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Target: ₹830
CMP: ₹713.95
Data Patterns reported 9 per cent y-o-y growth in revenue (in-line with JMF expectations), while EBITDA decline was restricted to just -1.4 per cent (12 per cent ahead of JMFe), as gross margins surprised positively on a favourable mix.
PAT was 5 per cent higher than estimate at ₹61.60 crore, (-7 per cent y-o-y). Management maintained its revenue growth guidance 25-30 per cent y-o-y with EBITDA margins of 40 per cent+, despite increase in share of development contracts in the order book.
We believe rising share of electronics in defence, step up to systems integration contracts and higher share of single vendor contracts will aid the company to achieve sales and EPS CAGR of 23 per cent CAGR respectively, over FY22-24.
We slightly increase our revenue estimates to factor in increased inflows in FY23/24, due to favourable macro environment, but continue to maintain our margins estimates in 41-42 per cent range.
We maintain Buy rating with revised target price of (30x FY24 EPS) ₹830 (₹800 earlier), as we build in a pickup in execution of large orders in FY24.
Key risks: Budgetary cuts or delays in project awards
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