Digilogic Systems IPO: Defence Technology Provider Plans Facility Expansion
Digilogic Systems Limited announces IPO opening January 20-22, 2026, to fund facility expansion and debt repayment. The defence technology company showed strong FY2025 recovery with 39.64% revenue growth to ₹72.06 crores and PAT margin expansion to 11.25%. IPO proceeds of ₹51.74 crores will fund new facility development, while ₹8.00 crores will repay debt. Despite strong customer relationships and industry certifications, investors should consider concentration risks and volatile operating cash flows.
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Digilogic Systems Limited, a technology solutions provider for India's defence and aerospace sectors, has announced its Initial Public Offering (IPO) scheduled to open on January 20, 2026, and close on January 22, 2026. The Hyderabad-based company, founded in 2011, specializes in Automated Test Equipment systems, radar and Electronic Warfare environmental simulators, application software, and embedded signal processing solutions.
Strong Financial Recovery in FY2025
The company demonstrated robust financial performance in FY2025, showing significant improvement across key metrics. Revenue recovery was particularly notable after a decline in the previous year.
| Financial Metric | FY2023 | FY2024 | FY2025 | Change (FY24-25) |
|---|---|---|---|---|
| Revenue from Operations | ₹55.96 cr | ₹51.56 cr | ₹72.06 cr | +39.64% |
| Profit After Tax | ₹2.18 cr | ₹2.40 cr | ₹8.11 cr | +238.00% |
| PAT Margin | 3.89% | 4.64% | 11.25% | +661 bps |
| PBT Margin | 5.29% | 6.23% | 15.05% | +882 bps |
The company's profitability metrics showed substantial improvement, with PAT margin expanding from 4.64% in FY2024 to 11.25% in FY2025. Total assets grew by 104.22% to ₹72.57 crores, while equity increased significantly to ₹33.46 crores.
IPO Proceeds and Expansion Plans
The company has outlined specific utilization plans for the IPO proceeds, with the majority allocated toward infrastructure expansion.
| Use of Proceeds | Amount | Purpose |
|---|---|---|
| New Facility Capex | ₹51.74 crores | 6,050 sq. mts facility with environmental test capabilities |
| Debt Repayment | ₹8.00 crores | Outstanding borrowings pre-payment |
| General Corporate Purposes | Not specified | Working capital and business development |
The new facility will feature environmental test capabilities for electronic sub-systems, aimed at enhancing operational capabilities and reducing dependence on outsourcing. This expansion aligns with the company's strategy to strengthen its end-to-end solution offerings.
Business Profile and Market Position
Digilogic Systems operates through two facilities - its Corporate headquarters in Hyderabad and a marketing office in Bangalore. The company holds strategic industry certifications including AS9100D for aerospace quality management and ISO 9001:2015, positioning it as a qualified supplier for critical defence applications.
Key business characteristics include:
- Customer Loyalty: 98% of revenue in H1 FY2025 came from repeat customers
- Government Relations: Empanelled as Development cum Production Partner (DcPP)
- Experience: Over 18 years in defence and aerospace sectors
- Leadership: Management team with over 38 years of combined industry experience
Risk Considerations
Despite strong financial performance, the company faces several operational and financial risks that potential investors should consider.
| Risk Factor | Details |
|---|---|
| Customer Concentration | Top 3 customers account for 70.92% of FY2025 revenue |
| Cash Flow Volatility | Negative operating cash flows in FY2025 (₹-10.52 cr) and FY2023 (₹-6.65 cr) |
| Geographic Risk | Both facilities located in Hyderabad region |
| Supplier Concentration | Top supplier represents 36.95% to 47.14% of purchases |
The company's operating cash flow showed volatility, turning negative in FY2025 despite strong profitability improvements. This pattern indicates potential working capital management challenges typical in project-based defence businesses.
Growth Trajectory and Market Opportunity
The company's financial metrics indicate strong growth momentum, with revenue CAGR of 13.46% and PAT CAGR of 93.29% over the FY2023-25 period. The current ratio improved to 1.61 in FY2025, indicating better liquidity management.
Digilogic Systems' positioning in India's defence sector aligns with the government's focus on indigenization and increased defence spending. The company's reusable engineering platforms and comprehensive solution capabilities provide competitive advantages in securing repeat business from government entities and defence PSUs.
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