DATAPATTNS - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.3

📊 Core Financials

Earnings & Profitability: EPS of ₹38.3 and PAT of ₹25.5 Cr this quarter (down from ₹114 Cr) reflect a sharp drop, likely due to timing of defense orders or project-based revenue recognition. ROCE at 21.0% and ROE at 15.2% are solid, indicating efficient capital deployment.

Debt Profile: Debt-to-equity of 0.00 — completely debt-free, which is a major strength in a capital-intensive sector.

Cash Flow: While not explicitly stated, the company’s strong margins and zero debt suggest healthy operating cash generation.

💰 Valuation Indicators

Metric Value Insight

P/E Ratio 74.2 In line with industry PE (75.3), but still expensive

P/B Ratio ~10.6 High premium over book value

PEG Ratio 2.33 Overvalued relative to growth

Dividend Yield 0.28% Minimal income play

Valuation is rich, and PEG ratio suggests growth may not fully justify the premium at current levels.

🛡️ Business Model & Competitive Advantage

Data Patterns (India) Ltd. is a niche player in the aerospace and defense electronics space. Key strengths include

In-house design and development capabilities across radar, avionics, and electronic warfare systems

Long-term contracts with DRDO, ISRO, and defense PSUs

High entry barriers due to regulatory approvals and specialized tech

Rapid prototyping and competitive pricing

The company has over three decades of experience and is well-positioned to benefit from India’s defense modernization and import substitution push

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📈 Technical & Sentiment Indicators

RSI: 65.5 – Approaching overbought territory.

MACD: 48.1 – Bullish momentum.

Volume Dip – Below weekly average, suggesting reduced participation.

DMA 50 & 200: Price is above both, confirming medium-term strength.

Despite recent profit contraction, the stock has surged ~77% over the past year, reflecting strong investor confidence.

💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹2,600–₹2,650, near DMA 50 and technical support.

Current Price ₹2,841: Slightly above ideal entry — consider partial accumulation or wait for a dip.

🕰️ Long-Term Holding

Hold or Accumulate on Dips: Strong ROE/ROCE, zero debt, and defense sector tailwinds make Data Patterns a compelling long-term play.

Watch Earnings Consistency & Order Book Visibility: Volatile quarterly profits and high valuation warrant disciplined entry.

You can explore Data Patterns’ long-term price targets and sector analysis for deeper insights

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. Let me know if you'd like a peer comparison with Paras Defence or Astra Microwave.

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