Data Patterns Q1 Results Review - Encouraging Start To FY25: Nirmal Bang

Nirmal Bang Report

Data Patterns India Ltd. reported a decent performance for Q1 FY25 despite a lean quarter. Revenue came in slightly lower at Rs 1.04 billion versus our estimate of Rs 1.06 billion. Gross margin improved by 800 basis points to ~72% (versus 64% in Q1 FY24), owing to solid performance in the core segments, successful order deliveries and optimal mix in products (resulting in lower cost of production).

Data Patterns intends to safeguard margins by reducing imports of subcomponents and increasing indigenous production. 

Management guidance for FY25:

• Revenue growth of ~20-25%,

• Ebitda margins of 35-40% will be sustained due to strong IP and low import content. We expect the company to exceed its estimate,

• PAT growth of 30% is in line with our assumptions,

• FY25 will differ from FY24, with equally strong performance in both Q3 and Q4 of FY25.

During FY24E-FY26E, we expect revenue/Ebitda/profit after tax growth to clock a CAGR of 24%/23%/22%. The stock has rallied by 17% since our initiation report on the Defence sector (April 5, 2024) and it is currently trading at FY26P/E of 68.2 times.

We had downgraded the defence sector to “sell” earlier this month because of extremely steep valuations relative to sector fundamentals. However, we have maintained “Accumulate" on Data Patterns with a target price of Rs3,124, valuing it at 62 times June'26E EPS (1SD above the long-term average).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.