Ladies and gentlemen, good day and welcome to Data Patterns (India) Limited, Q4 and FY25 earnings conference call hosted by Go India 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 the 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. Monalee Jain from Go India Advisors. Thank you, and over to you.
Yeah, thanks, Dave. Good morning, everyone, and welcome to Data Patterns (India) Limited earnings call to discuss the Q4 and FY 2025 earnings. We have the senior management of the company on call, Mr. S. Rangar ajan, 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 risks that the company faces. May I now request Mr. Rangar ajan to take us through the company's business outlook and financial highlights, subsequent to which we will open the floor for Q&A? Thank you, and over to you, sir.
Thank you, Monalee. Good morning, ladies and gentlemen. I'm pleased to welcome you to our Q4 and full year FY 2025 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'd like to begin by sharing some key highlights and strategic updates for the quarter. First of all, I'd 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 India's defense capabilities. The successful deployment of the BrahMos missile, which played a pivotal role in the mission, stands as a testament to India's indigenous defense 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 Patterns 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 contracts delivered in Q3, Q4, this was 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 Patterns received positive feedback on the product showcase at the recent Euro India. The company's commitment to R&D has driven several new innovations, positioning us to seize larger opportunities this year and beyond. The Ministry of Defence focused on doubling orders and ensuring a steady supply chain over the next four to five years. Data Patterns is well placed to benefit from the growing defense sector in India. We have advanced in the value chain by developing integrated systems as 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're shifting our focus to complete systems to grow our addressable market. Our goal is to become a leading systems supplier serving both India and other countries.
With 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've also developed and delivered transportable precision approach radars. This is expected to open a few more opportunities in the near future. As of March 31, our order book stands at INR 730 crore, and as of date, the order book is at INR 860 crore, including negotiated contracts. Our inter-end order book stands at INR 107 crore as of March 31. 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%-30% or 20%-25% revenue growth for FY 2026 while maintaining strong EBITDA margins at 35%-40%.
We are happy to inform you that our board has recommended a dividend of INR 7.9 per equity share of INR 2 each, which is subject to approval of the shareholders. With that, I will now hand over the floor to Venkat for his remarks.
Thank you, sir. Good morning, ladies and gentlemen. We are pleased to share the highlights of our financial performance for Q4 and full year FY 2025. Let's take a closer look at the financial results. In Q4 and FY 2025, we are pleased to report a strong quarter and a solid close to FY 2025, marked by significant growth both in top and bottom lines. Revenue for Q4 FY 2025 stood at INR 396.2 crores, 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. There are an AT segments where Q revenue drivers contributing to 60% and 20%, respectively. Our order book remains strong at INR 730 crores as of 31 March 2025. With orders negotiated and yet to be received, the order book as of today stands at INR 860 crores.
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%. EBITDA for Q4 was INR 150 crores, up by 61% year-on-year and 177% quarter-on-quarter, with margins in line with the guidance at 38%. PAT came in at INR 114 crores 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 INR 780 crores, up 36% year-on-year, with 53% from production and 43% from development contracts. Gross margin for the year was 61%. EBITDA stood at INR 275 crores, up 24% year-on-year, with a gross margin of 39%. PAT for 2025 was INR 222 crores, up 22% year-on-year, with a strong PAT margin of 31%. We remain a debt-free company in FY 2025 also.
As of 31 March 2025, we maintain a robust liquidity position with over INR 453 crore in cash and cash equivalents. As mentioned earlier, we remain firmly on track to meet our stated guidance of 20%-25% revenue growth. With that, I now open the floor for questions. Thank you.
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 Japan, from Philip Capital. Please go ahead.
Thank you for the opportunity, sir, and congratulations on a very strong performance. Also, congratulations on your contribution to operations in those. My first question is in the lines of, sir, in the earlier quarters that you had mentioned that some of your revenue recognition was impacted due to a client's request on deferment in delivery. Are those orders now delivered, and is it possible for you to quantify those?
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 not like to quantify the order value, but I think this quarter and next quarter, that will also get delivered.
Got it, sir. My next question is that in your PPT, you have mentioned that BrahMos seeker has now been successfully tested. Any feedback or any clarity in terms of when you will get any orders or any further processes that are yet to go with the currently undergoing?
