Current Rating and Its Significance
MarketsMOJO’s 'Hold' rating for Data Patterns (India) Ltd indicates a balanced stance on the stock, suggesting that investors should maintain their existing positions rather than aggressively buying or selling. This rating reflects a combination of factors including the company’s quality, valuation, financial trajectory, and technical signals. The 'Hold' grade implies that while the stock shows promise, certain considerations temper the enthusiasm for a stronger recommendation.
Quality Assessment
As of 21 February 2026, Data Patterns (India) Ltd demonstrates strong quality metrics. The company boasts a low debt-to-equity ratio, effectively zero, which indicates a conservative capital structure and limited financial risk. This is a positive sign for investors seeking stability in the Aerospace & Defense sector. Additionally, the company has exhibited healthy long-term growth, with net sales increasing at an annualised rate of 34.60%. The latest six-month period ending December 2025 saw net sales surge by 130.99% to ₹480.59 crores, while profit after tax (PAT) rose by 46.55% to ₹109.82 crores. These figures underscore robust operational performance and efficient cost management, as reflected in an operating profit margin of 46.55% on net sales, the highest recorded for the company.
Valuation Considerations
Despite the strong quality indicators, valuation remains a key factor influencing the 'Hold' rating. Currently, the stock is considered very expensive, trading at a price-to-book (P/B) ratio of 11.1, which is significantly above the average valuations of its peers. The company’s return on equity (ROE) stands at a healthy 16.5%, but the premium valuation suggests that much of the growth potential is already priced in by the market. The price-to-earnings-to-growth (PEG) ratio of 1.7 further indicates that investors are paying a premium relative to earnings growth. While the stock’s valuation reflects confidence in its prospects, it also warrants caution for investors mindful of entry price and risk-reward balance.
Financial Trend and Returns
The financial trend for Data Patterns (India) Ltd remains positive as of 21 February 2026. The company’s recent results highlight strong momentum, with a 39.5% increase in profits over the past year. The stock has delivered impressive returns, generating an 89.12% gain over the last 12 months, substantially outperforming the broader market benchmark, the BSE500, which returned 11.96% over the same period. Year-to-date, the stock has appreciated by 13.58%, and over the past month, it surged 32.41%. These returns reflect both the company’s operational strength and favourable market sentiment within the Aerospace & Defense sector.
Technical Outlook
From a technical perspective, the stock exhibits a mildly bullish trend. The recent price movement, including a 2.41% gain on the latest trading day, supports a positive near-term momentum. Institutional investors hold a significant stake of 21.82%, with their holdings increasing by 0.63% in the previous quarter. This institutional interest often signals confidence in the company’s fundamentals and can provide stability to the stock price. However, the technical grade suggests that while momentum is positive, it is not yet strong enough to warrant a more aggressive rating.
Summary for Investors
In summary, Data Patterns (India) Ltd’s 'Hold' rating reflects a nuanced view. The company’s strong quality metrics, positive financial trends, and solid technical signals are balanced against a valuation that is currently very expensive. For investors, this means that while the stock remains an attractive holding due to its growth and profitability, caution is advised regarding new purchases at current price levels. The 'Hold' rating encourages investors to monitor the stock closely for further developments in fundamentals or valuation that might justify a change in stance.
Strong fundamentals, solid momentum, fair price – This Large Cap from the NBFC sector checks every box for our Top 1%. This should definitely be on your radar!
- - Complete fundamentals package
- - Technical momentum confirmed
- - Reasonable valuation entry
Market Position and Sector Context
Operating within the Aerospace & Defense sector, Data Patterns (India) Ltd is classified as a small-cap company. Its market capitalisation and sector focus position it uniquely among peers, with a specialised product and service offering. The company’s ability to sustain high growth rates in net sales and profits is notable in a sector often characterised by long project cycles and regulatory complexities. The premium valuation reflects investor optimism about the company’s future prospects and its potential to capitalise on increasing defence budgets and technological advancements.
Institutional Confidence and Shareholder Base
Institutional investors’ stake of 21.82% is a significant endorsement of the company’s fundamentals. These investors typically conduct rigorous analysis before increasing their holdings, and the recent 0.63% rise in institutional ownership suggests growing confidence. This institutional backing can provide a stabilising influence on the stock price and may also indicate expectations of continued strong performance.
Risk Factors and Considerations
While the company’s fundamentals are strong, investors should be mindful of the high valuation multiples. The elevated price-to-book ratio and PEG ratio imply that the stock is priced for continued growth, which may not materialise if sector conditions deteriorate or if the company faces operational challenges. Additionally, the mildly bullish technical grade suggests that momentum, while positive, is not yet robust enough to signal a clear breakout. Investors should weigh these factors carefully when considering portfolio allocation.
Conclusion
Data Patterns (India) Ltd’s current 'Hold' rating by MarketsMOJO, last updated on 10 February 2026, reflects a comprehensive evaluation of the company’s quality, valuation, financial trends, and technical outlook as of 21 February 2026. The stock’s strong growth and profitability are tempered by a valuation that demands caution. For investors, maintaining existing positions while monitoring market developments and company performance is a prudent approach. The stock remains a noteworthy player in the Aerospace & Defense sector, with potential for future re-rating should valuation metrics become more attractive or operational momentum strengthen further.
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