Though the fundamentals look strong and revenue growth prospects are there, the current stock valuations seem to account for a very high growth far into future.
If the PAT becomes 3x over next 5 years, the current valuation is still justifiable.
Few questions in my mind right now:
- what is the revenue & PAT projection that is reasonable for Data Patterns? As per reverse DCF, something around 40% growth in PAT is priced in.
- will their orderbook growth continue over to next few years?
- will they be able to service their orderbook with their capacity additions?
- is there more upside from a fundamental POV considering the current rich valuation?
Just putting this out as defence sector has run up a bit and we need to be cautious not to get caught in cycle peak / bubbles.
Disc: Invested
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