DATAPATTNS — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

Moderator · Conference Operator

MS. MONALI JAIN – GO INDIA ADVISORS Data Patterns (India) Limited May 21, 2024

Ladies and gentlemen, good day and welcome to Data Patterns (India) Limited Q4 FY24

We'll hand it over to the management right now.

Sir, you can go ahead.

Yes, sir, your voice is audible.

You can go ahead.

Thank you.

We will now begin the question and answer session.

The first question comes from the line of Jyoti Gupta with Nirmal Bang.

Please go ahead.

Jyoti Gupta

Good morning, sir, and thank you.

Congratulations for a good set of numbers, something which I had anticipated.

Two things that I would like to understand in terms of revenues.

What is going to be the percentage in domestic and exports?

What is going to be the contribution of exports coming from the revenue side?

Ballpark maybe in the next two years?

What do you anticipate?

Second is, do you expect your inventory days to go down from 187 in FY25?

Third is, there is a steep decline in your raw material cost.

Could you give some flavor on what are the key reasons for this decline in raw material cost?

days. · This business has a larger inventory days. Inventory turnover ratio will be low in defense

This business has a larger inventory days.

Inventory turnover ratio will be low in defense business because it's a capital-accruing business, plus there's a lot of acceptance criteria before the consignment gets shipped.

So there's a lot of interaction with third-party agencies.

So inventory days become slightly longer.

But our interest is to reduce working apple days, net Data Patterns (India) Limited May 21, 2024 working apple days, which we're working towards.

So the next two, three years, you will see a substantial decrease in terms of net working apple days going ahead.

Moderator · Conference Operator

Next question comes on the line of Abhisek Sundar from Naredi Investment Private Limited.

Please go ahead.

Abhisek Sundar

Yes, okay.

My question currently, what is our order pipeline today?

And out of which, how much is the L1 order and what is our success rate?

Moderator · Conference Operator

Thank you.

Next question comes from the line of Dipen Vakil from Research Analyst.

Please go ahead.

Dipen Vakil

Thank you for the opportunity, sir.

And congratulations on great margins.

So my first question is on the line of, sir, you won a significant order from Bharat Electronics in this quarter.

So can you give some more light as to what platform or product that pertains to?

Moderator · Conference Operator

Thank you.

Next question comes from the line of Hardik Rawat with IIFL Securities.

Please go ahead.

Hardik Rawat

Hi.

Good morning.

Thanks for the opportunity.

Firstly, I wanted to understand what sort of, like you mentioned that you're looking at about INR1,000 crores worth of inflows in FY '25.

I wanted Data Patterns (India) Limited May 21, 2024 to understand within this, the Arudhra execution, what should be the value of that and often flow from the Arudhra program?

And what would be the execution timelines for this year?

Moderator · Conference Operator

Thank you.

Next question comes from the line of Parvati Rai with Equentis Wealth.

Please go ahead.

Data Patterns (India) Limited May 21, 2024

Parvati Rai

Thank you for taking my question.

So, with respect to the outlook given on revenue, while we mentioned that revenue growth of 20% to 25% for this year, and on a sustained basis, the slide also states that 25% plus CAGR over the next couple of years.

So, I want to understand, last quarter as well, we gave a revenue outlook of 20% to 25% and prior to that just 25%, but came in at almost 15 percent Y-O-Y.

So, what exactly should we kind of look?

Even for going forward years, should we take it at 20% to 25%, or would it be 25 plus percent CAGR that we are speaking of?

Moderator · Conference Operator

Thank you.

Next question comes from the line of Gagan Thareja with ASK Investment Managers.

Please go ahead.

Gagan Thareja

Sir, the first question is around the guidance that you've given.

In your top line guidance, you indicated a 20% to 25% margins, outer limit of 40%, which is lower than what you've done this year.

And yet, I think you indicated a profit guidance of 30%.

So, I'm just sort of trying to reconcile if the margins year-on-year are going to be slightly lower than what they have been in ‘24, then why would, the profit guidance be 30% for a sales guidance of 20% to 25%?

Moderator · Conference Operator

Thank you.

Next question comes from the line of Abhishek Poddar with HDFC Mutual Funds.

Please go ahead.

Abhishek Poddar

Hi, sir.

Thanks for taking my question.

So regarding the margins, sorry, one question on this, we have about 40% from development contracts and 50% plus from production.

Would the margin be very different in these contracts and also as your production contracts would increase, as the revenues increase over the next 2 years, 3 years, 4 years, would we see a mix on the margins Data Patterns (India) Limited May 21, 2024 because of that happening?

And the reason I'm asking this question is because when your peers are there their margins are much lower when their production is a major part of their revenue mix.

Moderator · Conference Operator

Thank you.

Next question comes from the line of Renu Baid with IFL Securities.

Please go ahead.

