Data Patterns rallies 9% to hit record high on strong order book position

The government's focus on liberalising foreign investment restrictions to achieve self-reliance under the 'Atmanirbhar Bharat' initiative is expected to keep the sector on a strong growth trajectory

Shares of Data Patterns (India) surged 9 per cent to hit a record high of Rs 2,353 per share on the BSE in Monday’s intra-day trade. Thus far in the calendar year 2023 (CY23), the stock of aerospace & defense has zoomed 113 per cent on back of strong earnings and healthy order book position. In comparison, the S&P BSE Sensex was up 6.6 per cent so far in CY23.

For the June-ended quarter (Q1FY24), the company's revenue from operations surged 31 per cent year on year (YoY), while earnings before interest, taxes, depreciation, and amortisation (Ebitda) grew 31 per cent YoY. Gross margin, too, remained robust at 62 per cent. 

As of June 30, Data Patterns has an order book position of Rs 967.11 crore. If all the projects where negotiations are completed are converted into orders, the order book will be Rs 1,066 crore, the company said.

Defence sector in India continues to be a significant focus for government. The current union budget has allotted Rs 5.94 trillion to bolster the defence sector, signalling a notable 30 percent YoY increase.

Further, the Ministry of Defence has set an ambitious target of achieving turnover of Rs 1.75 trillion within the aerospace and defence manufacturing sectors by 2025, which includes export targets of around Rs 35,000 crore.

Moreover, the Government's focus on liberalising foreign investment restrictions to achieve self-reliance under the "Atmanirbhar Bharat" initiative is expected to keep the Indian defense sector on a strong growth trajectory.

Data Patterns is one of the fastest growing companies in the Defence and Aerospace Electronics sector in India. It has supplied products catering to all the platforms, viz., space, air, land and sea, including products for LCA-Tejas, Light Utility Helicopter, BrahMos missile.

The company works closely with the defence PSUs such as Hindustan Aeronautics and Bharat Electronics as well as government organisations involved in defence and space research like Defence Research and Development Organisation (DRDO) and Indian Space Research Organisation (ISRO).

Analysts at InCred Equities said that Data Patterns aims for a topline growth of ~30 per cent consistently with healthy margin of ~35-40 per cent. For the next 2-3 years, the company is focused on developing new products and markets as they expect new opportunities would further accelerate growth.

"The management mentioned that they are actively pursuing new product development with QIP proceeds. The company's focus on building IP, build products, compete with the OEMs and try to build a capability and a scalable business model in India," the brokerage firm added.