Data Patterns (India) Ltd (NSE: DATAPATTNS) Q4 2025 Earnings Call dated May. 19, 2025
Corporate Participants:
Unidentified Speaker
S Rangarajan — Chairman and Managing Director
Venkat Subramanian — Chief Financial Officer
Analysts:
Unidentified Participant
Monali Jain — Analyst
Dipen — Analyst
Atul Tiwari — Analyst
Renu Baid Pugalia — Analyst
Lavina Quadros — Analyst
Jyoti Gupta — Analyst
Sandeep Agarwal — Analyst
Garvit Goyal — Analyst
Yash Poddar — Analyst
Dhavan Shah — Analyst
Rupesh — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Data Patents India Ltd. Q4 and FY25 earnings conference call hosted by Goindia Advisors. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Manali Jain from Goindia Advisors. Thank you. And over to you.
Monali Jain — Analyst
Yeah, thanks Dave. Good morning everyone and welcome to Data Patterns India Limited earnings call to discuss the Q4 and FY25 earnings. We have the senior management of the company on call. Mr. S. Rangarajan, Chairman and Managing Director. And Mr. Venkat Subramanian, Chief Financial Officer. We must remind you that the discussion on today’s call may include certain forward. Looking statements and must be therefore viewed in conjunction with the risk that company faces. May I now request Mr. Rangarajan to. Take us through the company’s business outlook and financial highlights subsequent to which we will open the floor for Q and A. Thank you. And over to you sir.
S Rangarajan — Chairman and Managing Director
Thank you, Manali. Good morning ladies and gentlemen. I’m pleased to welcome you to our Q4 and full year FY25 earnings call. I trust you had the chance to go through our earnings presentation which is available on the stock exchanges as well as our company website. Before Venkat takes you through the financial performance in detail, I would like to begin by sharing some key highlights and strategic updates for the quarter. First of all, I would like to begin by congratulating the Government of India and our armed forces for their resolute and successful handling of the recent India Pakistan conflict.
This decisive response has once again demonstrated the strength, preparedness and technological superiority of Indian’s defence capabilities. The successful deployment of the Brahmos missile which played a pivotal role in the mission stands as a testament to India’s indigenous defence innovation. We at Data Patterns are proud to have made a small yet meaningful contribution to the Brahmos program. And it is a moment of great pride for us to support the nation’s strategic defense initiatives. It gives me great pleasure to share that data Patent has delivered a strong financial performance in Q4 and for the full year we’ve achieved a remarkable 36% year on year growth.
For the full financial year. Our Q4 results were particularly encouraging with revenue doubling compared to the same quarter last year. We are proud to have achieved our guided revenue and profitability targets for the year reflecting our execution and operational discipline. While gross margins saw some pressure due to low margin strategic contract delivered in Q3 Q4, this is largely offset by a few higher margin projects allowing us to maintain healthy financial performance. Gross margin for the full year was 61% and PAT margin was 31%. PAT grew by 22% in line with our guidance, we remain focused on driving sustainable bottom line growth and are confident in our ability to maintain both revenue and pat momentum in the future.
During the quarter, fresh order intake was lower than anticipated, largely influenced by external factors beyond the Company’s control. As a result, our overall order book for the year has been modest. We continue to maintain a healthy pipeline and remain confident that these delays are temporary and will translate into stronger inflows in the upcoming quarters. The Company has made strong strides by initiating the development of future ready products and gearing up for several large upcoming contracts. With these strategic efforts underway and a healthy pipeline ahead, the company remains optimistic about a strong order inflow for the full year.
Data Pyranids received positive feedback on the product showcase at the recent Aero India Company’s commitment to R and D has driven several new innovations positioning us to seize larger opportunities this year and beyond. The Defense Ministry focused on doubling orders and ensuring a steady supply chain over the next 45 years. Data partners is well placed to benefit from the growing defence sector in India. We have advanced in the value chain by developing integrated systems with reusable building blocks leveraging our core strengths. This has enabled us to expand into key global markets like Europe and East Asia.
Moving forward, we are shifting our focus to complete systems to grow our addressable market. Our goal is to become a leading system supplier serving both India and other countries. The required manufacturing and testing infrastructure, skilled workforce and enhanced delivery capabilities. We are well equipped to meet international market demands. During the full year we achieved some large orders for radar, EW orders from MOD, PSUs, etc. We also developed and delivered transportable partition approach radars. This is expected to open few more opportunities in the near Future. As of March 31st our order book stands at 730 crores and as on date order book is at 860 crores including negotiated contracts.
Our interhand order book stands at Rs 107 crores as on 31st March. We remain optimistic about delivering strong growth and are firmly on track. We anticipate a good ramp up in order inflow in FY26 and remain confident in achieving 25 to 30% at 2025% revenue growth for FY26 while maintaining strong EBITDA margins at 35 to 40%. We are happy to inform you that our board has recommended a dividend of rupees 7.9 per equity share of rupees 2 each which is subject to approval of the shareholders. With that I will now hand over the floor to Venkat for his remarks.
Venkat Subramanian — Chief Financial Officer
Thank you sir. Good morning ladies and gentlemen. We are pleased to share the highlights of our financial performance for Q4 and full year FY25. Let’s take a closer look at the financial results in Q4 and FY25 25. We are pleased to report a strong quarter and a solid close to FY25 marked by significant growth both in top and bottom lines. Revenue for Q4FY25 stood at 396.2 crore up 117% year on year and 239% quarter on quarter. Development contracts contributed to 57% while production contracts and service contracts contributed to 42 and 1% of the Q4 revenues respectively.
Radar and ATE segments were Q revenue drivers contributing to 60 and 20% respectively. Our order book remains strong at 730 crore as of 31st March 2025 with the orders negotiated and yet to be received. The order book as on date stands at 860 crore. Gross margin for Q4 dipped slightly to 49% due to delivery of a low margin contract strategically taken by us. However, for the full year the gross margin stands at 61. Percentage EBITDA for Q4 was 150 crore up by 61% year on year and 177% quarter on quarter with margins in line with the guidance at 38%.