Yeah. We've been waiting for the flight tests on the missile to happen for quite some time now. We're happy to announce that the flight was carried over about three to four weeks back. It was an excellent flight, textbook flight, and textbook performance. We expect that shortly, we should be getting some more orders from BrahMos for the development additional units to be asked. Following up with that, we expect also production contracts to happen. Maybe in the next month, plus probably another year, the production orders also should happen.
Production orders are expected in next year, you are saying?
May happen this year, but it should happen early because they also would like to replace imported seekers with Indian seekers as per mandate. The products work very well. They are also pushing us to see that we get ourselves ready for delivery at the earliest opportunity.
Got it, sir. Now.
Sorry?
It should happen.
Got it, sir. Can you help us with what are the systems that you are supplying for BrahMos?
Today, we do all the launches for them, ground-based, mobile-based launches for all three services, Navy, Air Force, and Army. We also supply the air version for Sukhoi 30 and the test systems for all of three areas. As now the seeker is also tested, hopefully, we'll get some contracts to deliver those also.
Got it, sir. Your performance in FY 2025 has been robust in terms of your export orders and export revenue as well. Right now, we've landed close to around INR 100 crore in export orders. Any export orders which are there in the advanced stages in pipeline?
We are discussing with through some requirements. We've quoted for some. We are awaiting results from the quotations. Also, we appointed some representatives for ours, for these products of ours. They're already delivered in India and abroad. We expect some traction to take place through the course of this year. I can't really comment on exactly which order will come at what time. We don't know the international competition for all these products. There are not many companies in what we want to do. We expect some contracts to happen.
Got it, sir. That was some.
Thank you. Japan, sir, I would request you to come back in the queue for the questions.
Yeah, yeah. I'm done. Thank you.
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 JPMorgan. Please go ahead.
Yes, sir. Thanks a lot, and congratulations on a very strong set of numbers. Sir, I have two questions on future order intake prospects. The first is slightly longer term. I mean, if you could shed some color and light on what is the opportunity size that you are trying to address through all the R&D and the development efforts that you are making over the next four to five years. I mean, that is the value of orders that you could be bidding for based on your capabilities and R&D programs that you are undertaking. That is a slightly longer-term question. For FY 2026, what will be the size of order intake or what is the prospect that you are bidding for?
The products we developed, basically, we've taken advanced development of various products and radars and EW and community assistance as well as seekers. These are all the intent is to see that we scale the opportunities in India and our own top lines. We expect that the size of opportunities at that time for all this probably vary between INR 20,000-30,000 crore. This is why we took up money into the market and started development. These products are advanced as a development and acquisition. Regarding FY 2026, some of the orders have got delayed what we were supposed to get in FY 2025, but we expect those contracts to happen. Maybe somewhere between INR 1,000-2,000 crore is what we expect during the course of this year to get orders.
Based on the planning of those orders, we've already started some work in development and infrastructure creation as well as component ordering, expecting these contracts to happen.
For this INR 20,000 crore-INR 30,000 crore SAM, it will be over what period of time broadly?
I can't comment on that, but it should all be 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 also reflect on our delivery model. It will be around five years, six years, is what I'm thinking. We have to wait and watch really what happens, how long the flight test takes. All these things are not in our control, but we're gearing up to all of those things.
Great. Thanks a lot, and best of luck for the future.
Thank you. The next question is from the line of Renu Baid from IIFL Capital. Please go ahead.
Yeah. Hi, good morning, sir. Congratulations for the strong performance. My first question is on the order flow side. If you see, last year, we were indicating probably inflows in 2026 could be in the INR 20 billion-INR 30 billion range, including probable success for some developmental projects. 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-two program could get potentially pushed back by 6-12 months, or do you think we may see some initial success coming this year? That is the first question.
See, development contracts and make-two go through its own cycle because the products have been developed, evaluated, and based on which the RFPs will be issued based on field time. It is going to be very difficult to speed up such programs. What we are getting interesting requirements is that some of the products were delivered earlier. Repeat requirements are coming up, fast delivery requirements. These things have started coming in. I hope they get converted into contracts early. Yes, we find there is an urgency in repeating some of the products which already we have delivered. That also is there.
