Detailed Narrative
Q2 & H1 FY26 Performance Overview
Data Patterns reported robust financial results for Q2 and H1 FY26. Q2 revenue surged to INR 308 crores, marking a 238% year-on-year and 210% quarter-on-quarter increase. For the first half, revenue reached INR 407 crores, up 109% YoY. EBITDA for Q2 stood at INR 69 crores (up 100% YoY) and for H1 at INR 101 crores (up 41% YoY). Net profit for Q2 was INR 49 crores (up 63% YoY) and for H1 was INR 75 crores (up 18% YoY).
Strategic Project and Margin Impact
The company's Q2 profitability was impacted by the execution of a strategic, low-margin project valued at INR 180 crores. This contract, taken at a competitive price, was crucial for long-term opportunities and demonstrating capability in complex electromechanical systems. Consequently, Q2 gross margin was 39%, EBITDA margin 22%, and PAT margin 16%. Management indicated that without this specific project, Q2 EBITDA margins would have been in the guided range of 35-40%.
Order Book and Inflows
As of September 30, 2025, Data Patterns' order book, including negotiated and pending orders, stands at approximately INR 1,300 crores. Fresh order inflows during H1 FY26 totaled INR 351 crores, with significant contributions from BrahMos and ECIL. Additionally, INR 550 crores worth of orders have been negotiated but are yet to be confirmed. Management expressed confidence in surpassing INR 1,500 crores in order inflows for the full FY26.
Product Development and Export Focus
The company is heavily invested in product development, utilizing approximately INR 122 crores from QIP proceeds. Key development areas include various radars (fire control, ground, drone detection), EW systems, communication systems, avionics, and next-generation seekers. Data Patterns is also strategically expanding its export footprint, with the Transportable Precision Approach Radar (TPAR) successfully accepted by a European customer, and expects further international traction. The Total Addressable Market (TAM) for these new products is estimated at INR 15,000-20,000 crores.
Capital Allocation and Working Capital
Data Patterns maintains a debt-free status. Working capital days were reported at 343 days, with management aiming to keep this at a similar level for the full year, expecting significant receivables collection in H2. Long-term, the company targets reducing working capital days to around 270, contingent on a shift towards more production-oriented contracts. The cash conversion cycle, excluding customer advances, is estimated at 310-315 days.
Outlook and Future Growth Drivers
Management is confident in achieving its full-year revenue and EBITDA margin guidance, supported by a healthy order pipeline and strong execution capabilities. They anticipate securing more high-value orders in the coming quarters as their advanced technology and products gain wider market acceptance. The company's strategy involves proactive development of indigenous solutions and a transition from a subsystem supplier to a full systems integrator, addressing both domestic and international defence needs.