Nuvama increased target to 3700 from 2300
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Super results of Q2:
Net profit of ₹49.2 crore for the quarter ended September 2025, up 62.4% year-on-year from ₹30.3 crore in the same period last year.
Revenue for the quarter rose sharply to ₹307.5 crore from ₹91 crore YoY. EBITDA increased 97.4% to ₹68.1 crore from ₹34.5 crore in Q2 FY25.
Worth Noting: The company’s gross margin for the quarter was 38.52%, down from 75.96% in Q2 FY 2024-25, primarily due to the delivery of a strategic low-margin contract. The company expects to achieve its regular historical margins for the remainder of the year.
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Q2FY26 Concall Notes:
- Revenue 238% YOY, PAT 62% YOY.
- EBITDA Margin 22% vs 38% YOY. Q1 at 32%.
- Lower margin due to execution of a strategic project worth INR 180 Cr.
- The contract was taken at a competitive price considering long term opportunities.
- Ex of this contract, EBITDA margins were ~35-40%.
- Margins are expected to improve in H2 due to more balanced product mix.
- Order book INR 1300 Cr (includes orders negotiated pending receipt).
- Fresh order inflow of INR 351 Cr during H1.
- Confident of crossing INR 1500 Cr OB for FY26.
- Orders received from Brahmos and ECIL.
- Expecting high value orders in coming quarters.
- Export order book at INR 80 Cr.
- 31% of the order book relates to AMC (Annual maintenance contracts) for BrahMos ground systems.
- TPAR (Transportable Precision Approach Radar) exported to a European customer completed client acceptance. Expect positive traction from international markets.
- INR 122 Cr utilized from QIP funds for product development.
- Transitioning from a subsystem supplier to a full systems integrator, designing complete radar and EW systems in-house.
- Working capital is well controlled at 343 days (Will maintain at similar level for full year).
- Will collect most of the current receivables in H2.
- Still remain a debt free company as for most of the contracts there is advance given by the customer.
- New contracts should have even more advances and that will improve the cash conversion cycle.
- Expects WC to improve from 343 to 270 days gradually as they move from long gestation development contracts to production orders.
- Developing complete EW suite for the Super Sukhoi (4.5 gen fighter jet)
- Developed Jammer pods which are currently in testing.
- Developing BrahMos Seeker. Waiting for a contract.
- Focusing on the export market going forward. Management believes they build complex systems for which there’s not much competition worldwide.
- Developing products in radar, EW, avionics, ESM, electronic intelligence, drone detection and jamming, next gen seekers.
- TAM INR 15,000 - 20,000 Cr.
- AMCA (Advanced Medium Combat Aircraft) Consortium with BEML and Bharat Forge.
- Data patterns bring state of the art avionics (cockpit solutions, radars, EW).
- Currently at the RFI stage (Request for information), RFP (Request for proposal) has not been published yet.
- Expecting contracts in the next 6 months.
Disclaimer: Invested & Biased.
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There is no development fee because it is a buyer’s market. It must be the same with others as well, not just Data Patterns.
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If I am not wrong, then in the development orders the MoD or DRDO asks the companies to build a prototype which is able to perform certain specific function, shouldnt the company be paid for this? Or is it something like if development order is approved production order is guaranteed?
They are paid, it’s not free. That’s why he says gross margins are the same for development & production contracts. But the big money will made if & when you get production contract. Because production will have volumes and EBIDTA margins will be much higher.
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