Yes, definitely, there is some movement, but how this will all pan out, what kind of contracts we are going to get, we have some idea, but we do not want to comment on it at the present moment until it really happens.
Got it. So of the 10-20 billion inflow range which you are suggesting for 2026, what percentage of it could be driven by these emergency procurements which are like INR 2-3 billion in ticket size and which could be meaningful for us both in near-term order inflows as well as execution?
See, some of the products already we have delivered. Repeat requirements are coming up. They could be around INR 100 crore. We don't know. Again, this is very, very subjective because we need to get the inquiries, and then we need to quote. The second area is we're also gearing ourselves for some emergency procurement Ministry of Defence tenders where in the last two to three years' time, we have developed product categories which meet those requirements of the end users. They are putting the demonstration 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 crore also to happen. That is going to be dependent on competition and the success of the trials on which we have built the products for. These are areas.
The third area is whatever we have delivered earlier, and back-to-back contracts have happened to some of the PSUs. Back to back, we expect order inflow to take place for our delivery. That also is under discussion. It should also happen in the next three to six months' time. We are gearing ourselves to produce against those contracts so that some of the development, some of the inquiries that come 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.
Right. So can one infer that this could be almost between INR 5 billion and INR 6 billion for us in order size for the short-cycle delivery projects from all these three areas?
No, no. What is this? $5 billion-$6 billion? I don't understand. What did you say?
INR 500-600 crore range coming from all the three categories that you highlighted recently.
It should be more than that. It should be above INR 1,000 crore.
Got it. That is pretty encouraging. Second, within the longer-term projects, if you can share some updates in terms of how is the progress on the make-two projects, the R&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 level of revenue stream for us?
Yeah. The major revenue stream we're expecting where investments have happened, which is around INR 40 crore, INR 1-2 crore we have spent in 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 Helium comment and the jammer. We're working on the make-two programs for ADFCR. We're also looking at detection of very low cross-section UAVs, detect and jam. These are all areas where the company has put in a lot of effort in the last one to two years' time. 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 are happening. These are the areas we're looking at presently. The other area which is going to help us is because of the successful seeker flights, we expect some more contracts to happen in those areas. We're also developing additional seekers, not just for BrahMos. Also on air defense seekers, we are developing. We have contracts on hand. We expect to deliver on them. They are also expected to go into some numbers based on initial successes, what I was told by the customers, but we'll wait and watch what happens. Now that we have full competency here, we're building a whole range of these seekers for newer programs and newer missile systems. I hope all this pans out well.
These are all being done in-house, fully developed in-house. 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 a platform. 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're focusing on presently.
Thanks much and best wishes. I have questions in balance. You can come back. Thank you.
Thank you. The next question is from the line of Lavina from Jefferies. Please go ahead.
Hello, sir. Congrats again on a good set of results. Just two questions. What is, sir, of the export opportunities? It's a well-known thing that globally you're seeing a rise in defense spend, right? I just wanted some high-level thoughts from you. 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? Any products, if you can shed some light there. 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.
Yeah. See, we've been an import-centric country in defense and aerospace till late. We are now graduating to try to build more in India. Since 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. Having said that, it's not going to be very easy to export full systems immediately. That should be a long-term goal. We have to have a direction to do this. More and more you develop in India, more you'll 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.
There is a lot of also, what do you say, import controls or export controls which we need to address in their government agencies. Even getting specifications from a Western nation for requirements in defense is a challenge. Having said all that, there are opportunities to look at a growing European requirement, and then we'll be a competent capability established in India. It is possible to do part development in India for future requirements of their Western systems requirement. 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. 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. On the real defense equipment which is going airborne, it has its own challenges to build full systems and then ship into them. We can collaborate with them. There is definitely an opportunity for collaboration because we have a capability model, and they also have a shortage of that kind of capability within their countries. Scale-up drastically is not very easy in Europe. We should be able to address those opportunities. We want to put in a marketing model and market organization to address such opportunities. 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." When that kind of mindset suddenly says, "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?" Seeing is believing. We need to take that extra mile, pay the extra risk, build the products, show them it is world-class, and the belief will happen over a period of time.
