Not HAL Or BDL, But This Mega Rs 3,400 Defence Stock Advised To BUY On July 12; Intraday Target Rs 3,540

Brokerage Prabhudas Lilladher has recommended to buy an aerospace and defence stock on July 12, which is not a PSU like Hindustan Aeronautics (HAL) or Bharat Dynamics (BDL). But instead, mega defence stock with midcap status, Data Patterns. The brokerage sets an intraday target price above Rs 3,500.

Currently, Data Patterns share price is at Rs 3394.10 apiece with market cap of Rs 19,001.52 crore. On July 11, Data Patterns share price gained as much as 8% with an intraday hig of Rs 3,451.55 on BSE.

Shiju Koothupalakkal - Technical Analyst at Prabhudas Lilladher recommended BUY on Data Patterns with a stop loss of Rs 3,315 apiece and a target price of Rs 3,540, which signals a over 4% upside in an intraday.

Earlier, Jefferies also added Data Patterns as its top picks. In Jefferies' view, the company is a leading private sector player in defence and aerospace electronic solutions. Revenues should rise nearly 5x in FY24E-30E as indigenisation and export pipeline benefit the company. ROE improvement and reducing working capital intensity are the other drivers.

Data Patterns is a vertically integrated Defence and Aerospace electronics solutions provider catering to the indigenously developed defence products industry. Data Patterns' key strength is founded on over two decades of history of developing high-reliability products in this domain with the broad capability to develop and manufacture any high-reliability product.

Also, as per Trendlyne data, the consensus recommendation from 7 analysts for Data Patterns (India) Ltd. is HOLD. Of the total, 3 analysts have recommended 'STRONG BUY' on Data Patterns.

Among key fundamentals, the positives of the stock price are --- Debt to Equity Ratio is zero as the company is debt-free; Mutual Fund Holding increased by 2.53% in the last quarter to 9.34; Promoter Pledges are zero; Interest Coverage Ratio is 28.69, higher than 1.5, meaning that it is able to meet its interest payments comfortably with its earnings (EBIT), as per Trendlyne data.

Additionally, the company's annual Net Profit rose 46.52% in the last year to ₹181.69 Cr. Its sector's average net profit growth for the last fiscal year was 23.09%. Meanwhile, Annual Revenue rose 22.3%, in the last year to ₹565.83 Cr. Its sector's average revenue growth for the last fiscal year was 10.78%, the data further highlighted.

In case of technical, the Trendlyne data mentioned that Data Patterns has 2 bullish and no bearish candles active. The stock is trading above 8 out of 8 SMAs, and also trading above 5 out of 9 Oscillators in bullish zone.

Data Patterns has not delivered any bonus issue or carried any stock split. But it holds a strong track record of paying dividends. For FY24, the company paid final dividend of Rs 6.50 apiece, which is highest ever. Since August 2022, the company has delivered 3 dividends. In 2023 and 2022, the dividend payout was of Rs 4.50 per share and Rs 3.50 per share respectively.

Apart from Data Patterns, the Prabhudas analyst also recommended buy on two other stocks on July 12. They are:

- BUY TRIVENI ENGG cmp 414.95 Stop Loss 405 Target 438

- BUY DCX SYSTEMS cmp 434.25 Stop Loss 424 Target 456