PAT came in at 114 crore in Q4 growing at 61% year on year and 155% quarter on quarter with a strong PAT margin of 29%. For the full year 2025 revenue reached 780 crore up 36% year on year with 53% from production and 43% from development contracts. Gross margin for the year was 61%. EBITDA stood at 275 crore up 24% year on year with a gross margin of 39%. PAC for 2025 was 222 crore up 22% year on year with a strong PAT margin of 31%. We remain a debt free company in FY25. Also as of 31st March 2025 we maintain a robust liquidity position with over 453 crore in cash and cash equivalents.
As mentioned earlier, we remain firmly on track to meet our stated guidance of 20 to 25% revenue growth. With that I now open the floor for questions. Thank you.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to withdraw yourself from the question queue you may press star and two participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of dipain from Philip Capital. Please go ahead.
Dipen
Thank you for the opportunity sir and congratulations on a very strong performance and also congratulations on your contribution to operations indoor. So my first question is in the lines of in the earlier quarters that you had mentioned that some of your revenue recognition was impacted due to a client request on deferment in delivery. So are those orders now delivered and is it possible for you to quantify those?
S Rangarajan
Some of it has got delivered, some is yet to be delivered. We are still waiting customer clearance inspection for some of them. I would like to quantify the order value but I think this quarter and next quarter that also should get delivered.
Dipen
Got it sir. So my next question is that in your PPT you have mentioned that brahmos beaker has now been successfully tested. So any feedback or any clarity in terms of when you will get any orders or any further processes that yet are currently undergoing.
S Rangarajan
Yeah, we’ve been waiting for the flight tests on the missile to happen for some quite some time now. We’re happy to announce that the flight was carried over three to four weeks back. There’s an excellent flight, textbook flight and textbook performance. So we expect that in shortly we should get a new some more orders from Ramos to to you know for the development additional units will be asked. Following up with that we expect also production contracts to happen maybe next month. That’s probably another year. The production hours also should happen.
Dipen
So production orders expected in next year. You are saying
S Rangarajan
may happen this year but it should happen early. They are also they would like to replace imported Seekers with Indian Seekers as per mandate and the products work very well. They’re also pushing us to see that we get ourselves ready for delivery at the earliest opportunity.
Dipen
Got it. Sorry.
S Rangarajan
It should happen.
Dipen
Got it sir. So can you help us with. So what are the systems that you are supplying for Brahmos.
S Rangarajan
Today? We do all the launches for them. Ground based, mobile based launches for all three Services av, Air Force and Army. We also supply the air version of Sukhai 30 and the test systems for all of three areas. As now the secret is also tested. Hopefully we’ll get some contracts to deliver those also.
Dipen
Got it. So your performance in FY25 has been robust in terms of your export orders and export revenue as well. So right now we stand at close to around 100 crores in export orders. Any export orders which are there in the advanced stages in pipeline.
S Rangarajan
We are discussing with some requirements we have quoted for some. We are awaiting results from the quotations. Also we appointed some representatives for ours for these products of ours already delivered in India and abroad. We expect some traction to take place during the course of this year. But I can’t really comment on exactly which order will come at what time. We don’t know the international competition for all the products. Well there are not many companies in what we want to do. So we expect some contracts to happen.
Dipen
Got it sir. So that’s all.
operator
Thank you. Sir, I would request you to come back in the.
Dipen
Yeah, I’m done for the question. Thank you.
operator
Thank you. Participants, I would request you to limit your questions to two per participant. The next question is from the line of Atul Tiwari from JP Morgan. Please go ahead.
Atul Tiwari
Yes sir. Thanks a lot and congratulations on very strong of numbers. Two questions on future order intake prospect. So the first is slightly longer term. I mean if you could shed some color and light on you know what is the opportunity size that you are trying to address, you know through all the R D and the development efforts that you are making say over next four, five years. I mean there is a value of orders that you could be bidding for based on your capabilities and RNA programs that you are undertaking. So that is a slightly longer term question.
And for FY26, you know what will be the size of order intake or what is the prospects that you are bidding for.
S Rangarajan
The products were developed basically we’ve taken advanced development of various products and radars and EW and communication systems as well as these are all. The intent is to see that we scale the scale the opportunities in India and our own top line. We expect that the size of opportunities or TAM for all this probably vary between 20,000 to 30,000 crores. So this is why we took up good money into the market. These products are at advanced stage of development and completion. Regarding FY26, some of the orders have got delayed what we are supposed to get in FY25.
But we expect those contracts to happen maybe somewhere between thousand and two thousand crores is what we expect during the course of this year to get orders and plan. Based on the planning of those orders. We already started some work in development and infrastructure creation as well as component ordering. Expecting these contracts to happen.
Atul Tiwari
And for this 20 to 30,000 crore rupees tan it will be over what period of time? Broadly.
S Rangarajan
I can’t comment on that, but it should all be in the anywhere between three to five years or six years depending on production requirements from our Air Force and Navy. Whatever their requirements are back to back it will get. It will also reflect on our delivery model. So it will be around five years, six years is what I’m thinking. We can watch really what happens, how long the flight test takes. All these things are not in our controls but we’re gearing up to all of those things.
Atul Tiwari
Great, Thanks a lot and best of luck for Peter.
operator
Thank you. The next question is from the line of Renu Bhed from IIFL Capital. Please go ahead.
Renu Baid Pugalia
Yeah, hi, good morning sir and congratulations for strong performance. My first question is on the order flow side. If you see last year we were indicating probably inflows in 26 could be in 20 to 30 billion rupee range including probable success for some developmental projects. So a the question here is because of the current situation where we have seen a big sharp jump in emergency procurement in the near term, do you see that decision making or finalization of the developmental orders and the make to program could get potentially pushed back by six to 12 months? Or you think we may see some initial success coming this year? That’s the first question.