This is the path that Data Patterns (India) Limited is taking, investing ahead, convincing our customers that this is possible to do in India, and then go ahead and get the contracts. It is a tougher way of doing things, but it is a long-term game. As we have 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 are to build a capability and a product to convince the customers. This is where we are.
Thanks.
The next question is from the line of Jyoti Gupta from Nirmal Bank. Please go ahead.
Morning, sir. Great set of numbers. My first question is the net working capital days is still quite high in FY 2024 from 421. Looks like we're going to 468. What kind of net working capital days should we be seeing going forward? Please stop it now. The other thing is in terms of revenue, when you say INR 1,000 crore FY 2026, just from the repeat orders, looks like you're anyways crossing your current actual revenue growth of 36% going to 41%. That looks quite robust. The last question is, why did we in this year FY 2025 do some low-margin contracts? Any particular reason for that?
Okay. First question on networking capital. One has been about more than 50% in the last quarter. That also comes as networking capital looks at the ratios, looks higher. More importantly, this business, we've done a lot of development-centric contracts. Integration test, field test, flight test, all of them take time. 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, the turnaround time will be faster, cash realization will be faster, working capital days will come down. This is a transitory stage.
We 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 our products to address market, and they have to go through development cycles. That is the reason why we are at where we are. I think this is going to come down in the next two to three years' time. Having said that, we are still a zero-debt company. 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.
You were saying some it becomes like
You would have something like INR 1,000 crore just from the repeat orders because of the emergency procurement. If that is to the extent of INR 1,000 crore, then we will.
No, no, no. I did not say that. I did say emergency procurement is going to contribute to INR 1,000 crores. It's probably for INR 100 crores. I don't know exactly because the inquiries are started coming in, and they have to see how it closes. I said repeat orders from what we've done earlier, which back-to-back orders which we start getting should be more than INR 1,000 crores is what we are saying. That is not revenue, but the order book. We expect that anywhere between INR 1,000-2,000 crores order book in the course of this financial year, we should get is what I said. Okay. 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 order. We do a lot of IP generation. We don't recover development costs in those contracts.
We absorbed throughout our life, we've been absorbing development costs on a product and then gone ahead. When the contracts come in, it looks like bottom line is slightly better in those kind of contracts. Going ahead, we have to make integrated systems. Our company also has to build a 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. 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 in hundreds of crores or INR 1,000 crores plus a single contract we can do. We took this contract strategically. We said margins are not important. It is important that we build capability in the company. That is why we took it. Point number two, all of the electronics are designed in-house, which 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 has not affected our bottom line because though we build additional revenue, our bottom line business has continued to be 20% to above 20% is what we projected last year. We continue to retain that guidance. This is the reason.
What has been the, and I saw your thought 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?
The response is very good, but that does not convert into orders so fast because we need to go through trials. You see, because only after the trials are completed, the product can be absorbed. Yes, there is a lot of discussion taking place with the users. We believe that they will give us opportunity for the trials. Once the trials go through, there will be opportunities of converting into fairly substantive business. We are working with the agencies to see how it can be taken up. We are aware 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. We are on track. We have done a world-class system with specifications that 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've done and the capability we've built. I think we're 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 subsystems in India.
Great. Thank you so much, sir, and all the best. I'm sure you'll do very well going forward.
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. The next question is from the line of Sandeep Agarwal from Naredi Investment. Please go ahead.
Hello. Thank you for the opportunity. Just to follow up regarding the margin question, sir, could you please elaborate the primary reasons and factors that lead to significant sequential and near-line contraction in the margin? What is the sustainable margin at gross level and at EBITDA level we expect?
No, I didn't understand your question at all, Mr. Agarwal. Can you repeat the question properly? Because I couldn't understand. I know what you mean.
I know what margin, but beyond that, I couldn't understand.
Sir, what is the sustainable margin at gross level and at EBITDA level expected?
I'll try to repeat the question. What is the?
Sustainable margin.
Sustainable margin on a beta level is what you're asking. Am I right?
At EBITDA and gross level we expect?
