Data Patterns shares gain 18% in 6 days; JM Financial raises target, sees more upside

Data Patterns shares climbed as much as 2.7 per cent to Rs 3,086 in Friday’s trade, compared to the previous close of Rs 3,003 on the BSE. The defence electronics stock has advanced 18 per cent over the last six sessions.

Riding on the recent rally, domestic brokerage JM Financial reiterated its ‘Buy’ call on the counter and raised its 12-month target price to Rs 3,505 from Rs 3,070 earlier. The revised target implies an upside potential of about 14 per cent from the current levels.

JM Financial said it remains constructive on Data Patterns, citing its strong in-house design capabilities, a healthy order backlog, sustained focus on product development, robust EBITDA margin profile, and the government’s continued push for defence indigenisation.

The company delivered a solid set of numbers for Q2FY26, which the brokerage described as a strong performance. Revenue surged 238 per cent year-on-year to Rs 310 crore, led by the execution of a single large and strategically important project worth Rs 180 crore.

This delivery was completed earlier than anticipated, as the brokerage had factored it in for the second half of the fiscal. Supported by this, EBITDA grew 100 per cent year-on-year to Rs 68.5 crore.

Despite the revenue surge, quarterly margins came under pressure, in line with expectations. JM Financial highlighted that the large Rs 180 crore order was secured at competitive pricing with lower margins, a move undertaken to unlock future long-term opportunities.

Consequently, the EBITDA margin for Q2FY26 slipped to 22.3 per cent from 37.7 per cent in the year-ago period.

The brokerage, however, believes the pressure is temporary. It has already factored in weaker margins for the first half but expects a rebound in the second half, projecting EBITDA margins of around 41 per cent—similar to last year’s 2HFY25 levels. The management has also retained its full-year guidance of 20–25 per cent revenue growth and EBITDA margins of 35–40 per cent for FY26.

Data Patterns’ order book remains strong at Rs 670 crore as of Q2FY26. The management expects fresh order inflows of Rs 1,000 crore in the second half of the year.

One of the major upcoming triggers is the BrahMos Seeker contract. “Negotiation is completed and the company expects to receive the production order soon,” the brokerage said.

The company is also sharpening its focus on global markets, supported by an export order book of Rs 80 crore. JM Financial noted that Data Patterns plans to strengthen its international presence by setting up a dedicated exports team.