Multibagger defence stock falls 5% after hitting all-time high today; should you buy it?

Shares of the multibagger smallcap aerospace and defence major Data Patterns (India) marked their fresh all-time high in Tuesday’s session (May 21, 2024) after global brokerage Jefferies continued with its ‘buy’ rating on the counter post its Q4FY24 results.

Nevertheless, the counter quickly pared its early gains and fell up to 4.6 per cent to hit day’s low price of Rs 3166.80 per share. The stock’s fresh record high scaled earlier in the session is Rs 3,444 apiece on the BSE.

After marking a fresh record high of Rs 3,444 apiece on the BSE in early trade, the scrip traded with a cut of 1.8 per cent at Rs 3,260.85.

The brokerage has raised the target on the counter to Rs 4,135 from the earlier Rs 3,545, suggesting a possible run-up of nearly 25 per cent.

Jefferies maintained that the company’s fourth-quarter EBITDA remained largely in-line as higher margins offset lower revenue growth. Furthermore, the company’s investor presentation guides for 25 per cent plus revenue growth over the next two-three years, with margins being maintained at around 40 per cent (FY24 42.6 per cent vs 37.9% YoY).

In the earnings press release, the company noted that it secured orders worth over Rs 670 crore during the previous fiscal year. In addition its order book as on March 31, 2024 stood at Rs 1083.01 crore.

Furthermore, the  consensus recommendation from 7 analysts for Data Patterns (India)  is ‘buy’, shows Trendlyne -the stock research platform data. However, the 1-year price target of Rs 2,576 suggests a downside of 19 per cent.

Data Patterns (India) Q4 results

During the January-March period of the previous FY24, the company’s PAT climbed 40 per cent quarter-on-quarter to Rs 71 crore as against Rs 51 crore in the quarter ended December. Revenue from operations increased by 31 per cent in the reporting quarter  to Rs 182 crore in comparison to Rs 140 crore  in Q3 of FY24. EBITDA also logged a healthy growth of 55 per cent to Rs 93 crore. 

Data Patterns share price performance

The company’s shares over the last year have climbed 99.6 per cent, while its 1-month return is over 14 per cent. Data Patterns (India)  is a vertically integrated defence and aerospace electronics solutions provider. The company manufactures electronic boards and systems.