Data Patterns Falls 2% as Investors Sell After Strong Q1 Results

On July 30, Data Patterns (India) saw its shares dip over 2% to ₹3,280 each as investors rushed to lock in profits following the company's robust April-June quarter (Q1FY25) performance.

For Q1FY25, the company reported a 16% year-on-year growth in total revenue, reaching ₹104 crore, up from ₹89 crore in Q1FY23. Additionally, the profit-after-tax (PAT) increased by 27% YoY, rising to ₹33 crore from ₹26 crore in the same period the previous year.

EBITDA also saw a significant rise, increasing by 33% YoY to ₹28 crore in Q1FY25. As of June 30, 2024, Data Patterns' order book stood at ₹1,017 crore.

Srinivasagopalan Rangarajan, Chairman & Managing Director of Data Patterns (India), remarked, “This has been an encouraging start to the financial year 2025 with revenue growth of 16%, gross margins at 72%, and EBITDA margins improved by 465 bps at 36%, reflecting operational excellence. Our current order book surpasses ₹1,100 crore with an optimal production and development mix. We expect strong and steady order inflow for the full year given the government’s emphasis on ‘Made in India’ defence solutions."

Data Patterns focuses on the design and development of electronic hardware, software, firmware, mechanical systems, and product prototypes, including testing, validation, and verification. The company operates in sectors such as Radars, Electronic Warfare Suites, Communications, Avionics, Small Satellites, and other Communication & Electronic Intelligence Systems.

The company works closely with defence PSUs like Hindustan Aeronautics and Bharat Electronics, as well as government organizations involved in defence and space research, including DRDO and ISRO. This year, Data Patterns share price have surged over 81%, significantly outperforming the benchmark Nifty 50's 14% increase during the same period.

Investors are keenly awaiting Data Patterns' upcoming quarterly results, which will be announced at a board meeting on July 29, 2024. The company's strong track record of consistent performance has bolstered investor confidence and expectations for continued positive results.

On July 11, 2024, a report highlighted a significant development for Data Patterns (India). The Defence Research & Development Organisation (DRDO) awarded a new project to Data Patterns under the Technology Development Fund scheme.

The following day, Data Patterns clarified that it had signed the contract with DRDO but had not yet received the counter-signed contract. The company stated that the contract information was not considered material enough to require disclosure under SEBI regulations. Additionally, the sensitive nature of such contracts restricts disclosure unless the government customer releases the information to the public. The contract with DRDO is valued at ₹100 million, with ₹90 million funded by DRDO as a grant-in-aid and the remaining ₹10 million covered by the company.

Despite the contract's relatively small value, it garnered considerable attention from investors. The anticipation of future revenue from this and other contracts, along with the association with DRDO, boosted investor confidence.

Looking forward, Data Patterns aims to maintain steady revenue growth by reducing business seasonality and ensuring a stable order inflow. The company targets a 15% revenue increase from the previous financial year and is strengthening its position in the global defence electronics market, benefiting from 'Make in India' initiatives aimed at reducing dependency on imports.