Q3FY24 Review: Data Patterns India: Muted inflows to restrict growth

5 Feb 2024 , 03:46 PM

Delay in order finalizations in FY24 will restrict growth for Data Patterns India (DP) in FY25-26, believe analysts at IIFL Capital Services. Accordingly, they have downgraded their FY25/26 EPS estimates by 25/11%, respectively. Medium term prospects remain healthy for radars and EW systems. DP has been aggressively working to widen geographic footprint in UK, EU and even in the US, to reduce India dependence. Investments on new projects in Make-I & II projects are on track. While current Net Working Capital cycle remains elevated >300 days, DP targets to bring it down to ~250 days. 

Investment for Make-II are in advance stage of design & development, with component ordering underway. It is in talks with US OEMs for developmental work opportunities. QIP fund deployment to build up for prototype and capacity expansion thereafter. DP has increased headcount by >30% in FY24 to >700 engineers.

After near doubling PAT in FY22-24, analysts at IIFL Capital Services expect EPS growth to moderate to 19% CAGR in FY24-6. The stock is richly priced at 42x FY26 estimated EPS and will need key success in large order wins to drive next leg of jump.