Data Patterns (India) Limited stands out as a rapidly expanding enterprise within India’s Defence and Aerospace Electronics sector. It is one of the selected few providers of vertically integrated solutions in defence and aerospace electronics, specifically serving the domestic defence products market. The company emphasises in-house development and manufacturing, driven by innovation as well as design and development initiatives. With over 35 years of experience in the industry, Data Patterns has delivered products across various platforms, including space, air, land, and sea, featuring notable contributions to projects such as the LCA-Tejas, Light Utility Helicopter, and BrahMos missile.
In this article, we will discuss the summary of the Data Patterns (India)’s Q3 FY 25 Earnings Conference Call. So, let’s get into the details
Financial Highlights
Revenue for the quarter increased by 29% QOQ to INR 117 cr.
For 9 months, revenue stood at INR312 crore, down by 7.5 percentage year-on-year.
For the 9 months gross margin is at 76 percentage and EBITDA margin at 40 percentage.
As of December end, the company has over INR575 crores in cash and cash equivalents.
The company is debt free till date.
Growth outlook and order book
In quarter 4 the company expects a major ramp up in revenue, targeting around 20-25% growth for the full year.
As of December 31,2024 the company’s order book stood at INR 1095 crore. And international order book stands at INR106 crores as on 31st December 2024
The company expects new bidding pipeline of around INR 2000-3000 cr in next 18 monts.
The company is focusing on R&D extensively and showcased some of its innovations in the Defence Expo 2025.
Q3 order wins
In Q3 the company secured a production order for EW worth INR 80 crores,
A production order of RADAR worth INR 53 crores,
A production order for Avionics export worth INR 53 crore.
With recent Indian defence budget of INR 6.8 Lakh crore for FY 25-26 the company expects more order inflows during upcoming quarters.
Future outlook
The management is optimistic for large order wins in upcoming quarters
As defence budget Is increased 9.5% from previous year management expects new orders coming in further quarters.
Anticipates revenue growth in Q4 FY25.
Question and Answer Session Highlights
over the years, The company decreased the guidance from a revenue guidance of close to around 30% to now to 20% to 25%. What are the challenges faced by the company which compel it to change the guidance?
in the capital equipment market, the market order book doesn’t happen on a year-on-year, effort goes many years behind because the order happens. It takes sometimes 3 years, 5 years or 8 years, depending on what we did some years back, the contract starts happening now.
Of course, the conversion rate to contract can be much quicker in the coming days. But having been where the company is as defence industry in India, that is how the actual contract happens over a period of time.
Today, Board is increasing it. So whatever we did many years back, the contracts are coming as the repeat contracts now and some new orders and development contracts are happening, which is what driven today in the revenue growth you’ve seen today.
Going ahead to say what triggers are necessary to increase the scaling or increase in revenue growth faster, company need to have an addressable market, which is larger and build products that further addressable market and see that those initial entry orders have received which are tested based on which repeat orders, production orders start happening.
So what the company have done is raise money to build products to increase the addressable market of INR10,000 crores to INR20,000 crores. Once the company increase the addressable market, develops the products, positions it, and goes through the process of acceptance, then the contract should happen, which will scale growth substantively.
There are two things which have to happen. One, the growth is just to grow faster. Second, we need to have an order book for a few years, not a 1, 1.5, 2 2-year order book. The company need to have an order book 3 to 5 years on hand.
The company expects to do this over a period of time. And that is the reason we are doing very internal R&D, tremendous product development we’re doing. So, this company can propel to higher growth and also have a stable order book, which is at least 4, 5 years, 3, 4 years at least, so that we can have predictable growth patterns in the coming years.
what is the order inflow guidance that you are expecting for FY ’25?
The company did not disclosed any numbers for the question. According to management No orders have been lost; delays have occurred, but large tenders are expected in the next 3-4 months. The company actively participates in MoD programs and is well-positioned to secure significant orders. Once approvals and final negotiations conclude, there will be greater clarity on order finalization timelines.
on the export, so this time, we have seen a huge growth in our export revenue. So can you tell us from which area have we got this export orders? And what kind of execution are we looking at going ahead in exports?
A product development company in India has secured preliminary export contracts, successfully delivering a newly designed radar product to European markets about 14-15 months ago. The company sees this as an opportunity to showcase its intellectual property (IP) and products, developed in India, to advanced Western countries.
To expand exports, the company plans to establish a proper marketing organization in the coming year, acknowledging that building substantial export business will take time due to the need for field-proven products and navigating cumbersome processes in India. The goal is to transition from being a subsystem supplier to a system supplier with export-worthy products.
The company has seen success in radar orders and has been developing avionics for a European customer over the past 7-8 years, with increasing order volumes. These are not low-margin build-to-print contracts, but products designed with the company’s own IP, leading to customer satisfaction and no delays even during COVID. This has attracted interest from foreign OEMs visiting their factory.
In the medium to long term, the company aims to secure initial trial orders from new customers, which could lead to sustained revenue through the customers’ marketing capabilities. Events like Aero India will provide exposure to foreign OEMs. To support this growth, the company is building capability by expanding its workforce to over 1,000 engineers among 1,500 total employees, training them on existing development projects (e.g., for DRDO) to enable faster delivery and exceed customer expectations.
While the large Indian defense aerospace market is a priority, it is tender-driven and unpredictable. To balance this, the company seeks to supplement it with export orders of IP-driven products, ensuring steady month-to-month and quarter-to-quarter revenue. Investments in infrastructure, equipment, and development are planned to support this dual-market strategy.
-there are a lot of concerns that whether in India, defence indigenization is going to get slowed down, defence spend is going to get slowed down, ordering activity will slow down. I wanted to understand from you, are you seeing any changes on the ground particularly?
The management expresses a positive outlook on their interactions with senior officials from the Ministry of Defence (MoD) in India, including IAS officers. The MoD recognizes that delays are unacceptable and is focused on streamlining processes to enable faster orders and greater industry participation. The Defence Secretary has recently indicated that significant orders for the industry are forthcoming, signaling serious intent.
The management highlights the government’s awareness of bureaucratic hurdles and the urgent need to strengthen India’s defense capabilities, especially given the international context. They emphasize the Prime Minister’s clear stance on prioritizing indigenous defense as a critical component of national strength, a view shared widely across the government. The management believes this commitment will only intensify, driven by global events, and urges a redoubled effort to enhance India’s defense capabilities quickly and confidently, even if it involves some setbacks.