Data Patterns Q1: PAT falls 13% YoY to ₹22 Cr, margins squeezed; revenue +17% below plan
PAT -13.49% YoY · revenue +16.81% · margins compressing
₹116.03 Cr
+16.81% YoY
₹22.06 Cr
-13.49% YoY
17.89%
-5.3pp YoY
₹3.94
Data Patterns opened FY27 with a soft print: standalone revenue from operations rose 16.8% YoY to ₹116.03 Cr, but net profit fell 13.5% YoY to ₹22.06 Cr — the bottom line shrank even as the topline grew, the signature of margin compression. Net margin narrowed to 19.0% from 25.7% a year ago and operating margin slipped to ~27% from ~32%. The steep sequential decline (revenue −66%, PAT −84% off Q4's ₹344.85 Cr / ₹138.38 Cr) is a seasonality artifact — defence-electronics deliveries bunch into the Q4 year-end and Q1 is structurally the weakest quarter — and should not be read as fresh deterioration.
Q1 FY-2027 vs prior quarters
The squeeze sits on the cost lines, not the topline. Employee benefits rose 16.9% YoY to ₹42.53 Cr and other expenses jumped 63.5% to ₹17.61 Cr, both outpacing revenue; net material cost was ₹24.52 Cr (₹30.73 Cr consumed, offset by a ₹6.21 Cr inventory build), so gross held but operating leverage worked against the quarter at low seasonal volumes. There were no exceptional items this quarter, so the reported profit drop is clean and not distorted by one-offs — raw and adjusted YoY are the same.
The stock went into the print at ₹4,462, down 1.6% over the past month of trading.
For context: PAT has now risen for 3 consecutive quarters.
What the summary numbers don't show
No exceptional items this quarter — standalone-only (no subsidiaries); EPS ₹3.94 vs ₹4.55 YoY (not annualised)
QIP proceeds ₹461.49 Cr of ₹487.74 Cr utilised as of 30 June 2026 — ₹26.25 Cr unutilised
Management is targeting revenue growth of 20%-25% in the short term, while maintaining healthy EBITDA margins of 38%-40%. The company expects significant order book accretion and substantial revenue growth in the coming years driven by indigenization efforts in the Indian defense sector, increased defense spending glob
— This quarter: missed
Against management's own last-call guidance of 20–25% revenue growth with 38–40% EBITDA margins, Q1 undershot on both — 16.8% growth and ~27% margin. That doesn't invalidate the full-year target, since defence revenue is H2-weighted, but it raises the bar for the remaining quarters and for the "substantial order book accretion" management projected (FY26 closed with a ~₹926 Cr book). No firm Street consensus for this specific quarter surfaced, and management extracted no press-release commentary alongside the filing. The result lands amid a busy corporate calendar — a revised FY26 annual report (client data removed), a proposed ₹10 dividend, and a BRSR filing — none of which bear on the operating numbers. The Q1 earnings call is set for July 31; the order-book update and the margin path back toward the guided band are what to watch.
W1
Order-book accretion at the July 31 call — FY26 closed at ~₹926 Cr; management guided 'substantial' additions
W2
EBITDA margin recovery toward the guided 38–40% band, from ~27% this quarter
W3
Full-year revenue tracking versus the 20–25% growth target — Q1 at 16.8% needs H2 catch-up
Clean digital PDF, headers unambiguous, all arithmetic checks pass. Standalone only — company has no subsidiaries/associates/JVs (note 5), so no consolidated statement exists. No exceptional item this quarter (the ₹3.01 Cr Labour-Code charge sits only in the FY26 full-year column); EPS not annualised.
Margin Squeeze and Order Delays Test Confidence in FY Guidance
Data Patterns missed Q1 revenue guidance (16.8% vs. 20-25%) and saw PAT decline 13.5% YoY despite top-line growth. The quarter reveals margin pressure and order timing risk that management must navigate to justify reaffirmed full-year targets.
16.8%
vs 20-25% FY guidance
-13.5%
despite revenue growth
27%
vs 35-40% target
78.9%
flat YoY, signal intact
The core tension: PAT fell while revenue grew
Data Patterns delivered ₹116 Cr in Q1 revenue, growing 16.8% year-on-year. On the surface, that's a growth story. But profit after tax came in at ₹22.1 Cr, down 13.5% from the year-ago quarter—a signal that operating leverage has turned negative. With gross margins stable at 78.9%, the gap sits in the operating expense line, chiefly EBITDA margin compression from 35-40% guidance to just 27% in the quarter.
Where the margin pressure came from
Management attributed the 800-basis-point EBITDA shortfall to two factors: elevated employee costs for capability expansion and a shift in product mix. The CFO noted that gross margins remained healthy at 78.9%, indicating product quality held. The issue is structural near-term headwind—capex on headcount and facility investments—not a quality concern. But the magnitude of the squeeze (27% vs. 35-40% guidance) and the lack of a stated recovery timeline raise a critical question: how confident can we be that EBITDA margins recover to guidance levels by year-end?
