We all know the world isn’t always sunshine and rainbows. Just like a house that needs a lock on the door, a nation needs a strong defense to protect its citizens and it’s way of life. National defense isn’t just about fighter jets and soldiers on the frontlines. It’s a vast web of technology, strategy, and unwavering dedication that safeguards our borders, deter threats, and fosters peace.

The responsibility of national defense doesn’t solely fall on the shoulders of the armed forces. Innovative companies play a crucial role in developing cutting-edge technology that keeps our nation at the forefront of defense capabilities.

Here’s where Data Patterns come in. Data Patterns design, develop and manufacture critical electronic components and subsystems for various defence applications. From the day of getting listed to today’s date the company gave a whopping return of 268% within just three years of time. Will the company continue to grow further? Let’s delve deep into the concept and know further about the company.

Corporate Overview Of Data Patterns

Data patterns were first incorporated as “Indus Teqsite private limited”. They were established on November 11, 1998 at Bangalore, Karnataka. Data patterns is headquartered in Chennai, Tamil Nadu and it has its branches in Bangalore, Hyderabad, New Delhi and Thiruvananthapuram. The company converted into a public limited company by getting listed on stock exchanges on December 24, 2021. 

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Data patterns operates as a vertically integrated provider of defence and aerospace electronics solutions, catering specifically to the needs of the Indian made defence product industry. Data patterns, is a well established player in the Indian defence and aerospace electronics sector, boasting a rich history of over 35 years in the industry. As of Q3FY24, Data patterns employs a team including 1298 individuals,with a remarkable number of over 865 being qualified engineers.

As of Q3 FY24, Data Patterns had an order book of Rs. 960 crores, which grew by 8% year-on-year. They expect additional orders worth Rs. 600-800 crores to come in the next two quarters, which will take care of the next two years’ deliveries. Data patterns have received these orders from DRDO, Department of Space, BEL, HAL, BrahMos, Indian Navy and Indian Air Force.

Products and Segment Overview of Data Patterns

COTS (Commercial off the shelf) products

Data patterns offer a range of readily available, commercially produced electronic components which can be adapted for defence applications and products include processors, memory and modules.

Avionics

Avionics are the electronic systems that control an aircraft’s flight and navigation. Products include Light utility helicopters and Light combat aircrafts. 

Communications, ATE’s and Satellites 

Automated test equipment(ATE) is used to diagnose and troubleshoot communication equipment and Data patterns develops and manufactures electronic components and subsystems which are critical for satellite operations. 

Which include products like small and nano satellites and underwater electronics

Brahmos program

Data patterns contribute to Brahmos program by manufacturing fire control systems, mobile autonomous launchers and airborne launchers. 

Electronic warfare

This involves disrupting or manipulating the enemy’s electronic communications and radar systems. Data patterns manufactures surveillance and intelligence gathering (SIGINT) and COMINT and ELINT.

Radars

Radars are vital for detecting and tracking aircraft, ships and missiles. Products include surveillance radar, weather radar and coastal surveillance radar.

Financials Of Data Patterns

FY 2023FY 2022FY2021FY 2020
Revenue (in crore)453.45310.85223.95156.1
Net profit (in crore)12493.9755.5621.05
ROE14.24%24.02%30.74%14.70%
ROCE17.97%31.04%34.31%17.90%

In the FY 2023 Data patterns saw an increase in revenue, surging by 45.87% to reach 453.45 crore rupees as opposed to 310.85 crore rupees in FY 2022. This happened because of the opportunity given by the government to increase its self reliance in defence technology. Analysing a span of three years, encompassing FY 2021 to FY 2023, the company displayed a Compounded annual growth rate (CAGR) of 42.68% in revenue.

In FY 2023 the net profit of the firm was also increased by 31.95% to reach 124 crore rupees as opposed to 93.97 crore rupees. 

In FY 2023 ROE of the firm decreased by 10 % because of its long term debt and ROCE of the firm also decreased by 13% because of increased competition in the industry.  

Future Plans Of Data Patterns

  • The company has completed constructing a new manufacturing facility in Q4FY23 and it has set ambitious targets for further expansion, with a capex of rupees 100+crores for FY 2025.
  • Initiatives like Atmanirbhar Bharat, Positive Intergenerationalist, and the military Modernization Plan, which provides a steady order flow for the Indian military industry, support this projected expansion. These calculated actions have the potential to greatly increase the company’s performance in the changing military industry environment.
  • The management is expecting exports will be a major source of income for next 4-5 years. But the firm is currently focused on addressing the domestic market opportunities.
  • Ranagarajan, The CMD of Data patterns said that they retain 35-40% EBITDA in the current year and he expects the EBITDA to do better in the upcoming year. At the same time Ranagarajan highlighted radar, electronic warfare and avionics as the main drivers of companies operations which will lead them to grow in the future. He also shed light on plans for utilising funds which are raised through qualified institutional placements. 
  • Data patterns is actively managing its working capital to achieve a target cycle of 240 – 270 days in the coming years. This goal was primarily driven by reducing inventory holding periods.

Read more: Fundamental Analysis Of Paramount Communication

Conclusion

Looking at the performance of Data patterns it looks promising. Data patterns as a company has carved a niche as a leading provider of defence electronics solutions within India. But as a company they should be aware, too much of being dependent on government orders may be risky in future and it should focus on having a diverse customer base. 

However, their commitment to innovation and exploring new market opportunities positioned them well for future growth. As India’s defence sector continues to modernise and prioritise domestic manufacturing, Data patterns are poised to play a vital role in this crucial journey.

As an individual what would be your view on data patterns? Does it continue to rise, share your views in the comments below.

Written by Pavunkumar V M

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