Buy Data Patterns India Ltd Ltd For Target Rs. 3,300 By Choice Broking Ltd
Execution Strengthened; Strategic Momentum Intact
DATAPATT demonstrates robust operational and strategic progress, reaffirming its position as one of India’s most-advanced players in defence electronics. Despite a temporary contraction in operating margin – driven by a strategic, low-margin contract – the company’s execution is strong, with profitability expected to normalise as the product mix stabilises. Adjusted for this one-off impact, margin would have remained within the guided 35–40% range, underscoring the management’s focus on cost control.
The company’s order book stands at INR 6,736 Mn and complemented by a healthy INR 2,000–3,000 Cr pipeline across radars, electronic warfare and avionics programs. DATAPATT’s transition from subsystem manufacturing to full-system integration marks a pivotal shift, enabling participation in larger and more complex defence contracts. Continued R&D investments (~INR 120 Cr) in indigenous radar, seeker and jammer technologies enhance its technological depth and importsubstitution potential. The investments also help in growing DATAPATT’s export traction with global OEMs, signalling its rising credibility in international markets.
We expect over 25% revenue growth in FY26, supported by a strong execution momentum, expanding system-level capabilities and operating leverage benefits. Margin is likely to recover towards the guided 35–40% range as deliveries scale up in the second half. In our view, the recent margin compression is a transient phase in an otherwise accelerating growth story. We maintain our BUY rating on the stock with an upwardly revised TP of INR 3,300, valuing the company at 45x avg. of FY27/28E EPS.
Stellar Growth; Margin Contracts on Base Effect
* Revenue for Q2FY26 up 237.8% YoY and 209.5% QoQ at INR 3,075 Mn (vs CIE Est. INR 1,372 Mn)
* EBIDTA for Q2FY26 up 99.7% YoY and 113.5% QoQ at INR 685 Mn (vs CIE Est. INR 480 Mn). EBITDA margin stood at 22.3%, contracted 1,541bps YoY (vs CIE Est. of 35.0%)
* PAT for Q2FY26 up 62.5% YoY and 92.9% QoQ at INR 492 Mn (vs CIE Est. INR 388 Mn). PAT margin contracted by 1,727bps YoY, reaching 16.0% (vs CIE Est. 28.3%).
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SEBI Registration no.: INZ 000160131