Renu Baid

Yes, hi.

Good morning, sir.

Two quick questions from my side.

First, just want to pick a bit of your inputs in terms of, again, in terms of guidance.

Sorry for this.

You mentioned about 50%, 25% revenue guidance and 30% profit guidance, despite dip in operating margin.

So is it that you're expecting a sharp jump below EBITDA when it comes either in terms of other income or sharp shrinkage in the finance cost?

Any big change in the tax rate that we're expecting?

Just trying to understand the math behind this.

Moderator · Conference Operator

Thank you.

Next question comes from the line of CA Garvit Goyal with Nvest Analysis Advisory LLP.

Please go ahead.

CA Garvit Goyal

Good morning, sir.

Congrats for a good set of numbers.

Just two questions.

One is on the industry perspective.

So are you people witnessing any kind of potential risks on the supply chain or demand side that could lead to a slowdown in near to medium term?

Additionally, is there any emerging competition that might be capturing the market share or thereby impacting our order flows?

Moderator · Conference Operator

We've loss the line.

Next question comes on the line of Jatin Jadhav with Sahasrar Capital.

Please go ahead.

Jatin Jadhav

Hi.

So sir, basically my question was pretty much answered but I just want some clarity from you.

This question is regarding your competition.

So based on your competition, your EBITDA margins are around 40 and others are slightly on the lower end.

So I wanted to understand, since you are saying that you will maintain these margins, is it because of the IT we have developed in-house and the products we are making in-house and integrating them as well?

That's why we have a higher margin compared to other competition?

Moderator · Conference Operator

Thank you.

Next question comes from the line of Manish Kumar, an individual investor.

Please go ahead.

Manish Kumar

So most of the questions have already been answered, so I'll just skip them.

I have one last residual question, and this is of in terms of the human resource, the employee cost, which is what I'm looking at on a quarterly basis.

And I'm looking at the employee cost as a percentage of the expense that you have.

So what I saw is that there is a…

Moderator · Conference Operator

Thank you.

Next question comes from the line of Vishal, an individual investor.

Please go ahead.

Vishal

Yes.

Sir first I would like to place my congratulations to you for such a good set of numbers and the value addition, the value creation you have been doing to shareholders.

Thank you very much Data Patterns (India) Limited May 21, 2024 for that.

And my question was, if I look five years ago, our data pattern figures, so can I, you know, can we assume, you know, because at that time, if I compare that time to current times, what we have achieved today is, the [1:08:41 term] at that time is the profits are of current time.

So are we looking forward to repeat the same fit print maybe in next five years or earlier than that or even earlier also?

Moderator · Conference Operator

Thank you.

The next question comes from the line of Devansh Agarwal, an individual investor.

Please go ahead.

Devansh Agarwal: · Got it. And all the best, sir. For a retainer like us, it's always a good moment to see the stock

Okay.

So one very specific question with respect to Arudhra radar.

In some publication, it was mentioned that Bell got the order of INR2,800 crores for Arudhra radar.

However, in our presentation, it shows around INR180 crores of order for Arudhra or something.

Is it not possible to directly take the order from MoD or why is there a difference between the quantum?

This is what I'm trying to understand.

And the second question, sir.

Sorry.

We saw on your presentation that there's an increased focus on the offset.

Is there any action going on?

The reason I'm coming from is recently Azad has announced some kind of offset with Rolls Royce and it saw great momentum in the markets at least.

Got it.

And all the best, sir.

For a retainer like us, it's always a good moment to see the stock

Moderator · Conference Operator

Thank you.

Next question comes from the line of Arnab Bhattacharjee, an individual investor.

Please go ahead.

Arnab Bhattacharjee: · Hello, sir. Good morning. Just wanted to know about any R&D team here in the team, in this

Hello, sir.

Good morning.

Just wanted to know about any R&D team here in the team, in this

Moderator · Conference Operator

Just give me a moment, sir.

Mr. Bhattacharjee, please go ahead with the question.

Mr. Bhattacharjee, can you hear me?

Please go ahead with the question.

Arnab Bhattacharjee: · Hello, sir. Good morning. Just wanted to know about any R&D team here in the team, in this

Yes, I'm able to hear you.

Sir, I believe that, when it comes to radars, it's a very complex process, and it requires a lot of technical knowledge.

So I just wanted to understand how our R&D team is doing.

If you can give us, share with us a story that we had in the recent past.

How do you plan on upscaling for the new development goals that we receive?

Do you have collaborations with foreign universities, foreign businesses?

Thank you, sir.

Moderator · Conference Operator

Thank you.

Ladies and gentlemen, we have reached the end of question and answer session.

I would now like to hand the conference over to the management for closing comments.

Thank you.

On behalf of Go India Advisors, that concludes this conference.

Thank you for joining us.

You may now disconnect your lines.