Venkat Subramanian
See development contracts are MIC2 goes through its own cycle because the product has to be developed, evaluated and based on which the RFPs will be issued based on field trial. So it is going to be very difficult to speed up such programs. But what we are getting interesting requirements is that some of the products we have delivered earlier, repeat requirements are coming up for fast delivery requirements. So these things have started coming in. I hope they get converted into contracts early. But yes, we find there is an urgency in repeating some of the products which already we have delivered.
So that also is there. Yes, definitely there is some movement but you know how this will all pan out. What kind of contracts we are going to get? We have some idea but we don’t want to comment on it at the present moment until it really happens.
Renu Baid Pugalia
Got it. So of the 10 to 20 billion inflow range which you are suggesting for 26 what percentage in your view could be driven by these emergency procurement which are like 2 to 3 billion rupee in ticket size and which could be meaningful for us both in near term order inflows as well as execution.
Venkat Subramanian
See some of the products already we delivered, repeat requirements are coming up. They could be around 100 crores. We don’t know. Again this is very very subjective because we need to get the inquiries and then we need to quote. But there are second area is we are also gearing ourselves for some emergency procurement MOD tenders where the last two to three years time we have developed product categories which meets those requirements of the end users. They are putting the devastation systems up so that we go through the FET the evaluation trials properly. If these were to be successful we expect some more, a few hundred crores also to happen.
But that is going to be dependent on competition and the success of the trials in which we have built the products for. So those are areas. The third area is whatever we have delivered earlier and back to contracts have happened to some of the PSUs back to back. We expect order inflow to take place for our delivery. So that also is under discussion. It should also happen in the next three to six months time. So we are getting ourselves to produce against those contracts so that some of the development, some of the inquiries that comes this year we will probably be able to deliver this year itself to meet our top and bottom line requirements for this year’s guidance.
Renu Baid Pugalia
So can one infer that this could be almost between 5 to 6 billion rupees for us in order size for the short cycle delivery projects from all these three areas?
Venkat Subramanian
No, no, no. What is this? 55 to 6 billion? I don’t understand. What did you say?
Renu Baid Pugalia
I don’t talk in dollar terms. 500 to 600 crore range coming from all the three categories that you highlighted recently.
Venkat Subramanian
It should be more than that. It should be about thousand crores.
Renu Baid Pugalia
Got it. That is pretty encouraging. And second within the longer term projects if you can share some updates in terms of how is the progress on the make to project the R and D team ramp up and any notable new products where you think we could be in advanced stage for approvals and that can open up next leg of revenue stream for us.
Venkat Subramanian
Yeah, the major revenue stream we’re expecting where investments happen to the extent of 140 crores, 250 crores were spent the last one and a half years in product development comes in the category of fire control radars, airborne fire control radars, airborne electronic warfare suite including receivers and jammer ground and airborne or shipborne communication equipment as well as we also built based on whatever we’ve been delivering, we’ve also done a lot of work on the ground based. Eliant comment and the jammer. We’re working on the Make2 programs for ADFCR. We’re also looking at detection of very low cross section UAVs detect and jam.
So these are all areas where company has put in a lot of effort in the last one to two years time and these products are coming to some maturity. Hopefully in the next few months time the products will come out and then we’ll participate in contracts inquiries is happening. So these are the areas we’re looking at presently. And the other area which is going to help us is because of the seeker successful seeker flights, we expect some more contracts to happen in those areas. We’re also developing additional Seekers not just for our brahmos, also on air different Seekers we are developing, we have contracts on hand.
X will deliver on them there also. X will go into some numbers based on initial success. What I was told by the customers. But we had to wait and watch what happens. But now that we have full competency here they are building a whole range of these Seekers for newer programs and newer missile systems. I hope all this pans out well. But these are all being done in house, fully developed in house and the idea is to build these things which is going to have a repeat requirement over many years based on the production of weapon as well as the platform.
So that is the idea. So that we move from not just project oriented one off systems to a regular requirement which is spread over three to four years time which gives you a better cash flow, a better understanding of future business and a sustainable growth model. That is what we are focusing on presently.
Renu Baid Pugalia
Thanks much and best wishes. I have questions on balance sheet. I’ll come back. Thank you.
operator
Thank you. The next question is from the line of Lavina from Jefferies. Please go ahead.
Lavina Quadros
Hello sir. Congrats again on a good set of results. Just two questions. What is sort of the export opportunities? It’s a well known thing that Europe globally you’re seeing a rise in defense spend. Right. I just wanted some high level thoughts from you as can India actually contribute over there? I mean do we have the technology to actually go out there and supply to Europe in a big way? Or do you think the actual opportunity can end up being far smaller particularly for Indian companies. Right. And any products if you can shed some light there.
And secondly on the domestic side, has the government taken any concrete measures for increasing private sector contribution in the Defense supply chain or to improve working capital. Thanks.
Venkat Subramanian
Yeah, see we’ve been an import centric country in defense and aerospace till date. We are now graduating to try to build more in India. And since equipment, fully designed equipment is not done as of now in India, we still rely quite a lot on foreign OEMs with the technology transfer and work share arrangement to meet MOD criteria of Indian content. So having said that, it’s not going to be very easy to export full systems immediately. But that should be a long term goal and we have to have a direction to do this. More and more you develop in India, more you will be able to address the requirements.
Western countries have their own internal compulsions to build within their own supply chain within the country they normally do not import. And second there is a lot of also what do you say? Import controls or export controls which we need to address in their government agencies. So even getting specifications from a western nation for requirements in defence has a challenge, is a challenge. But having said all that, there are opportunities to look at a growing European requirement and then we be a competent capability established in India. It is possible to do part development in India for future requirements of their western systems requirement.