Healthy 17% YoY revenue growth
Delivered 16.8% YoY; below 20-25% FY guidance
Overstated
Strong gross margins at 78.9%
Held firm; EBITDA margin 27% vs 35-40% due to high overheads
Supported (incomplete)
PAT margin 19% reflecting temporary uneven revenue impact
NPM 17.9%; PAT down 13.5% YoY despite revenue growth
Contradicted
Customer approval delays caused revenue slip
QoQ revenue down 66.4%; slip amount unquantified
Partial
Order book at ₹2,654 Cr provides healthy visibility
₹1,734 Cr negotiated, unconfirmed, delayed 6+ months; confirmed ₹920 Cr only
Mixed
What changed on this call
Margin reset downward: EBITDA now 27% vs. 35-40% guidance—employee costs and product mix now structural near-term headwinds
Order conversion timeline slipped: ₹1.7 Cr negotiated orders facing ~2-month delay; large program stretched 6+ months
Revenue growth deceleration risk: Q1 at 16.8% YoY; FY27 target reaffirmed at 20-25% but execution risk evident
Export pipeline accelerating: New wins in Europe/UK (antenna, signal processor, civil aviation) with material revenue in 6-12 months
Capex intensity rising: ₹150-200 Cr over 2 years for production, test equipment, facilities—signals conviction but lumpy cash flow risk
The bull-bear ledger
Order book ₹2.6 Cr provides 6-9 month visibility; ₹2k Cr FY27 target diversifies concentration risk
Gross margins stable at 78.9%—pricing power intact despite margin compression
Strong balance sheet: ₹530 Cr cash, net debt-free; capex fully self-funded
Defense indigenization tailwind + export traction create ₹40-50k Cr addressable TAM
Q1 revenue missed FY guidance (16.8% vs 20-25%); execution risk on ₹2k Cr target unresolved
PAT declined 13.5% YoY despite revenue growth—deteriorating operating leverage, cost structure misaligned
EBITDA margins 27% vs 35-40% guidance with no recovery timeline; margin recovery unproven
₹1.7 Cr negotiated orders (65% of book) unconfirmed, delayed 6+ months; concentration risk from single program
₹150-200 Cr capex committed on uncertain pipeline; ROI at risk if orders slip
Risks, ranked by how much they should concern a holder
1
HighOrder conversion delays widen execution gap
₹1.7 Cr negotiated orders (65% of book) stalled 6+ months. If delays extend, ₹2k Cr FY27 target unreachable, forcing guidance miss and capex under-utilization.
2
HighMargin recovery contingent on order ramp unproven
EBITDA 27% vs 35-40% guidance. No timeline for recovery. If order volume doesn't accelerate, employee costs remain a drag—threatens reaffirmed FY guidance credibility.
3
HighRevenue quality deteriorating despite top-line growth
PAT down 13.5% YoY while revenue up 16.8% signals negative operating leverage. If cost structure not rightsized, margins remain compressed even with order book.
4
MediumCustomer concentration and approval delays
Large single program drives ₹1.7 Cr delays (6+ months already). If stretches further, order-to-cash cycle unpredictable and quarterly revenue volatile.
5
MediumCapex heavy on unconfirmed pipeline
₹150-200 Cr capex assumes order inflow justifies production ramp. If ₹2k Cr target misses or delays to FY28, capex ROI deteriorates and cash flow lumpy.
6
MediumExport and counter-drone revenue speculative
Europe/UK traction and counter-drone orders cited with 3-6 month timelines but not in ₹2k Cr prospect. If slip, 'significant additional market' upside evaporates.
How the street is positioned
Data Patterns' stock closed at ₹4,380.70 on the day of this review. The post-result price action tells a story: day 1 saw a -4.06% sell-off, but recovered to +2.08% by day 3, only to fade back into negative territory at -1.56% by day 5. The pop did not hold, signaling the market remains skeptical despite the order book headline.
The stock trades 11.59% below its all-time high, but 105.57% above its 52-week low—a reminder it has more than doubled from its lows even after this quarter's stumble. Institutionally, flows are cautiously supportive: FII ownership added 93 basis points and DII added 141 basis points in the latest quarter. This reflects long-term defense indigenization conviction, even as near-term execution comes into question.
The valuation story hinges on whether Q1 was a timing blip (supported by gross margin stability and ₹2.6 Cr order book) or signals structural cost issues. The market is pricing in skepticism: the fade from day 1 to day 5 reflects wariness about management's ability to hit reaffirmed full-year margins and orders.
The debate
1 · ₹1.7 Cr order conversions expected within ~2 months (Q2 FY27)
Management expects negotiated order conversion soon. If conversions slip again, ₹2k Cr FY27 prospect becomes unachievable. Watch for formal order acknowledgments, not just verbal guidance.
2 · Q2 EBITDA margin recovery trajectory
EBITDA 27% in Q1 is 800 bps below guidance. Q2 must show sequential improvement to justify 35-40% FY target. Even 30-32% would signal recovery on track; stagnation at 27% would challenge credibility.
3 · BrahMos seeker orders and jammer pod qualification (H2 FY27)
BrahMos seekers expected FY27. Su-30 jammer pod qualification expected before December 2026. Both are material upside catalysts—success would validate pipeline confidence and de-risk execution.
Data Patterns' Q1 miss on revenue guidance and PAT decline despite top-line growth expose near-term execution risk. The company's structural story—defense indigenization, order book depth, export traction—remains compelling. But the path to reaffirmed FY margins and orders is not yet proven. This quarter is a steady-execution story, not a step-change. Management has the balance sheet (₹530 Cr cash) and pipeline (₹2.6 Cr order book) to navigate margin pressure, but credibility hinges on Q2-Q3 delivery. The number to track from here is EBITDA margin—recovery toward 35-40% in H2 would reset confidence, while stagnation below 30% would force a guidance miss. Hold for now; the debate resolves by mid-FY27.