Buy Data Patterns India Ltd For the Target Rs.2,450 by Choice Broking Ltd
Weak Quarter, miss consensus estimates
* Revenue for Q3FY25 came at INR 1,170 Mn (vs. CEBPL Est. INR 1,766 Mn), down 16.1% YoY and up 28.6% QoQ.
* EBIDTA for Q3FY25 came at INR 540 Mn (vs. CEBPL Est. INR 724 Mn). down 10.0% YoY and up 57.5% QoQ. The EBITDA margin came at 46.2%, improved 313 bps YoY (vs. CEBPL Est. of 41.0%).
* PAT for Q3FY25 came at INR 447 Mn (vs. CEBPL Est. INR 587 Mn). down 12.4% YoY and up 47.5%. PAT margin improved by 162bps YoY, reaching 38.2% (vs. CEBPL Est. 33.3%).
Strong order pipeline offers growth potential, but execution risks remain a key focus:
DATAPATT boasts a strong order pipeline of INR 20- 30 Bn (5-6x TTM sales), providing revenue visibility over the next few years. As of December 31, 2024, the company’s book-to-bill ratio stood at approximately 2.2x of TTM sales, with secured orders valued at INR 10,947 Mn (order book consists of 47% developmental revenue, 47% production, and 6% is from service). During the last quarter, the order inflow was INR 991 Mn, and the order pipeline INR 20-30 Bn over 18months. We anticipate a significant improvement in the book-to-bill ratio, which could reach 5-6x of the current level. However, we remain cautious regarding the management’s commentary, as we anticipate possible execution challenges. Given these uncertainties, we are closely monitoring the situation and adjusting our outlook accordingly
Robust revenue growth backed by capacity expansion:
We forecast DATAPATT’s revenue to grow at 23.0% CAGR over FY24-27E, driven by the new order pipeline and capacity expansion worth INR 1,500 Mn. This expansion is expected to significantly broaden revenue streams. Additionally, we expect DATAPATT’s EBITDA margin to remain relatively flat from FY24 to FY27E, around 40%. We also anticipate an improvement in the cash conversion cycle, from 432 days in FY24 to 388 days in FY27E.
View & Valuation:
We like to maintain our positive view on DATAPATT, because strong order pipeline ensure the long-term growth story. We expects Revenue/EBITDA/PAT will grow at 23%/20%/19% CAGR over FY24-27E. We have revised our earnings estimates for FY26/FY27E, lowering the EPS projections by -6.2% and -6.1%, respectively due to delay in execution of major projects. We maintain the stock BUY recommendation with a target price to INR 2,450, which implies a valuation of 45x FY27E EPS
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SEBI Registration no.: INZ 000160131