So we are also in touch with one such company where we can do joint development of radars where this will not only look at address requirements in India but also globally. We can build systems together. So we are in touch. We are working very actively. We expect that in these cases we also want to co invest to build world class systems. This is how we want to go ahead. It is going to be very difficult. Some of the ground systems we can definitely deliver which is what we are exporting today now. But on the real defense equipment which is going airborne, it has its own challenges to build full systems and then ship it to them.
But we can collaborate with them. There are definitely opportunities of collaboration based on because we have a capability model and they also have shortage of that kind of capability within their countries. Scale up drastically is not very easy in Europe. So we should be able to address those opportunities. We want to put in a marketing model and market organization to address such opportunities. And coming to your second question on India. Yes definitely there is support for Indian equipment, Indian ip. It is up to us in India, the private sector to stand up, be counted, build the systems.
Because very difficult when a user has very little confidence because he’s always imported. They’ve always been talking about. You would have read the papers that we need technology from foreigners. So when that kind of mindset suddenly say I can do Everything in India and they will believe you as a user. It becomes very difficult when you put yourself in their shoes. It’s going to be very difficult to say suddenly you can do all this. Why were you not doing it so many years? So seeing is believing. So we need to take that extra mile. There is extra risk.
Build the products, show them it is world class and they believe it will happen over a period of time. This is the path that Data Patents is taking. Investing ahead, convincing our customers that this is possible to do in India and then go ahead and get the contracts. It’s a tougher way of doing things but it’s a long term game. And so as we’ve always been a development model company, we said we will go for a long term rather than buy and sell which we have never done in our life. We think it will pan out.
Our direction is right. We are convinced about what we are doing. We are very bullish about opportunities in India and we have to build a capability and a product to convince the customers. This is where we are.
Lavina Quadros
Thanks.
operator
The next question is from the line of Jyoti Gupta from Nirmal Bank. Please go ahead.
Jyoti Gupta
Morning sir. Great set of numbers. My first question question is the net working capital days is still Quite high in FY24 from 421 looks like you’re going to 468. When can be what kind of networking capital day should be seen going forward? Please stop us now. So and the other thing is in terms of revenue when you say 1000 FY26 just strongly repeat orders. Looks like you’re anyways processing your current actual growth revenue growth of 36 going to 41%. So that looks quite robust. And the last question is why did we in this year FY25 did some low margin contracts.
Any particular reason for that?
Venkat Subramanian
Okay first question on net working capital we are still you know one is we did about more than 50% in the last quarter. So that also comes as a network. Net working capital looks at, the ratio looks higher. But more importantly this business we’ve done a lot of development center contracts and you know integration test, field test, flight test, all of them take time. So that is the reason why the working capital is stretched for these contracts. I think given another two to three years time and the development is lesser and the production is more then the turnaround time will be faster.
Cash realization is faster. Working up the days will come down. So this is a transitory stage. You need to give the time frame to see that this pans out and we’re able to get see we’re trying to scale the revenue as well as the bottom line and we’re trying to do this very very fast. When you do this, we need to have products to address market and they have to go through development cycle. So that is the reason why we are at where we are. But I think this is going to come down in the next two, three years time.
Having said that, we are not really. We are still zero debt company. So we are able to manage that and I think we’ll continue to manage this in the coming years to happen. Regarding revenue growth, you were saying that I didn’t understand the question correctly as you are saying some.
Jyoti Gupta
You would have something like a thousand crores just from the repeat orders because of the emergency procurement. If that is to the extent of thousand crores.
Venkat Subramanian
No, I did not say that. I did say emergency procurement is going to contribute a thousand crores and let’s clear it probably for 100 crores. I don’t know exactly because the inquiry that started coming in and yet to see how it closes, I said repeat orders from what you’ve done earlier which back to back orders which you start getting should be about more than thousand crores is what we are saying. That is only that is not revenue but the order book. And we expect that anywhere between thousand 2000 crores order book in the course of this financial year we should get with what I said.
Okay, on the third point we talked about a lower margin. See what happens is till now we have been building products for DRDO and subsequent to delivery model we do a lot of IP generation. We don’t recover development costs in those contracts and we absorb. Throughout our life we’ve been absorbing development costs on a product and then gone ahead. So when the contracts come in it looks like bottom line is slightly better in those kind of contracts. But going ahead we have to make integrated systems. And our company also has to build the capability to build complete integrated solutions which will involve buying equipment, building large value equipment.
The underground cabling, power systems, the mechanical structures, some of the things which you need to buy out and integrate also. But that itself is a challenge because to do very large huge value programs we need to also gear up with a competency base in the organization. I’m happy to say that in the last one and a half two years time we built up a fairly good project management team and an organization which can repeat or build big programs and big products and hundreds of crores or thousand crore plus a single contract we can Do Though we took this contract strategically to say the margins are not important, it is important that we build capability in the company.
So that is why we took it. Point number two, all of the electronics are designed in house which is probably has its own capability to scale to large value contracts and radars Tomorrow there are two reasons why we took it and that is all going through proper phases. However, that does not affect our bottom line because though we build additional revenue, our bottom line business has continued to be 20% above 20% is what we projected last year. We continue to retain that guidance. So this is the reason.
Jyoti Gupta
And so what has been the. I mean I saw your port that you developed so quickly and it was actually displayed in Aero India. Have you received orders on that? How has been the response on that product?
Venkat Subramanian
The response is very good. But that doesn’t convert into order so fast because we need to put it both trials and you see, because only after the trials are completed the product then can be absorbed. But yes, there is a lot of discussion taking place with the users. We believe that they will give us opportunity for the trials and then once the trials go through there will be opportunities of converting into fairly substantive business. So we are working with the agencies to see how it can be taken up. We are aware of that. This is the path it has to take.
It is going to be a long haul kind of a program development product. That is why the money was taken for the market. But we are on track. We have done a world class system. The specifications are very good. All the foreign OEMs who have come visited us and seen the product are also quite happy at the kind of development we have done and the capability we have built. So I think we are going in the right direction and India will recognize that this is the way to go and hopefully give us more avenues to build these such systems in India.
