Data Patterns Q4FY26 performance was mixed, but earnings and order prospects remain robust

Overview

This report reviews Data Patterns' Q4FY26 results. Goldman Sachs believes the company's revenue performance this quarter was weak and below expectations, but the main reason was project execution and customer delivery timing rather than deterioration in demand or execution capability. Earnings remained resilient, with margins improving due to complete systems, in-house IP, and a smaller share of lower-margin strategic contracts. Goldman Sachs continues to like the company's long-term opportunities in Indian defense electronics, its proprietary IP platform, export expansion, and the global OEM supply chain.

Core views

Goldman Sachs' core view is that Data Patterns still has differentiated competitiveness: the company develops proprietary IP-driven platforms and can adapt them to global OEM requirements, which helps revenue stay within management's 20%-25% growth guidance. On the order side, the INR 10.9bn order agreed but awaiting signature, the INR 19bn production orders that may materialize over the next 12 months, and projects such as BrahMos seeker, LCA Mk-2, AMCA, and electronic warfare suites form medium-term growth catalysts. On profitability, management guides for EBITDA margins of 38%-40%, while Goldman Sachs uses a more conservative 38% average margin assumption.

Analysis framework

The report mainly uses earnings comparison, order backlog and order inflow tracking, management call information, revenue and margin forecast revisions, and a P/E-based target price valuation method. Goldman Sachs raised FY27E/FY28E/FY29E revenue forecasts by 4.2%/5%/6%, assuming around 23% year-over-year revenue growth, and rolled its valuation basis to FY28E.

Methodology notes

• Valuation methodsP/E-based target price methodology

  P/E valuation

  Goldman Sachs discounts Data Patterns' FY31E EPS to FY28E at a 12.7% cost of equity and assigns a 45x P/E multiple to arrive at a 12-month target price of INR 4,165/share; this target price implies FY27E and FY28E P/E multiples of about 71x and 56x, respectively.

• factor_profileGS Factor Profile

  Goldman Sachs factor profile

  GS Factor Profile compares a stock's position versus the market and industry peers from the perspectives of growth, financial returns, valuation multiples, and composite factors, providing investment context.

• corporate_activityM&A Rank

  M&A probability score

  Goldman Sachs uses an M&A rank of 1 to 3 to assess the probability that a company becomes a takeover target; if the ranking is 1 or 2, an M&A component may be included in the target price.

• databaseQuantum

  Goldman Sachs proprietary financial database

  Quantum provides company financial history, forecasts, and ratios, and can be used for single-company deep dives or cross-industry and cross-market comparisons.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Data Patterns (DATP.BO)

  Core research subject; an Indian defense electronics and systems solutions company.

  Strengths

  Proprietary IP platform, vertically integrated model, complete systems delivery capability, growing order backlog, export potential, expansion into the global OEM supply chain, and opportunities in projects such as BrahMos seeker and electronic warfare suites.

  Weaknesses

  Quarterly revenue is highly affected by execution timing, working capital days may still be elevated, and some orders have not yet been formally signed.

  Comparison

  Goldman Sachs positions it within its coverage universe, which includes Indian industrial and defense-related names such as Astra Microwave, Bharat Dynamics, Bharat Electronics, and Hindustan Aeronautics.

  Risks

  Order signing or existing contract execution delays, customer concentration, working capital days remaining elevated, project delivery pace falling short of expectations, and high valuation making the stock sensitive to earnings delivery.

Key data

• Report date2026-05-17The report cover shows 17 May 2026 7:37AM IST.
• RatingBuyGoldman Sachs maintains its Buy rating on Data Patterns.
• Target priceINR 4,165/shBased on 45x FY31E EPS and discounted to FY28E.
• Current priceRs3,873.45Data Patterns price shown on the regulatory disclosure page.
• Q4FY26 revenueINR 3,448mnThe chart shows Q4FY26 revenue; down 13% year over year.
• FY26 revenueINR 9,248mnThe revenue mix chart shows full-year FY26 revenue.
• FY26 order inflowINR 11.2bnUp 216% year over year, with order sources including radars, avionics, electronic warfare, and strategic electronics.
• Current order backlogINR 20.6bnIncludes INR 10.9bn of agreed but unsigned orders.
• Potential production ordersINR 19bnManagement said these could materialize over the next 12 months, based on products already delivered.
• Management revenue growth guidance20%-25%Goldman Sachs forecasts a mid-point of about 23% year-over-year growth.
• Management EBITDA margin guidance38%-40%Goldman Sachs uses a 38% EBITDA margin assumption on average through FY29E.
• Export order backlogINR 530mnManagement believes exports will become an important growth pillar.

Impact & implications

The report is positive for Data Patterns' investment case: despite revenue missing expectations in a single quarter, visibility from orders, export opportunities, a higher share of in-house complete systems, and medium- to long-term defense project progress support the sustainability of revenue and earnings. The higher target price and maintained Buy rating indicate that Goldman Sachs believes near-term volatility does not alter the long-term growth story. However, the current valuation implies a high P/E, so the market is demanding on order conversion and margin delivery.

Risks

• Delays in order signing or execution of existing contracts.
• Customer concentration risk.
• Working capital days may remain elevated.
• If the INR 19bn potential production orders do not materialize as expected, upside to revenue could be reduced.
• Export and global OEM collaboration progress may be slower than expected.
• The high valuation multiple makes the share price more sensitive to earnings estimates, order conversion, and margin changes.

What to watch

• Whether the INR 10.9bn agreed orders are formally signed within 1-2 months.
• The pace at which the INR 19bn potential single-supplier production orders materialize over the next 12 months.
• Whether export momentum improves significantly starting in FY27, especially in UK repeat orders and progress in cooperation with global OEMs in Europe and the US.
• Whether BrahMos seeker production orders are secured within 4-5 months and delivery progress before FY27.
• Testing and commercialization progress for LCA Mk-2, AMCA RFP, electronic warfare suites, and self-protection jammer pods.
• Whether EBITDA margins can stay within the 38%-40% guidance range.
• Whether working capital days continue to improve.