| Data Patterns (India) Limited | ||||||
| Long-term rating upgraded to 'Crisil A+/Stable'; Short-term rating reaffirmed | ||||||
| Rating Action | ||||||
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| 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 upgraded its rating on the long-term bank facility of Data Patterns (India) Limited (DPIL) to 'Crisil A+/Stable' from 'Crisil A/Positive'. The short-term rating has been reaffirmed at ‘Crisil A1’.
The upgrade reflects improvement in the credit profile of the company. Revenue has grown 36% in fiscal 2025 on account of strong execution capabilities and is expected to improve further over the medium term marked by healthy order book. Earnings before interest, taxes, depreciation and amortisation (EBIDTA) have remained healthy at 38.8% in fiscal 2025 and is likely to remain at 35-40% over the medium term. This has resulted in sustained increase in net cash accrual (NCA) to Rs 191.48 crore in fiscal 2025 and is expected to be over Rs 200 crore over the medium term. The financial risk profile has strengthened further with strong accretion to reserves.
The ratings continue to reflect the established track record and presence of DPIL in the defence equipment segment and 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 defence equipment sector: DPIL has more than three decades of extensive experience in the defence and aerospace equipment manufacturing business. Over the years, DPIL has established healthy relationships with their key customers such as Ministry of Defence (MoD), Defense Research and Development Organisation (DRDO), Brahmos Aerospace Private Limited, Bharat Electronics Ltd (BEL), Hindustan Aeronautics Limited (HAL) and Indian Space Research Organization (ISRO). This has resulted in improvement in scale of operations as reflected in operating income of Rs 708 crore in fiscal 2025 against Rs 519.8 crore for the full fiscal 2024 and sustenance of healthy profitability as reflected in EBIDTA of 38.8% in fiscal 2025. Such healthy relationships have helped in maintaining strong order book of Rs 730 crore as of March 2025 and expected incoming orders of Rs 1,000-2,000 crore in fiscal 2026, which will continue to support the business risk profile over the medium term.
Strong financial risk profile: Networth was strong at Rs 1,395.68 crore as on March 31, 2025, driven by initial public offering (IPO) of Rs 300 crore, qualified institutional placement (QIP) of around Rs 500 crore and strong accretion to reserves. The capital structure is healthy and debt protection metrics are robust because of absence of debt.
Weaknesses: Working capital-intensive operations: Gross current assets (GCAs) were high at over 500 days as on March 31, 2025 (GCAs after adjusting cash and bank balances and advances from customers is around 400 days). This was driven by high inventory levels, common to the defence industry, due to stretched nature of the projects, need to service and maintain the products for a long tenure and high receivables on account of stretched collection cycles, as majority of the customers are government entities. However, this risk is mitigated as the tenders generally cater to funded projects, which in turn also mitigate the risk of bad debt. The collection cycle is expected to improve owing to increasing contribution from production contracts, where the receivables cycle is relatively lower.
Susceptibility to changes in sourcing policies of key customers: Majority of the company’s revenue is from various public sector undertakings and defence-related organisations such as Ministry of Defence, DRDO, ISRO, HAL and BEL. This renders the company's revenue profile vulnerable to any significant change in government policies and capital expenditure (capex) plans related to defence and space research programs. However, India’s defence spending has been increasing and , there have been many initiatives such as Atmanirbhar Bharat, Make in India, announcement of negative import list for defence products and other policies by the Indian government that are signaling better prospects for Indian private sector companies such as DPIL. The company, with its rich experience in the defence electronics space, is well positioned to benefit from such indigenisation efforts. |
Liquidity: Strong Cash accrual is expected to be over Rs 200 crore per annum over the medium term. Against that, there is no debt obligation. Working capital limits largely remain unutilised through the 12 months through March 2025. Liquidity profile is further supported by deposits, investments and cash and bank balance of over Rs 450 crore which are unencumbered. |
Outlook: Stable Crisil Ratings believes that, over the medium term, DPIL will continue to benefit from the established market position of the company and its sustained operating performance. |
Rating sensitivity factors Upward factors
Downward factors
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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
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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