Jyoti Gupta
Great. Thank you so much sir and all the best. I’m sure you’ll do very well going forward.
operator
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. The next question is from the line of Sandeep Agarwal from Neriti Investment. Please go ahead.
Sandeep Agarwal
Hello. Thank you for the opportunity. Regarding the margin question, could you please elaborate the primary reasons and factors that lead to significant sequential and sequential and neuron contraction in the margin and what is the sustainable margin at graph level and EBITDA level? We expect.
S Rangarajan
No, I. I didn’t understand the question at all. Can you repeat the question properly? Because I couldn’t understand. I know it’s one margin but beyond that I couldn’t understand.
Sandeep Agarwal
So what is the sustainable margin at the gross level and a better level expected?
S Rangarajan
I’ll try to repeat the question. What is the sustainable market Sustainable margin on EBITDA level is what you’re asking, Am I right?
Sandeep Agarwal
And EBITDA and graph level we expect.
S Rangarajan
Okay, that depends on the contract. No, it can’t be generic answer. It depends on the contract that is fully designed by us. In which case the margins are is expected to be slightly higher because we don’t buy and integrate. Whatever other people buy is also drained here. So the material cost becomes low. But that should not be taken as a margin directly. Because what they build as part of their business, other people, we are doing it ourselves. We are not spending money and doing development. So it cannot be across the board answer. But whatever we are trying to do is a sustainable product margin because there is a lot of IP development happening which gets written off because in these large contracts they have also capitalized the product development effort.
But I think whatever we have been doing till now, we should be able to sustain.
Sandeep Agarwal
Some next follow up. Is the current label of margin is sustainable or we so just directionally we want to know the the pattern. What?
S Rangarajan
That’s what we have told 35 to 40 EBITDA margin we will be able. To sustain
Sandeep Agarwal
40 bitter margin.
S Rangarajan
35 to 40%.
Sandeep Agarwal
25 to 40%. Okay.
S Rangarajan
I said 35 to 40. But anyway I think the line is not very good at your end.
Sandeep Agarwal
Okay, thank you. Thank you. I understand. Thank you.
operator
The next question is from the line of Garved Goyal from Invest Advisory. Please go ahead.
Garvit Goyal
Hi, am I audible?
operator
Yes sir. Yeah.
Garvit Goyal
Good morning sir. Congrats for a decent set of numbers. My first question is on our order pipeline only like since the last one year we are talking about the order info pipeline of 2000 to 3000 cr and the horizon period is around 18 to 24 months. And again in recent PPT also we are talking about a similar pipeline and last year we did not achieve the order info that we projected for. So I want to ask own, can you please elaborate on the Q structure of hurdles that are delaying this pipeline conversion? For example, are we losing the orders to our competitors or any other specific things that is facing that is bringing some challenges to convert this pipeline into order books.
So that is my first question.
S Rangarajan
Okay. See whenever I talk about projected orders we do not consider competitive tenders because competitive tenders can go either way. So we do not take that into consideration in our projections. What are projections? We are talking about pipeline. These are all single vendor contracts basically due to earlier delivered contracts, maybe on commodity basis or whatever which repeat orders are likely to happen. So this is what we project second is we have not lost those orders, it only got postponed and that is that those are reasons which beyond our control. Some of the programs have got shifted and the contract is supposed to happen.
Some orders which our customers are supposed to get from MOT have got postponed. Some of the orders have happened now. So back to back the orders should start happening to us in the next few months time. And we hear that the projects just not got cleared, is getting cleared now is what our customers are saying. So I expect that this during the course of this year those contracts should also happen. So that is the second one. Third because of what has happened with our border, it is also likely that we will get some orders which is getting fast tracked.
So some orders also are likely to happen which will all contribute to our order book.
Garvit Goyal
So when we are saying for next year 1000-2000cr so are we pretty much sure like minimum 1000cr info will be there or is that it is just like an expectation and you are having not any control over it?
S Rangarajan
No, no. We are sure about this order because these orders have already been received by customers and back to back inquiry should start in the next month or so and we’ll be the single vendor contract for all of them based on our earlier delivered products. So we’re sure of those orders. It’s a question of one or two months here and there may happen. But nevertheless, since we want to develop some part, deliver some part of those contracts, we already started the necessary groundwork to see the delivery models can happen. So that also we started taking advanced action.
Garvit Goyal
Understood sir. And sir, secondly, in the last couple of quarters we were talking about some shift from part product supplier to end to end solution provider. So can you please update us on the progress in this regard how we are going on in this direction? What kind of inquiries are we seeing? Have we made any further development which will lead us to a big negotiation or big order in the upcoming months?
S Rangarajan
See, getting into full systems is what we attempted to do. We have done successfully in some of the contracts. We have delivered the precision approach radar to Air Force and Navy. One more order came that also has been delivered. So we’ve developed based on that we developed a product radar for the international market that has been accepted and delivered that is under installation. So like that we have started development products. Also earlier we were doing only Receivers for ew. And now we are trying to do a full system with our own direction finder. All of those systems which can be vehicle integrated mounted.
So we made the vehicle integration systems we are taking for demonstration. So wherever possible, slowly we are doing adding up on existing competencies and product capabilities and finishing the product to end systems. But to translate into end system order will take a bit more time because all of them have to go through demonstration trials and then based on which the contracts can happen. That’s a slightly longer route, but that is the only route we need to take because if we keep being a component supplier, our scaling is going to get limited to the available market space which we have.
So the idea is to increase the time and so the full system has to be done. That’s what we’re doing. But it will take a bit of time to see that this is happening. And we have to go through a lot of flight tests and all that depending on the platforms. So it will take time, but it will also be large orders as and when it happens.
