📉 The Financial Deep Dive
The Numbers:
Data Patterns (India) Limited posted strong top-line performance for the quarter ended December 31, 2025 (Q3 FY26). Total income surged 39% YoY to ₹179 Cr, with revenue from operations growing an impressive 48% YoY to ₹173 Cr. EBITDA increased 44% YoY to ₹78 Cr. However, the EBITDA margin saw a slight compression to 44.8% from 46.2% in the prior-year period. Profit After Tax (PAT) grew 31% YoY to ₹58 Cr, but the PAT margin declined to 33.7% from 38.2% YoY.
For the nine-month period ending December 31, 2025 (9MFY26), growth was substantial. Total revenue climbed 73% YoY to ₹602 Cr, and revenue from operations leaped 86% YoY to ₹580 Cr. Operational EBITDA rose 42% YoY to ₹178 Cr. Critically, the nine-month EBITDA margin experienced a significant compression, falling to 30.7% from 40.2% YoY. PAT margin also declined substantially to 22.9% from 34.5% YoY.
The Quality:
The most prominent concern arising from these results is the significant margin compression, particularly evident in the nine-month figures. While revenue growth is robust, the declining profitability per rupee of sales indicates potential headwinds. The drop in PAT margin is more pronounced than EBITDA margin, suggesting possible increases in depreciation, interest, or tax expenses that were not elaborated upon in the provided summary.
The Grill:
While no analyst call transcript is available, the sharp decline in margins, especially on a year-to-date basis, would be a key point of inquiry for investors and analysts. Management commentary highlighted confidence in achieving full-year guidance, citing robust execution, sustained demand, and a strong, executable order pipeline. However, the why behind the margin erosion remains a critical question that needs further clarification from the company.
🚩 Risks & Outlook
Specific Risks:
The primary risk facing Data Patterns is the execution of its record order book of ₹1868 Cr. While the substantial backlog provides revenue visibility, any delays, cost overruns, or pricing pressures in fulfilling these complex defense and aerospace electronics contracts could further impact profitability. The sustained margin compression suggests that the company may be facing challenges in maintaining its historical profitability levels on new contracts, potentially due to rising input costs or increased competition.
The Forward View:
Investors will closely monitor the company's ability to translate its record order book into profitable revenue in the coming quarters. The key focus will be on whether management can reverse the trend of margin compression and improve profitability per unit of sales. Sustained demand in the defense sector is a positive tailwind, but operational efficiency and effective cost management will be crucial for the company to capitalize on its strong pipeline without sacrificing margins. The next 1-2 quarters will be pivotal in understanding the sustainability of its growth trajectory and its capacity to address the profitability concerns.