Okay. That depends on the contracts, no. It cannot be a generic answer. It depends on the contract that is fully designed by us, in which case the margin is expected to be slightly higher because we do not buy and integrate. Whatever other people buy is also done here. So the material cost becomes low. 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 on development. It cannot be a cross-the-board answer. Whatever we are trying to do is a sustainable product margin because there is a lot of IP development happening and which gets written off. Of course, in these large contracts, they have also capitalized the product development effort. I think whatever we have been doing till now, we should be able to sustain.
The current level, so my next follow-up is the current level of margin is sustainable or we, so just directionally, we want to know the pattern. See what.
See, that's what we've told, 35%-40% EBITDA margin, we will be able to sustain.
40% EBITDA margin.
35%-40% will sustain.
25%-40%. Okay.
I said 35-40%. Anyway, I think the line is not very good at your end.
Okay. Thank you. Thank you. I understand. Thank you, sir.
The next question is from the line of Garved Goyal from Anvest Advisory. Please go ahead.
Hi. Am I audible?
Yes, sir.
Yeah. Good morning, sir. I'm Garved Goyal, decent set of numbers. My first question is on our order pipeline only. Since the last one year, we are talking about the order info pipeline of INR 2,000-3,000 crore, and our average is around 18-24 months. 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. I want to ask, can you please elaborate on the key factors or the 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 bringing some challenges to convert this pipeline into order books? That is my first question.
Okay. See, whenever I talk about projected orders, we do not consider competitive tenders because competitive tenders can go either way. 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 a competitive basis or whatever, which repeat orders are likely to happen. This is what we project. Second is we have not lost those orders. It's only got postponed. Those are reasons which are 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 MoD have got postponed. Some of the orders have happened now. Back to back, the orders should start happening to us in the next few months' time.
We hear that the projects have just not got cleared. It's getting cleared now is what our customers are saying. I expect that during the course of this year, those contracts should also happen. That is the second one. Third, because of what has happened with our border, it is also likely that we'll get some orders which are getting fast-tracked. Some orders also are likely to happen, which will all contribute to our order book.
Then we are saying for next year, INR 1,000-2,000 crore. Are we pretty much sure INR 1,000 crore info will be there, or is it just an expectation yet to run and you are having not any control over it?
No, no. We are sure about this order because these orders have already been received by customers, and back-to-back inquiries should start in the next month or so. We will be the single vendor contract for all of them based on our earlier delivered products. We are sure of those orders. It is a question of one or two months here and there may happen. Nevertheless, since we want to deliver some part of those contracts, we have already started the necessary groundwork to see the delivery models can happen. That also we have started taking advanced action.
Understood, sir. Sir, secondly, in the last couple of quarters, we were talking about some shift from part product supplier to end-to-end solution provider. Can you please update us on the progress in this regard? How are we going on in this direction? What kind of inquiries are we seeing? Have you made any further development which will lead us to a big negotiation or big order in the upcoming months?
See, getting into full systems is what we're attempting 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. Based on that, we've developed a product radar for the international market that has been accepted and delivered. That is under installation. Like that, we have started developing products. 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. We made the vehicle integration systems. We're taking it for demonstration. Wherever possible, slowly we are adding up on existing competencies and product capabilities and finishing the product to end systems.
To translate into end system order, it 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 is 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. The idea is to increase the time, and so the full system has to be done. That is what we are doing. It will take a bit of time to see that this is happening. We have to go through a lot of flight tests and all that depending on the platforms. It will take time, but it will also be large orders as and when it happens.
Wonderful. Sir, just one last question on the guidance part. I remember when we used to scope, approximately four to five quarters back, you were targeting around 30% earning growth in bottom line, basically, year over year. This year, we ended up with 22% growth. 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?
Actually, I think there's a mistake in probably communication or understanding. We did not say 30% bottom line growth would happen on 2024, 2025. We told only about 20%. Our top line growth is 20-25%. Bottom line, we talked about guidance of 20%. Today, also, I'm seeing the same top and bottom line growth. 30% happens. May can happen on the bottom line, but we're not at the present moment. How it will tell, it all depends on the contracts which happen and how our execution timelines are with respect to customer requirements, based on which it can be upped at a later date. Today, we are looking at a 20-25% top line growth and a 20% bottom line growth is what we're looking at. We want to stick to that guideline, not 30% bottom line. Maybe it can happen.
It is possible it can happen. At the present moment, we can't commit on that.