Garvit Goyal
And sir, just one last question on the guidance part. I remember when we used to spoke approximately four to five quarters back, you were targeting around 30% earning growth in bottom line basically year over year. But this year we ended up with 22% growth. So can you please provide insight into whether this change reflects the revised internal outlook. Additionally going forward, how investors should think about the sustainable earning growth over the next two to three years.
S Rangarajan
Actually I think the mistake in probably communication or understanding. We did not say 30% bottom line growth will happen on 24, 25. We told only about 20% and our top line growth at 20 25% bottom line. We talked about guidance at 20%. Today also I’m seeing the same top and bottom line growth. 30% happens make can happen on the bottom line. But that we’re not at the present moment how it would tell it all depends on the context which happens and how our execution timelines are with respect to customer requirements based on which it can be up at a later date.
But today we are looking at a 20 20% top line growth. And a 20% bottom line growth is what we’re looking at. And we want to stick to that guideline, not 30% bottom line. Maybe it can happen. It is possible it can happen. But. But at the present moment we can’t commit on that.
Garvit Goyal
Then for AB identity, what is the number you are quoting for bottom Line growth?
S Rangarajan
20% 20% 20, 22 0.
Garvit Goyal
Okay, okay, okay. Understood, understood. And so one last thing.
operator
Sorry to interrupt, sir, I would request you to come back in the queue for further. The next question is from the line of Yash Podar from Vinash Manchur. Please go ahead.
Yash Poddar
Yeah, hi, I’m Audible.
operator
Yes sir, you are.
Yash Poddar
Yeah, yeah, yeah. So firstly, hello sir. Congratulations on the set of the numbers. I, I wanted to actually understand a little bit about the R and D expenditure pattern for the company. Last couple of quarters presentations we have spoken about a decent amount being invested towards the R and D side. Now there are two questions with regards to that. The first one would be going forward and as we speak today, presently the R and D spends would be, you know, how would we attribute this R and D spends from a revenue standpoint? Are we able to attribute the R and D spend to any specific, say customer base or the revenue segment and be able to pinpoint, you know, where we are deriving maximum benefit from the R and D expenditure currently?
S Rangarajan
See traditionally whatever product development we were taking, we used to write it off with revenue expenses. This is all part of a requirement which is posted against an inquiry or the inquiry tending to happen. So with the market information we start development ahead. So we are ahead of the curve and we have a delivery model which is faster what otherwise would have been imported. We said we will develop it. So that is how we have been doing it all along. Today we are trying to get into a full system business. So the development expenses are going to be far, far higher and all of them have to go through what is called as flight trials and trials on the field which is going to be a longer term duration.
And also in anything you go through fighter aircraft qualification certification also takes a long time. So these are not products that you develop which you will get contracts in the same year. It is going to take two, three years before a contract can happen. Maybe two years, three years even for flight tests or qualification certification to happen after which the contracts can happen. So this R and D which you’re talking about is a longer term spend. That is why we sold shares and got some QAP money which we dedicated to frams which we are developing and that they spend more than 14140 odd crores on product development in the last one and a half years time.
So we continue to spend on those kind of large projects. This has a very large requirement in 20, 30,000, 2015 to 30,000 crores worth of adequate requirement is there. So we said let us develop this and see that we scale the company substantively as we are going ahead. So that is the reason we spent it, yes. Now that some of the products have started coming near maturity, we are also seeing whether some prototypes can be sold this year itself. So we are attempting to do so that the conversion of R and D to actual reality revenue can happen.
We are on the path of doing this, but I can’t comment on it at the present moment because this is in my head and the company is doing what is necessary. We need to go ahead and do this.
Yash Poddar
Okay, Understood, understood. And my other question was with regards to the time that you have mentioned previously and I think one of the questions you had answered previously, that we are trying to expand the time of the company. So if I were to look at and allude to some of the things mentioned in the previous calls with regards to new new age defense products such as UAVs and the next 10 years of how defense procurement is looking, how, how would we be positioned today in terms of both R and D as well as execution and so.
And would this also have a correlation with the 20% top line, sorry, the 20% bottom line growth that you’re mentioning or you know, in terms of profile, this is going to change drastically over the next couple of years.
S Rangarajan
Presently our focus area is in radars. It can be airborne, ground, naval, etc. Radar itself has got too many classifications, very many types of radars. We are addressing all types of radars. As far as UAV is concerned, we are looking very small cross section UAV to be detected a few kilometers away. We are building radars for that. Also to see that we can do second is on electronic intelligence and jamming. We’re working on both airborne and ground based systems. We’ve done a lot of work on all of them in the last 15 years. But now we are adding other areas of spoofing and things like that.
So a number of other areas including jamming. We are building products now. It will be a bouquet of products which will address evolving requirements in the different war scenario which we are facing. These are the second things you are doing. The third thing to do, secure communication across all platforms. This also is in a fairly advanced stage of completion. We should start trials in the next few months time. So all this is required. Fourth is integrated systems including vehicle, vehicle support system manufacturing. So that it can be not just the radar but also as an integrated requirement meet the complete requirement of customer.
We’re also doing that to see that we are addressing that. Fifth, as long as you can supply, connect with the platform supplier or weapons supplier. We can also look at some kind of Seekers to do this. We have a lot of ideas and it all comes from a common pool of development. It’s just not just ideas but we need to build capability to produce this. Today we are nearly 1600 people working in data patterns. Nearly 1000 engineers are working here rapidly enhancing our engineering capabilities and design capabilities. And that is another thing which you’re putting up.
We are also spending about 150 crores in the next one to two years time to create infrastructure to production, test and validate systems which we expect contracts to happen in the two to three years having. So we need to be ready to deliver. So that also is happening because infrastructure takes a long time doing that all round development effort is being done right.
Yash Poddar
This 150cr is a forward guidance for the. For the R and D expenditure sir, or is it for capital expenditure?
