crisil Ratings has evaluated the standalone business and financial risk profiles of DPIL.

Key Rating Drivers & Detailed Description

Strengths:

  • Established track record and presence in the defense equipment sector: DPIL has more than three decades of extensive experience in defense and aerospace equipment manufacturing business. Over the years DPIL has established healthy relations with their key customers such as Ministry of Defence (MoD), Defense Research and Development Organization (DRDO), Brahmos Aerospace Private Limited, Bharat Electronics Ltd (BEL), Hindustan Aeronautics Limited (HAL) and Indian Space Research Organization (ISRO). The same has resulted in improvement in scale of operations as reflected in operating income of Rs 519.8 crore in fiscal 2024 against Rs 453.45 crore for the full year fiscal 2023 and sustenance of healthy profitability as reflected in EBIDTA of 42.64 percent in fiscal 2024. Company has reported revenue of Rs.195.1 crore in H1 of FY 25 with EBIDTA of 36.64 percent. Such healthy relations also helps in maintaining healthy in-hand order book of Rs 971.4 crore as on September 30th 2024 and would continue supporting business risk profile over the medium term.

 

  • Strong financial risk profile: Financial risk profile is healthy marked by strong Net-worth, healthy capital structure and robust debt protection metrics. Net-worth is strong at Rs.1,322.38 crore as on 31st March 2024 and Rs.1349.62 crore as on 30th September 2024 driven by IPO of Rs.300, QIP of around Rs.500 crore and Strong accretion to reserves. Capital structure is healthy and debt protection metrics is robust marked by absence of debt.

 

Weaknesses:

  • Working-capital-intensive operations: Business of DPIL continues to remain working capital intensive, marked by its estimated high gross current asset (GCA) days of around 616 days as on March 31, 2024 (GCA days after adjusting cash and bank balances and advances from customers is around 468 days). The same is due to high inventory levels which is generally common to the defence industry due to elongated nature of the projects and requirement to service and maintain the products for a long tenure and elongated collection cycle accounting to high receivables, as majority of customers are government bodies. However, risk related to the same is mitigated as the tenders generally cater to funded projects, which in turn also mitigate the risk of bad debts. Collection cycle is expected to improve owing to increasing contribution from production contracts, where receivable cycle is relatively lower.

 

  • Susceptibility to changes in sourcing policies of key customers: Majority of revenue is from various public sector undertakings and defence-related organizations such as Ministry of Defence, Defence Research and Development Organisation (DRDO), Indian Space Research Organisation (ISRO), Hindustan Aeronautics Limited | India (HAL), Bharat Electronics Limited, etc. This renders the company's revenue profile vulnerable to any significant change in the Government of India's policies and capex plans regarding defence and space research programs. However, in the recent years there have been many initiatives such as Atmanibharta Bharath, Make in India, announcement of negative import list for Defence Products, etc, by Indian Government that are signaling better prospects for Indian Private Sector Companies such as Data Patterns. The Company, with its rich experience in the Defence Electronics space is well positioned to benefit out of such indigenization efforts.

Liquidity: Strong 

Cash accruals are expected to be over Rs 150 crore per annum over the medium term. Against that, there is no debt obligation. Working capital limits largely remain unutilized through the last 12 months ended December 2024. Liquidity profile is further supported by deposits, investments and cash and bank balance of over Rs.550 crore which are unencumbered.

Outlook: Positive

Crisil Ratings believes that over the medium term, DPIL will continue to benefit from established market position of the company and its sustained operating performance

Rating sensitivity factors

Upward factors

  • Sustained revenue growth rate of over 22 percent while sustaining EBITDA margins at more than 38% leading to higher cash accruals.
  • Sustenance of healthy financial risk profile and improvement in working capital cycle

 

Downward factors

  • Stretch in working capital cycle or large debt funded capex
  • Sharp decline in revenues or reduction in margin to less than 25%

About the Company

Established in 1998 by Mr. S. Rangarajan, Chennai-based DPIL develops and produces mission-critical electronic products for defence and aerospace customers.

Key Financial Indicators

As on / for the period ended March 31

 

2024

2023

Operating income

Rs crore

519.80

453.45

Reported profit after tax

Rs crore

184.52

112.22

PAT margins

%

34.95

24.65

Adjusted Debt/Adjusted Net worth

Times

0.00

0.00

Interest coverage

Times

23.77

23.51

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs. Crore) Complexity Levels Rating Outstanding with Outlook
NA Bank Guarantee NA NA NA 725.00 NA Crisil A1
NA Cash Credit NA NA NA 50.00 NA Crisil A/Positive
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 50.0 Crisil A/Positive   -- 01-07-24 Crisil A/Positive 16-10-23 Crisil A/Stable 30-09-22 Crisil BBB+/Stable Crisil BBB/Stable
      --   --   -- 24-04-23 Crisil A-/Positive 08-03-22 Crisil BBB+/Stable --
      --   --   -- 22-03-23 Crisil A-/Positive   -- --
Non-Fund Based Facilities ST 725.0 Crisil A1   -- 01-07-24 Crisil A1 16-10-23 Crisil A1 30-09-22 Crisil A2 Crisil A3+
      --   --   -- 24-04-23 Crisil A2+ 08-03-22 Crisil A2 --
      --   --   -- 22-03-23 Crisil A2+   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 25 State Bank of India Crisil A1
Bank Guarantee 215 Axis Bank Limited Crisil A1
Bank Guarantee 90 ICICI Bank Limited Crisil A1
Bank Guarantee 205 HDFC Bank Limited Crisil A1
Bank Guarantee 115 Bank of Baroda Crisil A1
Bank Guarantee 75 State Bank of India Crisil A1
Cash Credit 20 HDFC Bank Limited Crisil A/Positive
Cash Credit 10 Bank of Baroda Crisil A/Positive
Cash Credit 10 ICICI Bank Limited Crisil A/Positive
Cash Credit 10 Axis Bank Limited Crisil A/Positive
Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
Rating criteria for manufaturing and service sector companies
CRISILs Bank Loan Ratings - process, scale and default recognition

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