For Aberta Industries, what is the number you are quoting for bottom line growth?
20%.
20%?
20, 20, two zero.
Okay. Okay. Okay. Understood. Understood. And sir, one last thing on the.
Sorry to interrupt, sir. I would request you to come back in the queue for further questions.
Just last question, sir. Just last question. Please allow.
The next question is from the line of Yash Poddal from Viansh Ventures. Please go ahead.
Yeah. Hi. Am I audible?
Yes, sir, you are.
Yeah. Yeah. Firstly, hello, sir. Congratulations on the set of the numbers. I wanted to actually understand a little bit about the R&D expenditure pattern for the company. Last couple of quarters, presentations, we have spoken about a decent amount being invested towards the R&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&D spends would be how would we attribute this R&D spends from a revenue standpoint? Are we able to attribute the R&D spend to any specific, say, customer base or the revenue segment and be able to pinpoint where we are deriving maximum benefit from the R&D expenditure currently?
Okay. See, traditionally, whatever product development we are taking, we used to write it off as revenue expenses. This is all part of a requirement which is posted against an inquiry or the inquiry tending to happen. With the market information, we start development ahead. We are ahead of the curve, and we have a delivery model which is faster. Otherwise, what have been imported, we say we'll develop it. That is how we've been doing it all along. Today, we are trying to get into a full system business. The development expenses are going to be far, far higher. All of them have to go through what is called flight trials and trials on the field, which is going to be a longer-term duration. Also, when anything you go through fighter aircraft, qualification certification also takes a long time.
These are not products which you develop, which you'll get contracts in the same year. It is going to take two to three years before the contracts can happen, maybe two to three years, even for flight tests or qualification certification to happen, after which the contracts can happen. This R&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 programs which we're developing. That has spent more than INR 141 crore, INR 140-odd crore on product development in the last one and a half years' time. We continue to spend on those kind of large projects. This has a very large requirement in INR 20,000 crore-INR 30,000 crore, INR 20,000 crore, INR 15,000 crore, INR 30,000 crore worth of adequate requirement is there.
We said, "Let us develop this and see that we scale the company substantively as we're going ahead." That is the reason we explained it. Yes, now that some of the products have started coming near maturity, we're also seeing whether some prototypes can be sold this year itself. We are attempting to do so that the conversion of R&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.
Okay. Understood. Understood. My other question was with regards to the time that you have mentioned previously. I think one of the questions you had answered previously was that we are trying to expand the time of the company. If I were to look at and allude to some of the things mentioned in the previous calls with regards to new-age defense products such as UAVs and the next 10 years of how defense procurement is looking, how would we be positioned today in terms of both R&D as well as execution? Would this also have a correlation with the 20% top line—sorry, the 20% bottom line growth that you're mentioning? In terms of profile, is this going to change drastically over the next couple of years?
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're looking very small cross-section UAV to be detected a few kilometers away. We're building radars for that also. We 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 the last 15 years. Now we are adding other areas of spoofing and things like that. A number of other areas, including jamming, we're building products now. It'll be a bouquet of products which will address evolving requirements in the different war scenarios which we are facing. These are the second things we're doing.
The third thing to do is 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. All this is required. Fourth is integrated systems, including vehicle support system manufacturing, so that it can be not just the radar, but also as an integrated requirement to meet the complete requirement of customer. We are also doing that. We will see that we are addressing that. Fifth, as long as we can connect with the platform supplier or weapons system 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 is not just ideas, but we need to build capability to produce this. Today, we have nearly 1,600 people working in Data Patterns.
Nearly 1,100 engineers are working here. We're rapidly enhancing our engineering capabilities and design capabilities. That is another thing which we're putting up. We're also spending about INR 150 crore 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. We need to be ready to deliver. That also is happening because infrastructure takes a long time. Right. We're doing that. All-around development effort is being done.
Right. This INR 150 crore, is there forward guidance for the R&D expenditure, sir, or is it for capital expenditure?
Capital expenditure. R&D expenditure, already we have budgets, and we already spent about INR 140 crore-150 crore. INR 107 crore. I don't know. Some numbers we have spent. We have in our kitty some more—these are approved programs we've taken up in-house. Additional expenditure will also happen. Moving with the scenario of what's happening, we see we can also, as long as the competencies exist, we'll continue to build products very aggressively, is what we're doing.
