Data Patterns (India) Limited — Q1 FY26 earnings call

Call held 8 Aug 2025

Management summary

Data Patterns reported a subdued Q1 FY26 with revenue declining 4.6% YoY to INR 99 crores, primarily due to customer approval delays. Despite this, gross margins improved, and the company maintained healthy EBITDA and PAT margins of 32.3% and 25.7% respectively. A strong order book of INR 1,079 crores and INR 320 crores in new orders this quarter provide confidence for a pickup in execution from Q2, with the company reiterating its full-year growth and margin guidance.

Highlights

  • Q1 FY26 revenue stood at INR 99 crores, down 4.6% year-on-year due to customer approval-related delays.

  • EBITDA for the quarter was INR 32 crores, with a margin of 32.3%.

  • Net profit for Q1 FY26 was INR 25.5 crores, achieving a PAT margin of 25.7%.

  • The current order book stands at a strong INR 1,079 crores.

  • New orders worth over INR 320 crores were received since the start of the financial year, including from BrahMos and MoD.

  • The export order book remains healthy at about INR 100 crores.

  • The company maintains its full-year guidance of 20-25% revenue growth and 35-40% EBITDA margins.

  • Over INR 120 crores has been deployed in new product development activities, focusing on indigenous capabilities.

Concerns

  • Customer Approval Delays

Key financials

  1. Revenue ₹99 Cr -4.6%YoY
  2. EBITDA ₹32 Cr
  3. EBITDA Margin 32.3%
  4. Net Profit ₹25.5 Cr
  5. PAT Margin 25.7%
  6. Cost of Goods Sold Decline 30% -30%YoY

What they filed

Q1 FY27: revenue up 17.2%, net profit down 15.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue91 117 396 99 307 +237%173 +48%345 −13%116 +17%
EBITDA34 54 149 32 68 +100%81 +50%193 +30%31 −3%
Net profit30 45 114 26 49 +63%58 +29%138 +21%22 −15%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹1,079 Cr

as of 2025-08-08 quantified

Inflow this quarter

₹320 Cr

Execution

pickup in the execution and revenue growth from Q2 onwards

Composition

  • Export (geography) ₹100 Cr 9.3%
  • BrahMos and MoD (client type)

Pipeline

deal pipeline tcv

Potential orders from single-vendor contracts, airborne radars, and development contracts for flight testing, with a broader pipeline of INR 2,000-3,000 crores.

Cancellations & deferrals

  • deferred: Revenue of approximately INR 27 crores deferred due to customer approval-related delays that impacted dispatches and revenue recognition.
The pipeline is strong, and the company is confident of achieving full-year growth guidance, with execution expected to pick up from Q2.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹120 Cr
    • New product development activities, focusing on building indigenous capabilities across radar systems, electronic warfare, communication systems and airborne systems. ₹120 Cr
    • Creating infrastructure and production infrastructure in anticipation of future contracts.
    • Investing in people and training for future requirements.
    We already deployed over INR120 crores in the new product development activities with a focus on building indigenous capabilities across radar systems, electronic warfare, communication systems and airborne systems.

Guidance & targets

Revenue

  • Revenue Growth Revenue · full year · High confidence 20% to 25%
    Our pipeline is strong and we're confident of achieving full year growth guidance of 20% to 25%, revenue growth while maintaining healthy EBITDA margins in the 35% to 40% range.

    — S. Rangarajan

Profitability

  • EBITDA Margin Profitability · full year · High confidence 35% to 40%
    Our pipeline is strong and we're confident of achieving full year growth guidance of 20% to 25%, revenue growth while maintaining healthy EBITDA margins in the 35% to 40% range.

    — S. Rangarajan

Order Inflow

  • New Orders Order Inflow · next 6, 7, 8 months · Medium confidence INR1,000-plus crores
    we believe in the next 6, 7, 8 months probably before end of the year or early next year, we should get some INR1,000-plus crores orders.

    — S. Rangarajan

Order Pipeline

  • Potential Orders Order Pipeline · next 18-24 months · Medium confidence INR 2,000 crores to INR 3,000 crores
    the order pipeline of this INR1,000, INR2,000 crores we're talking about are 2 billion to 3 billion which we're talking about is all based on those kind of contracts.

    — S. Rangarajan

What to watch in Q2 FY26

Q1 Deferred Revenue Recognition

next quarter
Current INR 27 crores deferred
Target INR 27 crores recognized

Why it matters

Direct impact on Q2 revenue and validation of customer acceptance process for previously delayed orders.

around maybe INR27 crores. But they just started testing now. Last 10 days, work has started. Customer acceptance has started. So, if this goes on properly, we should be able to bill it in the coming quarters.

Risks & concerns

  • Customer Approval Delays

    high

    Delays in customer approvals directly impacted Q1 revenue recognition, deferring approximately INR 27 crores, though inspections have now started.

    Management acknowledged

  • Government Procurement Timelines

    medium

    The unpredictability of government inspection and procurement timelines can cause delays in revenue recognition, despite end-user urgency.

    Management acknowledged

  • Competition in Emergency Procurement

    medium

    Emergency procurement contracts involve competitive bidding, requiring successful demonstration and field trials to secure orders.

    Management acknowledged

  • Adoption of Indigenous BrahMos Seekers

    medium

    While Data Patterns has an indigenous seeker solution for BrahMos, its adoption depends on government decisions, as imported seekers are currently used.

    Management acknowledged

Q&A highlights

7 direct
AMC Contract Execution & Cyclicity Direct
The main AMC contract we received is from BrahMos. This is for a 5-year AMC, but it's predated AMC from -- starting from last January... this is a 5-year AMC contract, which is billable yearly.

