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Healthy opportunity pipeline supports growth visibility

* Data Patterns (DATAPATT) reported a muted 2QFY27 performance, with EBITDA declining 54% YoY, mainly due to a high base from a large contract executed in 2QFY26 and deliveries of several ongoing programs being scheduled for 2HFY27. Further, revenue from the Development/ Production/Service segments declined 77%/24%/9% YoY.

* The company’s order book and negotiated orders currently stand at INR27b (order book of INR17.2b, and negotiated orders of INR9.6b), with an additional INR15–20b pipeline expected to convert by Mar’27, subject to customer approvals. We believe multiple strategic programs across radars, electronic warfare, BrahMos seekers, HAL platforms, and counter-drone systems provide strong medium-term growth visibility.

* We broadly retain our FY27/FY28 estimates despite a muted 2Q, as execution is expected to accelerate in 2HFY27, with production underway for scheduled deliveries. DATAPATT has also retained its full-year guidance, supported by strong order book visibility. We reiterate our Neutral rating with a TP of INR4,040 (premised on 50x FY28E EPS).

Revenue declines due to delayed execution and a high base

* DATAPATT’s consolidated revenue declined 57% YoY to INR1.3b (est. of INR3.7b) in 2QFY27 due to a high base from a large contract executed in 2QFY26 and deliveries of several ongoing programs being scheduled for 2HFY27. Revenue from the Development/ Production/Service segment declined 77%/24%/9% YoY to INR453m/INR768m/INR112m.

* In terms of products, electronic warfare accounted for the largest revenue mix at 52%. In terms of customers, MoD played a significant role this quarter, accounting for 51% of the mix.

* DATAPATT’s gross margin expanded 30.5pp YoY to 69%, led by a change in product mix. Employee expenses/other expenses increased 20.8pp/850bp YoY at 33.1%/12.4% of sales.

* Accordingly, EBITDA margin expanded 130bp YoY to 23.5% (est. ~28.4%). EBITDA declined 54% YoY to INR314m (est. INR1b). Adj. PAT declined 57% YoY to INR218m (est. INR845m).

* In 1HFY27 Revenue/EBITDA/PAT declined 39%/38%/41% YoY to INR2.5b/INR627m/INR439m.

* The order book stood at ~INR17.2b as of Sep’26 vs. INR9.3b/INR6.7b in Jun’26/Sep’25. Development/Production/Service segments accounted for 36%/43%/21% of the total order book. * CFO in 1HFY27 stood at INR1.1b vs. a cash outflow of INR498m in 1HFY26.

* NWC days stood at 374 days as of Sep’26 vs 365 days as of Mar’26, due to a spike in inventory days from 108 to 170 between FY26 and 1HFY27.

Valuation and view

* DATAPATT delivered a muted 2QFY27, with revenue impacted by a high execution base and deliveries scheduled for 2HFY27; however, management maintained its FY27 guidance. The company continues to strengthen its positioning through investments in proprietary technologies across electronic warfare, radars, counter-drone systems, and complete defense systems, while a strong order pipeline and emerging export opportunities provide healthy growth visibility.

* Further, medium-term tailwinds, including:

1) differentiated product building competencies

2) long-term relationships with clients

3) a strong pipeline of products and increasing participation in complete system programs, will drive sustainable growth.

* We estimate a revenue/EBITDA/adj. PAT CAGR of 25%/23%/29% over FY26-28. Reiterate Neutral with a TP of INR4,040 (premised on 50x FY28E EPS)

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