Okay. Thank you so much for answering all the questions.
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 Davanshah from Alpha Accurate Advisors. Please go ahead.
Yeah. Thanks for the opportunity, sir. My question is on the BrahMos side. Out of the total cost of BrahMos, can you share what would be our opportunity size in terms of the percentage? Also, that is fine. Secondly, maybe two, three years down the line, this production and service business contribution to the revenue, can it inch up to 70-odd % from currently roughly around 55-odd %?
Yeah. I'll 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'll do. We'll continue to develop products, maybe 20% or 15%. That is how it has to go for a mature model. Since there are a 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're doing. Regarding the first question on BrahMos, I can't really tell you because I can't forecast this. We are quoted somewhere. Products have to happen. 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.
It's sensitive. Let it happen. Maybe one of those following questions, after it happens, maybe I can talk about it.
Sure, sir. Yeah. That's all from my side. Thank you.
Thank you. The next question is from the line of Rupesh from Intel Census Capital. Please go ahead.
Hello, sir. Thank you for the opportunity and congratulations on fantastic results. I have two, three questions, so we'll ask all of them together. First question, sir, is on Ashwini LLTR radar. I think we were expecting a fairly decent-sized order, but you had said that the bid is competitive. 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 color on which products are we involved in. Are we involved in AFA radar, DRM DTM, radar warning receivers, or jammer? Some idea, if you can give, so that we can estimate the contribution per plane. If you can also update if we have received any development orders in Sukhoi 30 upgrade. When do you, in your estimate, when can we see commercial orders?
That is second. 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. If you can just map out the opportunity and our positioning in that, and have you received any development order for either airborne SDR or a land-based SDR? These are my three questions. Thank you. Thank you, sir.
As regards to Ashwini radar, BEL has got the order last year, I think February, March. They got the order 2024, 2025. We are in discussion with them. We expect that the requirements should flow down to us, and based on which, we should be able to make an offer. Hopefully, finally, there is a contract in the next three to six months' time. I hope this will happen. Yes, that is an important contract for us. We are waiting for the definitions because there are a lot of changes in the definitions. The original LLTR, which is designed by us, all the electronics, was for 10 years back. A lot of obsolescence and capability changes also we are suggesting as part of this contract because it has to now support the next 20 years. Modern component, modern architecture, some changes have been planned. That is under discussion.
Hopefully, it will happen in the next couple of quarters is what we're thinking. As regards to Sukhoi 30, this is a contract which is already placed on HAL. HAL, 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 a successful flight for the last six, seven years. We've been flying it. It's done some very good performance, based on which we believe that this air will be configured for Sukhoi 30. 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 fire control radar hardware. We have 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 it to flight as possible. We've also developed the jammer pods as an EW suite fully. Part of it has flown. This is the RWR. The other one has not flown. That is also getting completed. We have a product. We're doing internal tests of the products. These requirements are very large. Only a few months back, DAC cleared about INR 7,400 crore for the jammer pods. Earlier, another 100 sets have already been placed on Sukhoi 30 pods or on Sukhoi 30 upgrade for HAL. The requirements are large. 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. We are looking at opportunities to how to take it to flight trial. We've also done some work for Navy, where earlier delivered jammer pods from international companies. We have upgraded the pods with our hardware and electronics. We expect that to fly, which gives us an opportunity to flight test our electronics and software, which will also come in handy when newer systems are doing. What we're doing today is all AESA. Even the jammer is AESA. I don't have any development order for all of them. This is the future large business opportunities, which we have addressed. We are trying to see whether our development will meet the requirements.
As regards to SDR, we have developed with DRDO the hardware for airborne SDR, which is already flown in the LCA, and it's likely to fly in other platforms in the coming months. We've also done development of UAV-based, what do you call, UAV-based systems, as well as ground-based manpack-oriented network MANET manpack systems. This is we've been starting development in the last one and a half years, and it has come to a 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 on form-fit function capabilities. We're completely designed in India. We've also done all the waveforms which are necessary for it. We expect that that should be presented to the users in the next couple of months.
