Data Patterns (India) Limited: Q2 FY26 Performance and Strategic Outlook

Data Patterns (India) Limited, a key player in India's defense and aerospace electronics sector, has reported a robust financial performance for the second quarter and half-year ended September 30, 2025. The company's strategic focus on in-house design and full systems integration continues to drive growth, despite a temporary impact on margins from a specific contract. The Board of Directors approved the limited review financial results, highlighting significant top-line expansion and sustained profitability, reinforcing the company's position as a strategic defense systems provider.

For Q2 FY26, the company's Net Revenue stood at Rs 307.5 crore, contributing to a half-year (H1 FY26) Net Revenue of Rs 406.8 crore. This represents a remarkable 109% year-on-year growth for H1 FY26, demonstrating strong operational momentum and execution capabilities. While the Gross Margin for Q2 FY26 was 38.5%, a notable decrease from 75.96% in Q2 FY25, this was attributed to the delivery of a strategic low-margin contract. However, management expressed confidence in achieving regular historical margins for the remainder of the year. EBITDA for Q2 FY26 doubled to Rs 68.5 crore, and Net Profit after Tax (PAT) increased by 62% to Rs 49.2 crore compared to the corresponding period last year.

Strategic Imperatives and Growth Engines

Data Patterns is actively pursuing several strategic initiatives to sustain its growth trajectory and enhance stakeholder value. A primary focus is on moving up the value chain by building full systems using reusable in-house designed building blocks with proprietary intellectual property. This transition from a subsystem supplier to a full systems integrator, capable of designing complete radar and Electronic Warfare (EW) systems, creates a strong market differentiation and enhances eligibility for high-value tenders. The company has invested over Rs 120 crore in new product development, with these products nearing readiness.

Expanding its geographical footprint is another key priority. Data Patterns has successfully exported Transportable Precision Approach Radars and Search & Track Radars to international customers in Europe and East Asia, marking its first export of a fully developed radar. This move is expected to diversify revenue streams and generate positive traction from international markets. The company is also committed to significant investments in products, technology, and capital expenditure, with Rs 175 crore invested in capex over the last five years and an additional Rs 150 crore planned for the next two years. These investments aim to develop future-ready products and expand the total addressable market (TAM), which is estimated to be between INR 15,000 to INR 20,000 crore for its new product categories.

Furthermore, the company has effectively utilized approximately INR 122 crore from its Qualified Institutional Placement (QIP) proceeds for product development in critical areas such as Radar, EW, and Communication systems R&D. These QIP-funded developments are in advanced stages and are anticipated to translate into high-value contracts as the technology gains wider customer acceptance.

Order Book and Future Outlook

Data Patterns maintains a healthy order book, which stood at Rs 673.6 crore as of September 30, 2025. Including orders that are negotiated and yet to be received, the total order book is Rs 1,286.98 crore. The company secured fresh order inflows of INR 351 crore during H1 FY26, with significant contributions from BrahMos and ECIL. Management expects an additional Rs 100 crore in order inflows for the remaining part of the year.

Looking ahead, Data Patterns remains confident in its growth trajectory. The management has guided for a revenue growth rate of 20-25% over the next two to three years and anticipates EBITDA margins to be around 35-40% in FY26. The company also aims to maintain its net debt-free status, reflecting a disciplined financial approach. The strong order pipeline, coupled with robust execution capabilities and a proactive approach to product development, positions Data Patterns for sustained profitable growth and strong cash generation.

Conclusion

Data Patterns (India) Limited's Q2 FY26 performance underscores its strategic clarity and disciplined execution. By focusing on indigenous design, full systems integration, geographical expansion, and continuous R&D investment, the company is well-positioned to capitalize on the growing opportunities in the defense and aerospace electronics market. The management's commitment to maintaining profitability and a strong balance sheet, alongside its ambitious growth plans, reinforces investor confidence in its long-term value creation potential.