S Rangarajan
Capital expenditure, R and D expenditure. Already we have budgets and we already spent about 140 odd crores in the last 150 crores. 107. I don’t know. Some number we have spent we have in our kitty some more. These are approved programs we’ve taken up in house. And additional expenditure will also happen. And moving with the scenario, what’s happening we see as long as the competencies exist, we’ll continue to build products very aggressively is what we’re doing.
Yash Poddar
Okay, thank you so much for answering all the questions.
operator
Thank you. Participants are requested to limit their questions to one per participant as there are several people waiting for their turn. The next question is from the line of Dhavan Shah from Alpha Curate Advisors. Please go ahead.
Dhavan Shah
Yeah, thanks for the opportunity sir. So my question is on the brahmos side, out of the total cost of. Brahmos, can you share what would be. Our, you know, opportunity size in terms of the percentage also that is fine. And secondly, maybe two, three years down the line, this production and service business contribution to the revenue can it inch. Up to 70 odd percent from currently. Roughly around 55 odd percentage.
S Rangarajan
I will ask the second question first. As long as the product development has happened and approvals happen, definitely the production should start going 70% and above. This is what we think we will do. We will continue to develop products maybe 20%, 15%. That is how this has to go for a mature model. Since there are lack of full products in the Indian market which is designed in India today, the gap is very high. We are trying to address the gap in competencies which we have. So that is what we are doing. Regarding the first question on brahmos, I can’t really tell you because I can’t forecast this.
We have quoted somewhere orders have to happen and we are a bit premature to say what is the value of the contract now and what percentage of the overall contract. I don’t want to address that now sensitive and let it happen. Then maybe one of those following questions after it happened maybe I can talk about it.
Dhavan Shah
Yeah, that’s all from my side. Thank you.
operator
Thank you. The next question is from the line of Rupesh from Intel Census Capital. Please go ahead.
Rupesh
Hello sir, thank you for the opportunity and congratulations on fantastic result. I have two, three questions maybe I’ll ask all of them together. So first question sir is on Ashwini LLTR radar I think we were expecting a fairly decent sized order but you had said that the big is competitive so if you can provide an update on that that is question number one. Question number two is on Sukhoi 30 upgrades. I mean if you can give some, you know, color on which products are we involved in? Are we involved in, you know drm, DTM or radar warning receivers or jammer some idea if you can give so that we can estimate the contribution per plane and and then you can, if you can also update if you have received any development orders in SU 2030 upgrade and then when, when do you in your estimate when can we see commercial orders? That is second and then the third one is sir, I see this SDR in your presentations SDR My understanding is there is an airborne SDR and a land based SDR.
So if you can you know just, just map out the opportunity and our positioning in that and have we received any, you know development order for either airborne SDR or land based fdr. So these are my three questions. Thank you. Thank you sir.
S Rangarajan
As regarding the Ashwini radar Bell has got the order Last year March, February, March they got the order 2425 so we are in discussion with them. We expect that the requirements will flow down to us and based on which we should be able to make an offer and hopefully finalize a contract in the next three to six months time. I hope this will happen. Yes, that’s an important contract for us. We’re waiting for the definitions because there are a lot of changes in the definitions. Original LATR was designed by us, all the electronics was 10 years back so a lot of obsolescence and capability changes.
Also DRDO is suggesting as part of this contract because it has to now support next 20 years. So modern component, modern architecture some changes have been planned so that is under discussion. So hopefully it will happen in the next couple of quarters is what we are thinking. As regards Sukhai 30, this is a contract which is already placed on HAL and HIL back to back has to do something. We are developing products against it. We don’t have a contract on this. We have developed the radar warning receiver. It’s flying in both our early warning radar Netra as well as the lca.
It’s successful flight for last six, seven years we’ve been flying it. It’s done some very good performance based on which we believe that this ARDU will be configured for cosmic 530. Again we don’t have an order for this but we have a product which meets the requirements. We’ve also designed as part of the larger view of increasing TAM. We’ve also designed the AESA 500 radar hardware. We had to do the software. We’re looking at some collaborative support with government to see whether this can fly and go ahead. At the present moment we don’t have an order but we are working towards completion and development and see that we can take the flight time if possible.
We also developed the Java Pods as an EW suite. Fully part of it is flown. This is the rwf. The other one is not flown. So that is getting also completed. We have a product, we’re doing internal tests of the products. These requirements are very large. Only last few months back dac cleared about 7400 crores for the jammer pods and earlier also another 100 sets has already been placed on Sukhoi 30 pods on Sukhoi 30 upgrade for his. So the requirements are large. So that is the reason we said we will design the products and build it.
The products have been designed, we are under testing in the office and we are looking at opportunities to how to take it flight trial. We have also done some work for Navy where earlier delivered Jammer pods from international companies. We have upgraded the pods with our hardware and electronics so we expect that to fly which gives us an opportunity to fly test. Our electronics and software should also come in handy when your systems are doing. But what we’re doing today is all aesa. Even the JAMMER is aesa. So I don’t have any development order for all of them.
This is the future large business opportunities which we have addressed and we’re trying to see whether our development will meet the requirements. As regards sdr, we have developed with DRDO the hardware for Airborne SDR which is already flown in the LCA and likely to fly in other platforms in the coming months. We’ve also done development of UV based, what do you call UV based systems as well as ground based manpack oriented network mannet manpack systems. We’ve been starting development over the last one and a half years and it has come to very very very high level of maturity which can be encrypted data with frequency hopping and also supports the encryption of Government of India encryption.
It is in line with what India is importing and form fit function capabilities but completely designed in India. We have also done all the waveforms which is necessary for it. We expect that that should be presented to the users in the next couple of months and hopefully we will start some testing and field testing to take place. These are all necessary because when you build an integrated system data links this that all of them which is electronics. I think we need to have a competency model to build products. So it will be a bouquet of programs, products, an integrated solution we can give.
