Data Patterns shares drop 4% on slump in Q4 net profit

Data Patterns

Shares of Data Patterns (India) Ltd suffered a 4 percent drop on May 15 after the company announced its financial results for the fourth quarter ended March 31, 2023. The company's net profit declined 10 percent to Rs 55 crore in comparison to Rs 62 crore reported a year ago, while the revenue gained 9 percent to Rs 189 crore, compared to Rs 173 crore in the previous year's quarter.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) declined 16 percent YoY to Rs 73 crore, with employee costs increasing 41 percent to Rs 24 crore. Operating profit margins dropped to 39.5 percent compared to 51.1 percent in the corresponding quarter of the previous year.

“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, a two-fold increase over FY23 sales. However, sustainability of margins would be a key factor to watch-out for in the coming quarters,” according to analysts at ICICI Direct.

Follow our live blog for all market action

For the full year FY22-23, the company's revenue grew by 46 percent to Rs 453 crore, more than the management guidance of 40 to 45 percent. EBITDA also increased by 21 percent YoY to Rs 171 crore. However, employee costs were up by 27 percent, and the cost of raw materials consumed doubled during the year to Rs 194 crore.

Consequently, the operating profit margins declined to 37.8 percent compared to 45.5 percent in the FY21-22, despite the management's guidance of 40 percent margins. Net profits rose by 32 percent to 124 crore during the year.

“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,” ICICI Direct said.

Also Read: Avenue Supermarts falls on Q4 margin decline, slow recovery in merchandise sales

The company's board has proposed a final dividend of Rs 4.5 per equity share (at 225 percent per equity share of Rs 2 each) for the financial year 2022-23.

The Chennai-based electronics solution provider’s market cap has increased over 115 percent in the last one year, but declined 8.46 percent in the last one month. At 10.25 am on May 15, the scrip was trading 4.27 percent down on the NSE at Rs 1,521.75 with the benchmark Nifty trading 0.36 percent up at 18,381.45 points.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.