Clarifies the nature and revenue recognition of significant AMC orders, indicating recurring revenue streams from existing products.

Asked by Dipen Vakil

Order Pipeline Clarity & AON for BrahMos Partial
we believe in the next 6, 7, 8 months probably before end of the year or early next year, we should get some INR1,000-plus crores orders.

Provides near-term order inflow expectations and highlights specific high-value opportunities like airborne radars and BrahMos, though specific contract values are not disclosed.

Asked by Dipen Vakil

Q1 Revenue Delay & Quantum Direct
around maybe INR27 crores. But they just started testing now. Last 10 days, work has started. Customer acceptance has started. So, if this goes on properly, we should be able to bill it in the coming quarters.

Quantifies the revenue impact of delays in Q1 and provides a timeline for recovery in subsequent quarters, indicating a temporary setback.

Asked by Hardik Rawat

Employee Cost Escalation Direct
No. It is headcount-driven. There is wage revision plus headcount driven. Suppose we want, from a INR700 crores, to be a INR5,000 crores company in the next, let's say, 4 years, 5 years, we need to do not just the products.

Explains the increase in operating costs as a strategic investment in future growth and capability building, rather than just inflationary pressures.

Asked by Hardik Rawat

Q1 Revenue Skew towards BEL & Margin Impact Direct
our margins have gone up. Gross margins have gone up to 80%. I thought we have done very well on the gross margin. You're probably talking EBITDA. EBITDA is a different story because the top line comes down, expenses remain the same. So EBITDA comes down. But our gross margins have increased.

Corrects the analyst's perception of margin decline, clarifying that gross margins improved, and EBITDA margin pressure was due to lower top-line and fixed costs, not inherently lower margins from specific clients.

Asked by Jyoti Gupta

Jammer Ports & SU-30 Integration Direct
We've also made an offer to Air Force to fit it into the SU-30. They have taken it very positively because of the -- this is a self-protection jammer, which is fitted to all the aircraft.

Highlights a significant product development, its successful flight testing, and potential for large orders (estimated INR 7,400 crores for EW suite) with a key defense platform, pending flight trials.

Asked by Jyoti Gupta

Production vs. Development Contracts & Margin Impact Direct
So actually, we don't charge a nonrecurring development fee in most of the contracts we take up. So I don't think there is any difference between production and development in terms of gross margins.

Clarifies that the company's business model (funding its own development) means there's no significant margin difference between development and production contracts, ensuring consistent profitability.

Asked by Krishna Doshi

Q2 Execution Confidence & Margin Dip Direct
See, margins are governed by product mix. Sometimes we take contracts with very low margins or not normal margins because we believe it's a long-term -- this product will have value to the company.

Addresses the uncertainty of government approvals but reiterates urgency from end-users for Q2 execution. Explains margin strategy as a long-term play for IP and market share, even if it means lower initial margins on some contracts.

Asked by Garvit Goyal

2 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

Data Patterns reported Q1 FY26 revenue of INR 99 crores, a 4.6% decline year-on-year, primarily due to customer approval delays impacting revenue recognition. Despite the top-line dip, gross margins improved to 80%, though EBITDA stood at INR 32 crores (32.3% margin) and PAT at INR 25.5 crores (25.7% margin). The company maintains its full-year guidance of 20-25% revenue growth and 35-40% EBITDA margins, expecting execution to pick up from Q2.

Strong Order Book and Pipeline

The current order book stands at a robust INR 1,079 crores, with INR 320 crores in new orders secured since the start of the financial year, including contracts from BrahMos and the Ministry of Defence. The export order book contributes INR 100 crores. Management anticipates securing over INR 1,000 crores in new orders within the next 6-8 months, with a broader pipeline of INR 2,000-3,000 crores based on single-vendor contracts and ongoing developments.

Strategic R&D and Product Development

Data Patterns has invested over INR 120 crores in new product development, focusing on indigenous capabilities in radar systems, electronic warfare, communication systems, and airborne systems. This investment aims to expand the addressable market and secure larger contracts by offering fully developed and internally tested products. The company's strategy is to 'build first to be eligible to win,' ensuring international quality standards.

Key Product Developments and Opportunities

The company is progressing with its indigenously developed jammer for SU-30 aircraft, with air trials and hardware testing nearing completion within the next 1-1.5 months, potentially leading to significant orders (estimated INR 7,400 crores for the EW suite). Additionally, Data Patterns holds orders for LCA Mark-2 mission systems, including a modern glass cockpit, with deliveries expected in the next 3-4 months. The firm is also developing indigenous seekers for BrahMos, which could substantially increase orders if adopted.

Customer Approval Delays and Q2 Outlook

Approximately INR 27 crores of revenue recognition was deferred in Q1 FY26 due to delays in customer inspections and approvals. However, these inspections have now commenced, and the company expects to bill this revenue in the coming quarters. Management expresses confidence in a pickup in execution and revenue growth from Q2 onwards, driven by the strong order book and the urgent need for products from end-users, despite the inherent unpredictability of government processes.

Employee Cost and Margin Strategy

Employee costs increased by 27% year-on-year, primarily driven by headcount additions and wage revisions. This is part of the company's long-term strategy to scale up to a INR 5,000 crores company by investing in skilled personnel and infrastructure. While EBITDA margins were impacted by lower Q1 revenue, gross margins improved. The company consciously takes on some contracts with lower initial margins if they offer long-term value, IP creation, or market entry opportunities.

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