DATAPATTNS - Data Patterns (India) Limited Share Price

The management of Data Patterns (India) Limited provided an optimistic outlook during the Q1 FY '26 Earnings Conference Call. The key points highlighted include:

1. Order Book Strength: The order book stands at INR 1,079 crores, with over INR 320 crores of new orders secured since the start of the financial year, including significant contracts from BrahMos and the Ministry of Defense (MoD).

2. Export Traction: The export order book is robust at approximately INR 100 crores, and the company is experiencing increased interest from international markets, particularly following the heightened demand for indigenous defense equipment after Operation Sindoor.

3. Investment in R&D: Data Patterns has committed over INR 120 crores towards new product development, focusing on indigenous capabilities across multiple domains, including radar systems, electronic warfare, communication systems, and airborne systems.

4. Revenue Guidance: The management reiterated a growth target of 20% to 25% for the full year, expecting revenue to pick up from Q2 onwards, buoyed by a strong order pipeline and improved execution.

5. EBITDA Margin Expectation: The company aims to maintain healthy EBITDA margins in the range of 35% to 40%.

6. Focus on Margins and Profitability: The management remains focused on profitability despite short-term revenue fluctuations due to customer approval delays, with an emphasis on higher quality and differentiated products to ensure sustainable margins.

7. Future Opportunities: Management believes the domestic defense market is evolving favorably, with expected new contracts tied to urgent governmental needs, enhancing visibility for significant order inflows over the next 18-24 months, estimated between INR 2,000 to INR 3,000 crores.

Overall, the management is confident about the future trajectory of the company, citing a strategic commitment to investing in development and infrastructure to capitalize on emerging opportunities in the defense sector.

Q&A Section Summary from Data Patterns (India) Limited Q1 FY '26 Earnings Call

Question 1: Dipen Vakil: "Can you tell us more about the AMC contracts won this quarter, specifically regarding their execution period and ordering patterns?"

Answer: "The major AMC is a 5-year contract from BrahMos that began last January. Typically, we operate on a 3 to 5-year AMC model for BrahMos, billed yearly. We expect similar contracts as new orders come in post-warranty."

Question 2: Dipen Vakil: "Regarding your expected order inflows of INR 2,000 to INR 3,000 crores over 18 to 24 months, how much do you anticipate for this fiscal year?"

Answer: "We project at least INR 1,000 crores in orders this year. Discussions are ongoing for contracts related to airborne radars, and we anticipate contracts could materialize within 5 to 8 months."

Question 3: Hardik Rawat: "Which specific orders faced delays in customer testing, and what is the estimated quantum of revenue slippage?"

Answer: "Revenue recognition has slipped by approximately INR 27 crores due to delays in customer testing. Recently, testing has resumed, and we hope to recognize these revenues in the upcoming quarters."

Question 4: Hardik Rawat: "Are you expecting an overall order value in the range of INR 15 billion to INR 20 billion for the fiscal year?"

Answer: "Yes, that is achievable, though it may vary based on how the government processes these products. There are multiple products undergoing field trials that could lead to orders soon."

Question 5: Amit Dixit: "Will services contracts comprise a larger portion of your orders going forward, especially given the quarter's order inflow mix?"

Answer: "We typically focus on production contracts over services. While recent service contracts are beginning, most of our future pipeline will still largely depend on hardware deliveries to users."

Question 6: Rahul Jain: "Could you provide details on key programs driving your order pipeline of INR 20 billion to INR 30 billion over the next 18 to 24 months?"

Answer: "Our pipeline and estimates focus on repeat orders from previously delivered systems, predominantly in radar and EW, but I cannot provide specific line items due to confidentiality."

Question 7: Garvit Goyal: "What gives you confidence for revenue acceleration in Q2 despite delays in the current quarter?"

Answer: "We believe the necessary customer approvals will proceed smoothly, given the urgency for product deliveries. Acceptance testing has just started, and barring any further delays, we expect to meet our planned shipments."

Question 8: Rupesh Tatiya: "Regarding the orders for BrahMos seeker systems, can you elaborate on timelines and specifics?"

Answer: "We expect initial orders within the next month or two, especially now that our seeker has successfully passed testing. Full production orders might follow in 6 to 9 months, pending final approvals."