Data Patterns share price targets: What Jefferies, others say after huge Q2 miss

Analysts have mixed views on Data Patterns (India) Ltd after its September quarter results, which saw a sharp miss on revenue, Ebitda and margins. While Jefferies and Choice Institutional Equities see long-term growth potential backed by strong order visibility, Nuvama has retained a 'Hold' rating, awaiting conversion of negotiated orders.

Jefferies said September quarter Ebitda was 61 per cent below its estimates, given a 52 per cent miss on revenue and margins at 23.6 per cent, 590 basis points below expectations.

The management retained its FY27E revenue growth guidance of 20-25 per cent despite a 39 per cent YoY fall in H1, citing confidence in an execution uptick backed by strong growth in order book and order flow. The Ebitda margin guidance of 35-40 per cent was also maintained, against 25 per cent achieved in H1.

"Our price target of Rs 5,545 values the company at 65 times September 2028E PE, which is at a 20 per cent discount to its peak since listing in December 2021. A 2.4 times rise in absolute profits over FY26-30E, 18 per cent ROE and debt-free balance sheet, with in-house technology in a growing defence pie, should keep valuations elevated. Downside risks – 1) Obsolescence of the company’s technology, 2) Lack of management bandwidth," Jefferies said.

Nuvama said Data Patterns missed Street’s PAT estimate by 67 per cent on weak revenue, with operating profit margin at 23 per cent against consensus expectations of 33 per cent. Order inflow shot up 5.6 times YoY to Rs 930 crore, while the order backlog rose two times to Rs 1,720 crore. Despite the miss, FY27 guidance was retained, implying H2FY27 sales growth of 65-75 per cent YoY and OPM of 38-44 per cent.

"We await conversion of Rs 970 crore of negotiated orders and Rs 2,000 crore of incremental opportunities. This can take the March 2027 order book to Rs 3,500 crore, driving 30 per cent-plus EPS CAGR, 20 per cent RoE and potential PE expansion. Retain ‘Hold’ pending order conversion with an unchanged target of Rs 4,500 (45 times FY29E PE)," Nuvama said.

Choice Institutional Equities believes investments in complete systems and reusable technology platforms could strengthen the company's competitive positioning and create opportunities for meaningful revenue scaling over the next few years.

"We believe Data Patterns is gradually moving up the value chain, from supplying subsystems to developing complete indigenous defence solutions. This transition could expand its addressable market and strengthen its positioning in larger defence programmes. Its firm order book of Rs 1,724 crore, along with negotiated orders of Rs 956 crore, takes total order visibility to Rs 2,680 crore," it said.