Target: ₹3,100
CMP: ₹2,526.55
We believe Data Patterns’ strong strategic investment continues to set the company on a promising trajectory. Q1 saw revenue dip due to unavoidable customer acceptance delays, but margin remained resilient. Q1 is facing hiccups, which are generally followed by aggressive R&D ramp-up cycles — not a fundamental weakness. The company holds a robust order-book of ₹1,079 crore.
Data Patterns also has a strong order pipeline, comprising ₹2,000-3,000 crore contracts over the next 18-24 months, primarily in airborne radars, EW systems, seekers and upgrade programmes. It has invested about ₹120 crore in new products, which materially improves its TAM and makes it a substitute to import.
We expect the company’s FY26 guidance of 20-25 per cent growth is within reach, assuming timely acceptance and conversion of development contracts into production awards. We assume EBITDA margins can recover towards the guided 35-40 per cent range once the top line normalises. The primary upside catalysts are successful flight trials and formal production orders for seekers, jammer pods and airborne radars.
We have introduced FY28 estimates and, based on the average FY27/28E EPS, we upgrade our rating to Buy (from Add). The target price has been raised to ₹3,100 (from ₹2,915), maintaining our valuation multiple at 45x FY27E EPS.
Published on August 12, 2025
