Creating the future of defense technology

We all know that the world isn’t always sunshine and rainbows. Just like a house needs a lock on its door, a country needs strong defenses to protect its people and way of life. National defense is not just about fighter jets and front-line soldiers. Protecting borders, deterring threats, and fostering peace is a vast network of technology, strategy, and unwavering commitment.

Responsibility for national defense does not lie solely with the military. Innovative companies play a critical role in developing cutting-edge technologies that keep our country at the forefront of our defense capabilities.

This is where data patterns come into play. Data Pattern designs, develops and manufactures critical electronic components and subsystems for a variety of defense applications. From the day it went public to today’s date, the company has recorded a whopping 268% return in just three years. Will the company continue to grow further? Let’s dig deep into the concept and learn more about the company.

Enterprise Overview of Data Patterns

data pattern It was initially incorporated as “Indus Teqsite private Limited”. They were founded on 11 November 1998 at Bangalore, Karnataka. Data Pattern is headquartered in Chennai, Tamil Nadu with offices in Bangalore, Hyderabad, New Delhi and Thiruvananthapuram. The company was converted to a public limited company when it was listed on the stock exchange on December 24, 2021.

Data Patterns operates as a vertically integrated supplier of defense and aerospace electronics solutions that specifically cater to the requirements of the Indian defense industry. Data Patterns is a well-established company in the Indian defense and aerospace electronics sector and boasts a rich history of over 35 years in the industry. As of Q3 2024, Data Patterns employs a team of 1,298 individuals, of which a whopping 865 are qualified engineers.

As of Q3 2024, Data Patterns’ order book stands at Rs. It is KRW 96 billion, an 8% increase compared to the same period last year. They expect additional orders worth Rs. $60 to $80 billion is expected to arrive in the next two quarters, which will cover deliveries for the next two years. The data pattern has received these orders from DRDO, Ministry of Space, BEL, HAL, BrahMos, Indian Navy and Indian Air Force.

Product and Segment Overview in Data Patterns

COTS (Commercial off the Shelf) products

Data Pattern offers a variety of readily available, commercially produced electronic components applicable to defense applications; its products include processors, memories, and modules.

avionics

Avionics are the electronic systems that control the flight and navigation of an aircraft. Products include small utility helicopters and small combat aircraft.

Telecommunications, ATE and Satellite

automated test equipment(ATE) is used to diagnose and troubleshoot communications equipment, and data patterns develop and manufacture electronic components and subsystems critical to satellite operation.

These include small and nano satellites, underwater electronics, and more.

BrahMos Program

Data Pattern contributes to the Brahmos program by manufacturing fire control systems, mobile autonomous launchers, and aerial launchers.

electronic warfare

This includes jamming or manipulating enemy electronic communications and radar systems. Data patterns manufacture Surveillance and Intelligence Gathering (SIGINT) and COMINT and ELINT.

radar

Radar is essential for detecting and tracking aircraft, ships, and missiles. Products include surveillance radar, weather radar, and coastal surveillance radar.

Finance in Data Patterns

In fiscal 2023, Data Pattern’s revenue grew by 45.87% to reach 453.45 crore rupees. This is in contrast to Rs 310.85 crore in FY 2022. This occurred because it provided an opportunity for the government to become more self-sufficient in defense technology. After analyzing three years from FY 2021 to FY 2023, the company recorded a compound annual growth rate (CAGR) of 42.68%.

In fiscal 2023, the company’s net profit increased by 31.95% to reach 124 crore rupees as against 93.97 crore rupees.

In fiscal 2023, the company’s ROE decreased by 10% due to long-term debt, and the company’s ROCE also decreased by 13% due to increased competition in the industry.

What’s next for Data Patterns?

• The company completed construction of its new manufacturing facility in the fourth quarter of fiscal 2023 and has set ambitious targets for further expansion with a capital expenditure of over Rs 100 crore in fiscal 2025.
• Initiatives such as Atmanirbhar Bharat, Positive Intergenerational and Military Modernization Plan, which provide a steady flow of orders to the Indian military industry, support this planned expansion. These calculated actions have the potential to significantly improve a company’s performance in the changing military industry environment.
• Management expects exports to become the main source of revenue over the next four to five years. However, the company is currently focused on addressing domestic market opportunities.
• Ranagarajan, CMD, Data Patterns, said EBITDA has remained at 35-40% this year and he expects EBITDA to be better next year. At the same time, Ranagarajan highlighted radar, electronic warfare and avionics as key drivers of the company’s operations, which will drive future growth. He also revealed plans to utilize the funds raised through placement of eligible institutions.
• Data patterns are actively managing working capital to achieve target cycles of the next 240 to 270 days. This goal was achieved primarily by shortening inventory holding periods.

Read more: Fundamental Analysis of Paramount Communications

conclusion

Looking at the performance of the data pattern, it looks promising. Data Patterns as a company has carved a niche as a leading supplier of defense electronics solutions in India. However, as a business, we need to recognize that relying too much on government mandates can be risky in the future, and we need to focus on having a diverse customer base.

However, our commitment to innovation and exploration of new market opportunities positions us well for future growth. As India’s defense sector continues to modernize and prioritize domestic manufacturing, data patterns are poised to play a critical role in this critical journey.

As an individual, what are your views on data patterns? If it continues to rise, please share your thoughts in the comments below.

Written by Pavunkumar VM

By leveraging the Stock Screener, Stock Heatmap, Portfolio Backtesting and Stock Comparison tools on the Trade Brains portal, investors have access to comprehensive tools to identify the best stocks, stay updated and informed with stock market news. invest.