So that is the idea with which product development is happening here. We don’t have additional contracts for all of them. The extra contracts will happen when the products mature because specifications are world class. This is what we are doing. Thank you.
Rupesh
Thank you for answering my question. Sir. I have more but I’ll come back in the queue.
operator
Thank you. The next question is from the line of ABHI from Vice Capital. Please go ahead.
Unidentified Participant
Hello. So. Hello. Am I audible?
operator
Yes.
Unidentified Participant
Hello. Thank you for the opportunity. So in the. In the last conference call you mentioned. That two large space radar contract account for approximately 50 60% of your inventory. Could you please clarify that whether any orders related to these contacts were delivered during this quarter?
S Rangarajan
Yeah, we have delivered the hardware for one of those radars. Second radar will be delivered probably the next. Probably in the next six months.
Unidentified Participant
So sir, given that deliveries have been made on these large space contracts, could. You please explain why the inventory levels have not been decreased according to this quarter?
S Rangarajan
Inventory has come down with respect to what has been delivered for the second radar, the inventory is still with us. It’s a very large inventory because as I told you we don’t have much margins in all these contracts. So it is very high inventory oriented and that is still in our books. The third is for contracts expected to deliver this year. We also work ahead of time in buying electronics to see that we can deliver. We expect some contract to be finalized in the next 15, 20 days time. But we need to deliver it in the next four to five months time.
We won’t be able to start buying material post contract to deliver on the requirements. The requirements are urgent. The order is going to be a single tender. So we’ve already started manufacturing against those things. So what we do is slightly different. We do based on market inquiries and the surety of the marketing guys and the customer request. We start developing and producing products ahead of the contract to see that we can deliver along expected lines. Some of the contracts, government agencies, there’s a lot of delay, internal delay, but they still insist that we deliver ahead.
So that is the model we’ve been doing with them. And as long as they’re sure that the contract is not going to get slipped, please try and do that. So third point is you must look at understand the inventory in defense equipment is going to be on the higher side because not only development takes place but after development and testing there is customer certifications, acceptance trials. All of this takes enormous amount of time which is not in our control. And if you don’t do this, we’ll find that we’re slipping on delivery models. Since we have a commitment to deliver and continue we try to take these things on inventory and then build the products and keep them ready.
So test cycles are long, lead times are long. So we need to address that. That is the nature of the beast as far as defence equipment is concerned. It is worldwide. You will find that it has never been just in time. Inventory. And second, these are all projects which comes hurried and then the customer though it has taken two to three years for them to place the order. They want delivery less than six months in one year. So to handle that such kind of customer request I need to have a cost model which is very different.
And that is what we are doing.
operator
Thank you sir. The next question is from the line of Dipen from Philip Capital. Please go ahead.
Dipen
Thank you for the follow up opportunity. So just one question from my side sir. What would be the estimated execution cycle for the current order book and for the order pipeline that you have mentioned say 1000-2000 crore in FY26. How quickly can the execution cycle be over there as well?
S Rangarajan
More than 70, 80% of the existing orders in hand will get executed this year. And we expect that some portion of the orders which is coming this year will execute this itself. We’re taking advanced action in terms of procurement and design which is going to be done. All that is happening as we speak. So that is. I don’t. I think it answers your question.
Dipen
Sure sir. Thank you so much. And all the best for FY26 sir.
operator
Thank you. Ladies and gentlemen, due to time constraint this was the last question for today’s conference call. I now hand the conference over to the management for closing comments.
S Rangarajan
Thank you very much for all the people who have joined this call. I’d just like to say that I’ve been repeating this for some time. The opportunities in India is very large in defense markets we have been habitually importing. So there is a large opportunity for Indian systems to come in. Especially with the make in India initiative which government is supporting. This opportunity is very, very large. It’s not that we lack in competency and capability. It is never allowed to do things in India at the earlier days. I think it is our responsibility to build up products, address the market and the opportunity.
So we are very, very bullish on the opportunities and our capability to deliver and address them. Towards this we are going ahead with development of products, spending money to prove that these products are world class to customers. Only after they see that this is available they will have the confidence that India can also do these things. So it’s our responsibility to see that this is done. We are actually talking in 3, 4 areas during the call also it has come out we are working very, very aggressively on building full radars, all kinds of radars, airborne ground based radars, search track, fire control, all of them.
Whether all of those radars we build and this is built 100% including mechanical design. Everything is designed in house. Second is a complete EW suite for air and ground including Jammer. We believe it’s a large opportunities, we need to look at it and do this. Third is the RF Seekers which you’re talking. Fourth is the communication equipment and integrated solutions for various kinds of applications. This is notwithstanding the products we do with DRDO we do for all platforms. Parts or some of the parts are major parts of systems where a lot of design work, development software comes from drdo.
The rest is being done by us in the electronics. We engage with them and these have been my customers the last 20 odd years. We’ve learned a whole lot of knowledge has come into the company based on a continued working relationship with drdo. So this is undue to grow. But that’s not alone. We’re not just investing product development, we’re also investing in infrastructure development which will take time. We bought traditional land, we are building this infrastructure. Also test equipment to do the Seekers and radars and validation and also scenario simulators which can do tests in the ground before we launch it in the air.
So all of this to get customer confidence building in house here. So that is also happening. Look also at the export market we are also looking at joint development of very very high end UE based radars along with a foreign company. A joint development can happen where we are co investing to see that we can address world markets. We need to do this more to go not just Indian government oriented requirements also reduce this across so that we have other customer bases and goes global. We want to do that also so we’re talking to in various levels we need to address.
We’re an engineering company we need to improve our marketing organization to address large opportunities but we are on the track the direction is very clear. We’re very bullish on our growth and we’re taking all efforts to see that we build competencies and products in India. If you have any further questions please send it to Goindia and we will get all of your questions answered. Thank you very much for your patience and listening to this be part of this call. Thanks a lot.
operator
Thank you on behalf of Go India Advisors. That concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.