Digilogic Systems IPO: ₹59.74 Crore Defence Technology Issue Opens January 20, 2026
Digilogic Systems Limited launches ₹59.74 crore IPO opening January 20-22, 2026, to fund new facility and debt repayment. The defence technology company showed strong FY2025 recovery with 39.55% revenue growth to ₹72.06 crores and improved PAT margins to 11.25%. However, significant risks include customer concentration (top 3 clients contribute 70.92% revenue) and volatile operating cash flows.
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Digilogic Systems Limited, a technology company specializing in defence and aerospace solutions, is set to launch its initial public offering worth ₹59.74 crores. The IPO will open for subscription on January 20, 2026, and close on January 22, 2026. Founded in 2011 and headquartered in Hyderabad, the company focuses on Automated Test Equipment (ATE) systems, radar and Electronic Warfare environmental simulators for India's defence sector.
Strong Financial Recovery in FY2025
The company demonstrated robust financial performance in FY2025, with significant improvements across key metrics. Revenue from operations surged 39.55% to ₹72.06 crores in FY2025, recovering strongly from the decline experienced in FY2024.
| Financial Metric | FY2023 | FY2024 | FY2025 | Change (FY24-25) |
|---|---|---|---|---|
| Revenue from Operations | ₹55.96 cr | ₹51.56 cr | ₹72.06 cr | +39.55% |
| Total Revenue | ₹56.12 cr | ₹51.71 cr | ₹72.19 cr | +39.55% |
| PAT | ₹2.18 cr | ₹2.40 cr | ₹8.11 cr | +238.33% |
| PAT Margin | 3.89% | 4.65% | 11.25% | +660 bps |
The company's profitability showed remarkable improvement, with PAT margins expanding from 4.65% in FY2024 to 11.25% in FY2025. Net profit after tax increased substantially to ₹8.11 crores in FY2025 from ₹2.40 crores in the previous year.
IPO Fund Utilization Strategy
The fresh issue of ₹59.74 crores will be allocated across three primary objectives. The largest portion, ₹51.74 crores, will fund the establishment of a new facility featuring 6,050 square meters of built-up area and an environmental test facility for electronic sub-systems.
| Fund Utilization | Amount | Purpose |
|---|---|---|
| New Facility Setup | ₹51.74 cr | 6,050 sq. mts facility with environmental test capabilities |
| Debt Repayment | ₹8.00 cr | Pre-payment of outstanding borrowings |
| General Corporate Purposes | Balance | Growth opportunities and working capital |
The new facility aims to enhance operational capabilities and reduce dependence on outsourcing, positioning the company for expanded capacity and improved margins.
Business Model and Market Position
Digilogic Systems operates as a Development cum Production Partner (DcPP) in India's defence and aerospace sector. The company provides end-to-end solutions including design, development, integration, and manufacturing of specialized equipment. Key offerings include:
- Automated Test Equipment (ATE) systems
- Radar and Electronic Warfare environmental simulators
- Application software and embedded signal processing solutions
- Comprehensive support services
The company maintains AS9100D and ISO 9001:2015 certifications and serves customers through direct government contracts and third-party vendor relationships. Repeat customers represented 98.00% of revenue in H1 FY2025, demonstrating strong client relationships.
Risk Factors and Financial Concerns
Despite strong revenue growth, the company faces several significant risk factors. Customer concentration presents the primary concern, with the top three customers accounting for 70.92% of FY2025 revenue. This creates substantial dependence on a limited client base.
| Risk Category | Details |
|---|---|
| Customer Concentration | Top 3 customers: 70.92% of FY2025 revenue |
| Cash Flow Volatility | Negative operating CF: ₹10.52 cr (FY2025), ₹6.65 cr (FY2023) |
| Cyber Security Loss | ₹45.17 lakhs loss due to cyber fraud in FY2025 |
| Geographic Risk | Both facilities located in Hyderabad |
Operating cash flows have been volatile, turning negative ₹10.52 crores in FY2025 despite strong profitability. The company also experienced a cyber security incident resulting in ₹45.17 lakhs loss during FY2025.
Balance Sheet and Capital Structure
As of September 30, 2025, the company maintained a total asset base of ₹64.53 crores with shareholders' equity of ₹35.07 crores. The current ratio stood at 2.08 times, indicating adequate liquidity position.
| Balance Sheet Item | Amount (Sep 30, 2025) |
|---|---|
| Total Assets | ₹64.53 cr |
| Current Assets | ₹40.49 cr |
| Total Equity | ₹35.07 cr |
| Current Ratio | 2.08x |
| Debt-to-Equity | 0.84x |
The IPO will significantly strengthen the capital structure, with the fresh issue expected to increase the equity base substantially while reducing debt levels through the planned ₹8.00 crore repayment.
Investment Considerations
Digilogic Systems presents a mixed investment proposition for potential investors. The company benefits from India's increasing defence spending and indigenization initiatives, supported by over 18 years of industry experience and established government relationships. The strong financial recovery in FY2025 and planned capacity expansion through the new facility indicate growth potential.
However, investors must carefully evaluate the customer concentration risks, cash flow volatility, and execution challenges associated with the new facility setup. The company's dependence on government contracts also exposes it to policy changes and budget allocation variations. The investment appears suitable for risk-tolerant investors with long-term horizons who believe in India's defence sector growth story.
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