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- 15 May 2023
- ICICI Securities
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DATA PATTERNS MARGINS COME IN LOWER THAN EXPECTATIONS
DATAPATTNS - 2758 Change: -138.10 (-4.77 %)News: Revenue increased by 8.5% YoY to Rs 185.1 crore in Q4FY23. Sequentially, the revenue is up by 65.5% as the execution remains better QoQ. Gross margin has contracted sharply by 720 bps (856 bps lower QoQ) to 57.8% during the quarter on account of significant increase in raw material cost. EBITDA margin also contracted by 1165 bps YoY and 244 bps QoQ to 39.6%; lower than our estimate of 44.1% on higher others cost. Thus, on account of lower margins, EBITDA declined 16.1% YoY (+56.0% QoQ) to Rs 73.4 crore. PAT declined by 10.2% YoY (+66.1% QoQ) to Rs 55.4 crore. For FY23, revenue is up by 45.9% YoY to Rs 453.5 crore with EBITDA margin at 37.9% (748 bps lower YoY). EBITDA for FY23 is up 21.8% to Rs 171.8 crore as contraction in margins has partially negated the impact of strong revenue growth. FY23 PAT is up by 31.9% to Rs 124.0 crore.
Views: Though the overall numbers came higher than our estimates, sharp contraction in margins is a key negative surprise. Going ahead, the company’s revenue growth is expected to remain strong during FY24-25 led by healthy order backlog of | 924 crore (~2x FY23 sales). However, sustainability of margins would be a key factor to watch-out for in the coming quarters. In terms of opportunity for the company in defence electronics space, we believe that the it remains huge considering the growing usage of electronics systems in defence platforms. There is an already strong orders pipeline for Data Patterns (worth | 2000-3000 crore) for next 3-4 years which includes radars, electronic warfare, communication systems, satellites and other electronic warfare sub-systems or components.
Impact: Negative