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 that it will be a showcase. It will be a bouquet of programs and products, an integrated solution we can give. That is the idea with which product development is happening here. We do not have additional contracts for all of them, but the extra contracts will happen once the products mature because specifications are world-class. This is what we are doing.
Thank you. Thank you for answering my questions, sir. I have more, but I'll connect in the queue.
Thank you. The next question is from the line of Avi from Vice Capital. Please go ahead.
Hello. Am I audible?
Yes, sir.
Hello. Thank you for the opportunity. In the last conference call, you mentioned that two large space radar contracts account for approximately 50-60% of your inventory. Could you please clarify that, whether any orders related to these contracts were delivered during this quarter?
Yeah. We've delivered the hardware for one of those radars. Second radar will be delivered probably in the next six months.
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?
Inventory has come down with respect to what has been delivered. The second radar, the inventory is still with us. It is a very large inventory because, as I told you, we do not have much margins in all these contracts. 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. The expecting of contract, we finalize in the next 15-20 days' time. We need to deliver it in the next four to five months' time. We will not be able to start buying material post-contract to deliver on the requirement. The requirements are urgent. The order is going to be a single tender. We have already started manufacturing against those things. 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. There are some of the contracts, government agencies, there's a lot of delay, internal delay, but they still insist that we deliver ahead. That is the model we've been doing with them. As long as they're sure that the contract's not going to get slipped, we try and do that. Third point is you must look and 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 are customer certifications, acceptance trials. All of this takes an enormous amount of time, which is not in our control.
If we do not do this, we will find that we are slipping on delivery models. Since we have a commitment to deliver and continue, we try to take these things, earn inventory, and then build the products and keep them ready. Test cycles are long. Lead times are long. We need to address that. That is the nature of the beast as far as defense equipment is concerned. It is worldwide. You will find that it has never been just-in-time inventory. These are all projects which come hurried. The customer, though it has taken two to three years for them to place the order, wants delivery in less than six months and one year. To handle such kind of customer request, I need to have a cost model which is very different. That is what we are doing.
Thank you, sir. The next question is from the line of Dipen from Philip Capital. Please go ahead.
Thank you for the follow-up opportunity. Sir, just one question from my side. What would be the estimated execution cycle for the current order book? For the order pipeline that you have mentioned, say, INR 1,000-2,000 crore in FY 2026, how quickly can the execution cycle be over there as well?
More than 70-80% of the existing orders on hand will get executed this year. We expect that some portion of the orders which is coming this year will execute this year itself. We are taking advanced action in terms of procurement and design, which is going to be done. All that is happening as we speak. I think it answers your question.
Sure, sir. Thank you so much and all the best for FY 2026, sir.
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.
Thank you very much for all the people who have joined on this call. I'd just like to say that I've been repeating this for some time. The opportunities in India are very large in defense markets. We have been habitually importing. There is a large opportunity for Indian systems to come in, especially with the Make in India initiative, which government is supporting. There's an opportunity that's very, very large. It's not that we lack in competency and capability. It was never allowed to do things in India in the earlier days. I think it is our responsibility to build up products, address the market, and the opportunity. We are very, very bullish on the opportunities and our capability to deliver or 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. It is our responsibility to see that this is done. We are actually talking in three, four areas. I have also, 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. 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 is a large opportunity. We need to look at it and do this. Third is the RF seekers, which you are talking. Fourth is the communication equipment and integrated solutions for various kinds of applications. This is not withstanding the products we do with DRDO.
We do for all platforms. Some of the major parts of systems where a lot of design work and development software comes from DRDO. The rest is being done by us in the electronics. We engage with them. These have been my customers for 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. This is unreal to prove. That's not alone. We're not just investing in product development. We're also investing in infrastructure development, which will take time. We bought traditional land. We're building this infrastructure, also test equipment to do the seekers and radars and validation and also scenario simulators, which can do test in the ground before we launch it in the air. All of this to get customer confidence building in-house here. That is also happening.
Look also at the export market. We're also looking at joint development of very, very high-end UAV-based radars along with a foreign company. The 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, but also reduce this across so that we have other customer bases and go global. We want to do that also. 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. We are on the track. The direction is very clear. We're very bullish on our growth. 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 Go India, 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.
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.