DTA PATTERNS - ANALYSIS **Data Patterns (India) Ltd** shows robust fundamentals and a bullish technical setup, albeit trading far above its fair value. Analysts expect continued growth, driven by strong defense and aerospace demand, but caution on premium valuation. Here’s a detailed summary with ROCE, ROE, CAGR, fair value, resistance/support, and target, plus competitive analysis.
***
## Fundamental Analysis
- **ROCE:** ~22.5% (TTM), indicating exceptional capital efficiency.
- **ROE:** ~19.2% (TTM), similar to top defense sector peers.
- **CAGR (3Y):** Estimated 54–58% stock price CAGR; revenue CAGR ~36%
- **Fair Value:** Median model puts fair value at ₹280 (EV/EBITDA), but more bullish models suggest up to ₹1,975 (Price/Sales).
- **Valuation Multiples:** P/E 66.82x (TTM), P/B 9.42, highlighting a premium to sector and market.
***
## Technical Analysis
- **Current Price:** ₹2,560.80 (as of Sep 2025).
- **Support Zones:** Near ₹2,350–2,400, also at ₹2,020 (major base).
- **Resistance Levels:** Fibonacci pivots at ₹2,735, ₹2,840, ₹3,010, ₹3,285 (major upside targets).
- **Momentum:** 20-day and 200-day moving average crossover signals recent bullish momentum, with ~13.5% average gains in prior cycles.
- **Target (Next 6 Months):** Analyst consensus targets ₹3,136–₹3,700, with the most conservative at ₹2,500.
***
## Competitive & Brokerage View
- **Peers:** Bharat Electronics (ROCE ~20%, lower valuation), Hindustan Aeronautics, Bharat Dynamics.
- Data Patterns ranks highest in margin, order pipeline, and growth of indigenous defense electronics.
- Brokerages have a “Strong Buy” bias with only valuation caution; strategic government contracts and indigenization drive growth.
***
## Summary Table
| Metric | Value/Level | Remarks/Peers Comparison |
|----------------|-----------------------------|-------------------------------------------------------|
| **ROCE** | ~22.5% | Highest among defense electronics peers |
| **ROE** | ~19.2% | Near sector best |
| **CAGR (3Y)** | 54–58% (stock), 36% (sales) | Rapid revenue and price growth |
| **Fair Value** | ₹280 (EV/EBITDA median) | Price/EBITDA models sharply below market price |
| **Current Price** | ₹2,560.80 | As of Sep 2025 |
| **Support** | ₹2,350–2,400, ₹2,020 | Key volume bases |
| **Resistance** | ₹2,735, ₹2,840, ₹3,010 | Fibonacci and prior highs |
| **6M Target** | ₹3,136–₹3,700 | Analyst consensus |
| **Peers** | BEL, HAL, BDL | Slight edge in margins/order visibility |
***
Data Patterns (India) Ltd is trading at a **significant valuation premium** compared to its defense sector peers, with higher price-to-earnings and price-to-book multiples, suggesting elevated growth expectations from investors versus most competitors.
## Valuation Comparison Table
| Company | P/E Ratio | P/B Ratio | Market Cap (₹ Cr) | Valuation Premium to Fair Value |
|-------------------------------|-------------|-------------|-------------------|-------------------------------|
| Data Patterns (India) Ltd | **66.82x** | 9.42x | 14,334.3 | 807% above fair value |
| Hindustan Aeronautics Ltd | 36.03x | Not shown | 297,839.0 | Moderate |
| Bharat Electronics Ltd | 49.76x | Not shown | 272,033.0 | Moderate |
| Bharat Dynamics Ltd | 93.06x | Not shown | 52,187.5 | High (outlier) |
| Zen Technologies Ltd | 47.45x | Not shown | 12,974.3 | Moderate |
| Astra Microwave Products Ltd | 62.07x | Not shown | 9,531.5 | Moderate |
| Paras Defence & Space Tech | 84.24x | Not shown | 5,195.1 | High |
| Rossell India Ltd | 17.75x | Not shown | 246.2 | Low |
- **Industry Median P/E:** 62.07x
- **Industry P/E Range:** 17.75x (lowest) to 93.06x (highest).
## Highlights
- Data Patterns’ **P/E of 66.82x** is above the industry average (60.15x) and close to the median, but its fair value premium (+807%) is among the highest in the sector—suggesting investors are factoring in strong order flows, rapid earnings growth, and superior margins.
- Price-to-book ratio of **9.42x** further confirms valuation stretching compared to most established defense peers.
- Only Bharat Dynamics and Paras Defence show similar or greater valuation multiples, usually reflecting cyclical earnings or momentum phases rather than long-term sustainability.
- Other large peers—such as Hindustan Aeronautics and Bharat Electronics—have lower P/E ratios despite bigger size and similar growth rates, indicating more reasonable market expectations.
## Takeaway
- **Data Patterns’ current valuation is at a substantial premium** to both its intrinsic value and most sector peers, justified only if its high growth sustains and market conditions remain favorable.
## Investment Outlook
- **Strengths:** High ROCE/ROE, strong sector tailwinds, margin leadership, and robust order book.
- **Risks:** Valuation premium (trading 807% above median fair value), short-term volatility possible if sector sentiment reverses.
- **Conclusion:** Data Patterns is favored for long-term growth but caution is advised for fresh entry at current levels; consider adding only on market dips and sector pullbacks.
[
