DATAPATTNS - Data Patterns (India) Limited Share Price

In the earnings conference call held on May 19, 2025, management provided an optimistic outlook for Data Patterns (India) Limited. They reported a robust 36% year-on-year growth for FY25, highlighting a doubling of revenue in Q4 compared to the same quarter last year. The gross margin for FY25 was maintained at 61%, with a PAT margin of 31%, representing a 22% increase in PAT.

Management indicated that despite some lower than expected fresh order intake due to external factors, their current order book stands at INR 730 crores as of March 31, 2025, increasing to INR 860 crores including negotiated contracts. They expect to achieve revenue growth of 20% to 25% in FY26, while maintaining strong EBITDA margins between 35% and 40%.

Key points forward-looking points mentioned include:

1. Anticipation of a significant ramp-up in order inflow due to re-engagement with previously postponed contracts, suggesting a strong pipeline for FY26.
2. Continued emphasis on R&D, with past investments leading to advanced developments, especially in radar systems and electronic warfare solutions.
3. The strategic decision to shift focus towards larger integrated systems to expand their market reach, including a potential increase in exports to Europe and other regions.
4. A recommendation for a dividend of INR 7.9 per equity share, subject to shareholder approval.

Overall, management remains confident in capturing larger opportunities in the growing defence sector in India, particularly in light of the government's initiatives aimed at boosting indigenous manufacturing.

1. Question: "In the earlier quarters, you mentioned that some of your revenue recognition was impacted due to a client request on deferment in delivery. Are those orders now delivered? And is it possible for you to quantify those?"

Answer: Some of it has been delivered, while some are still pending due to customer clearance inspections. I can't quantify the order value, but I expect delivery this quarter or the next.

2. Question: "You've mentioned that BrahMos seeker has now been successfully tested. Any feedback on when you will get orders?"

Answer: The flight tests were conducted successfully about three to four weeks ago. We anticipate receiving orders for additional units soon, with production contracts potentially following within the next year.

3. Question: "Regarding the order inflow for FY '26, can you provide an estimate on what we might expect?"

Answer: We're targeting between INR 1,000 crores to INR 2,000 crores in orders for FY '26. We are confident because these orders are based on previous deliveries, hence they are likely to materialize.

4. Question: "The current working capital days are quite high. What should we expect going forward?"

Answer: Our working capital is tied up in developmental contracts. I expect that as production becomes more significant than development, our working capital days will normalize, likely in the next 2 to 3 years.

5. Question: "Can you comment on the expected sustainable EBITDA margins?"

Answer: We project to sustain EBITDA margins at 35% to 40%. The specific margin will vary depending on the nature of contracts, as those with complete design by us tend to yield higher margins.