Synopsis:
Jefferies has assigned a Buy call on the stock, predicting an upside of 35% citing strong order inflow and delayed revenue, which will reflect in the next quarter.
With a market capitalisation of Rs 14,154 crore, the shares of Data Patterns (India) Ltd closed at Rs 2,528 per share, representing a decline of 23 percent from its 52-week high of Rs 3,267.20 per share. In the last one year, the stock has corrected by 13 percent.
Leading global brokerage, Jefferies, has assigned a Buy call on the stock with a target price of Rs 3,400 per share, signalling an upside potential of 35 percent from its previous day closing price of Rs 2,514.30 per share.
Jefferies pointed out that Data Patterns fell short of sales expectations in Q1, primarily due to a revenue postponement of Rs 270 crore, which is now anticipated to be recognised in Q2. Nevertheless, the company is sticking to its growth forecast for FY26, aiming for a 20–25 percent increase. In Q1, order inflow surged to Rs 180 crore, which is 4.8 times higher than the same period last year, bringing total orders received for FY26 to Rs 320 crore so far.
Jefferies is optimistic that the company’s robust in-house technology, along with the expanding defence sector, could lead to a threefold rise in both revenue and profit from FY26 to FY30.
Q1 Highlights
Data Pattern’s revenue for Q1 FY26 came in at Rs 99.3 crore, registering a 4.6 percent decline from Rs 104.1 crore in the same quarter last year. Additionally, on a sequential basis, revenue declined by 75 percent from Rs 396.2 crore in Q4 FY25.
EBITDA for Q1 FY26 came in at Rs 32.1 crore, registering a 13.7 percent decline from Rs 37.2 crore in the same quarter last year. Additionally, on a sequential basis, EBITDA declined by 78.5 percent from Rs 149.5 crore in Q4 FY25. Additionally, EBITDA margins declined by 343 bps in Q1 FY26 and declined by 543 bps from its previous quarter.
Coming to its profitability, the company reported a net profit decline of 22 percent to Rs 25.5 crore in Q1 FY26 as compared to Rs 32.8 crore in Q1 FY25. Additionally, on a QoQ basis, it plunged by 78 percent from Rs 114.1 crore.
As of the latest data, the company has a robust order book of Rs 814 crore, where the majority of the orders are from its radar, AMC and avionics segment, accounting for over 92 percent of the total order book.
Also, it derives 63.1 percent from Bharat Electronics alone, followed by DRDO with 9.9 percent, Hindustan Aeronautics with 1.8 percent, and others with 14.8 percent. It also derives 10 percent of its revenue from exports and 0.3 percent from Brahmos.
In short, Jefferies is optimistic about the long-term prospects for Data Patterns, even though Q1 was a bit of a letdown due to some revenue delays. With a solid order book, impressive in-house technology, and increasing demand in the defense sector, the brokerage anticipates the stock could climb by 35% to reach Rs 3,400. They also foresee revenue and profits potentially tripling between FY26 and FY30.
Written by Satyajeet Mukherjee
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post Defence stock to buy now for an upside of 35%; Recommended by Jefferies appeared first on Trade Brains.