Current Rating and Its Significance
MarketsMOJO’s 'Hold' rating for Data Patterns (India) Ltd indicates a balanced stance for investors. It suggests that while the stock exhibits solid qualities, it may not offer significant upside potential relative to its current price. Investors are advised to maintain their positions without aggressive buying or selling, considering the stock’s present valuation and market conditions.
Quality Assessment
As of 25 December 2025, Data Patterns (India) Ltd maintains a good quality grade. The company demonstrates strong operational fundamentals, including a low debt-to-equity ratio averaging zero, which reflects a conservative capital structure and limited financial risk. Its return on equity (ROE) stands at a healthy 15.5%, signalling efficient utilisation of shareholder funds to generate profits. Furthermore, the company has shown consistent long-term growth, with net sales expanding at an annual rate of 35.13%, underscoring robust demand and operational scalability within the Aerospace & Defense sector.
Valuation Considerations
Despite its quality credentials, the stock is currently rated as very expensive in valuation terms. Trading at a price-to-book (P/B) ratio of 9.9, Data Patterns commands a significant premium compared to its peers’ historical averages. This elevated valuation reflects high investor expectations for future growth but also limits the margin of safety for new entrants. The company’s price-to-earnings-growth (PEG) ratio of 2.5 further suggests that the stock’s price growth is outpacing earnings growth, indicating a stretched valuation that warrants caution.
Financial Trend and Performance
The financial trend for Data Patterns remains positive. The latest nine-month results ending September 2025 show net sales of ₹803 crore and a profit after tax (PAT) of ₹188.77 crore, both higher than previous periods. Over the past year, the stock has delivered a total return of 7.05%, while profits have grown by 26.1%, reflecting solid earnings momentum. Additionally, the company has consistently outperformed the BSE500 index over the last three years, reinforcing its status as a steady performer in the smallcap segment.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Technical Outlook
The technical grade for Data Patterns is mildly bullish. The stock has shown resilience with a one-day gain of 0.36% and a one-week return of 7.99%. However, it has experienced some short-term volatility, with a one-month decline of 9.45% and a six-month dip of 9.22%. Despite these fluctuations, the year-to-date return remains positive at 7.89%, indicating underlying strength. Institutional investors hold a significant 21.19% stake, which often contributes to price stability and informed market movements.
Investor Implications
For investors, the 'Hold' rating suggests a cautious approach. The company’s strong fundamentals and positive financial trends provide a solid foundation, but the current valuation premium limits immediate upside potential. Those already invested may consider maintaining their holdings to benefit from steady earnings growth and sector tailwinds, while new investors might wait for more attractive entry points or valuation corrections.
Sector and Market Context
Operating in the Aerospace & Defense sector, Data Patterns benefits from a niche market with high entry barriers and growing demand for advanced technology solutions. The company’s consistent sales growth and profitability highlight its competitive positioning. However, the sector’s cyclical nature and geopolitical factors can introduce volatility, reinforcing the need for a balanced investment stance.
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Summary
In summary, Data Patterns (India) Ltd’s current 'Hold' rating reflects a stock with strong quality and positive financial trends but constrained by a high valuation. Investors should weigh the company’s robust fundamentals and steady earnings growth against the premium price it commands in the market. The mildly bullish technical signals and institutional backing provide additional confidence, yet caution is advised given the valuation stretch and sector dynamics.
Looking Ahead
Going forward, monitoring quarterly earnings, sector developments, and valuation shifts will be crucial for investors considering Data Patterns. The company’s ability to sustain growth and profitability while justifying its premium valuation will determine its attractiveness as a long-term investment. For now, the 'Hold' rating serves as a prudent guide for balanced portfolio management.
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