India’s defence sector has changed significantly over the last few years.
Now, the focus is no longer limited to conventional defence equipment. Shipbuilding, defence electronics, radars, electronic warfare, unmanned systems, and advanced platforms are becoming important.
This makes the comparison between Garden Reach Shipbuilders & Engineers (GRSE) and Data Patterns very interesting. Both operate in India’s defence ecosystem, but their business models are very different.
In this editorial, we will discuss these two defence stocks and compare them on various parameters – revenue growth, margins, return ratios, cash flows, and valuations.
Business Overview
Garden Reach Shipbuilders & Engineers Ltd
Garden Reach Shipbuilders & Engineers, or GRSE, is a Defence Public Sector Undertaking under the Ministry of Defence.
The company primarily caters to the shipbuilding requirements of the Indian Navy and Indian Coast Guard.
GRSE operates mainly as a capital goods manufacturer; its revenue largely comes from long-term shipbuilding contracts, while ship repairs, engineering products, and other marine-related activities provide additional revenue streams.
Apart from shipbuilding, GRSE has a ship repair business. It undertakes refits and repairs of naval and coast guard vessels and has also worked on foreign warships.
GRSE’s revenue remains heavily dependent on the domestic defence market. More than 95% of its business is linked to the Indian market, with the Indian Navy and Coast Guard being its major customers. However, the company is gradually building an export presence through warship and patrol vessel deliveries and ship-repair projects for friendly foreign countries.
GRSE was granted Navratna status in June 2026. Management has also highlighted its strong order visibility and focus on execution. Shipbuilding accounts for around 95% of the order book.
Data Patterns (India) Ltd
Data Patterns operates at a very different end of the defence value chain. The company is a vertically integrated defence and aerospace electronics manufacturer with more than three decades of experience in designing and developing electronic systems.
Its products are used across space, air, land, and naval platforms. Unlike GRSE, which builds large physical platforms such as warships, Data Patterns focuses on the electronic systems that go into defence and aerospace platforms.
Its business covers three broad stages: development, production, and services.
During the development stage, the company works on R&D and prototype development. Once a product moves into production, it manufactures the systems in larger quantities. It also earns revenue from maintenance and after-sales services.
Revenue is largely domestic, with around 90-95% coming from the Indian market. Its customers include DRDO, ISRO, BEL, HAL, the Ministry of Defence, and private defence prime contractors. The company is also increasing its presence in overseas markets, including Europe, the US, and the UK.
The company has also expanded its manufacturing footprint, while investing ahead of expected orders in areas such as radars, electronic warfare, satellite integration and AI-enabled electromechanical systems.
Data Patterns has used capital raised through its QIP to expand its capabilities. It has also acquired a 100% stake in ST Advanced Composites to increase vertical integration.
Revenue
| Consolidated Revenue from Operations (Rs million) | FY22 | FY23 | FY24 | FY25 | FY26 | FY22-FY26 CAGR |
| GRSE | 17,544.50 | 25,611.50 | 35,880.00 | 50,756.90 | 70,021.60 | 41.34% |
| Data Patterns | 3,110.00 | 4,530.00 | 5,200.00 | 7,080.00 | 9,250.00 | 31.32% |
Source: Company Financial Performance
GRSE’s revenue increased from Rs 17,544.5 m in FY22 to Rs 70,021.6 m in FY26 with a CAGR of 41.34%.
The scale of the increase is significant, and revenue has increased roughly four times over the four years.
The major driver has been execution across large naval programs; projects such as P17A Advanced Frigates, Anti-Submarine Warfare Shallow Water Crafts, and Survey Vessels have contributed to the strong growth in revenue.
The ship-repair business has also expanded during this period. Data Patterns, meanwhile, increased revenue from Rs 3,110 m in FY22 to Rs 9,250 m in FY26, translating into a 31.32% CAGR.
Its growth has been driven by products moving from the development stage into serial production. This transition is important for an electronics company because the economics of a product can change significantly once a successfully developed system starts being manufactured in larger quantities.
Profitability
Revenue growth tells only one part of the story. The next question is how much profit each company generates from that revenue.
Profitability Snapshot (FY22 – FY26)
| Metric (Rs million) | FY22 | FY23 | FY24 | FY25 | FY26 | FY22-FY26 CAGR |
| GRSE Gross Profit | 2,695.00 | 3,252.70 | 4,919.00 | 7,090.80 | 10,293.20 | 39.80% |
| Data Patterns Gross Profit | 2,250.00 | 2,830.00 | 3,550.00 | 4,320.00 | 5,850.00 | 26.98% |
| GRSE EBITDA | 1,050.00 | 1,320.00 | 2,450.00 | 5,160.00 | 7,290.00 | 62.32% |
| Data Patterns EBITDA | 1,410.00 | 1,720.00 | 2,220.00 | 2,750.00 | 3,710.00 | 27.36% |
| GRSE PAT | 1,895.30 | 2,281.20 | 3,572.70 | 4,604.00 | 6,529.00 | 36.24% |
| Data Patterns PAT | 939.7 | 1,240.00 | 1,816.90 | 2,218.10 | 2,713.70 | 30.36% |
Source: Company Financial Report
The profitability comparison is quite different from the revenue comparison.
GRSE’s EBITDA increased from Rs 1,050 m in FY22 to Rs 7,290 m in FY26, a CAGR of 62.32%, and PAT also increased at a 36.24% CAGR.
On the other hand, Data Patterns’ EBITDA increased from Rs 1,410 m to Rs 3,710 m during the same period, while PAT increased from Rs 939.7 m to Rs 2,713.7 m.
Despite its much smaller revenue base, Data Patterns generated EBITDA of Rs 3,710 m in FY26.
GRSE, however, generated EBITDA of Rs 7,290 m because of the much larger scale of its shipbuilding operations.
The margin comparison explains the difference.
Margin Snapshot (FY22 – FY26)
| Margin | FY22 | FY23 | FY24 | FY25 | FY26 |
| GRSE Gross Margin | 15.36% | 12.70% | 13.71% | 13.97% | 14.70% |
| Data Patterns Gross Margin | 72.35% | 62.47% | 68.29% | 61.02% | 63.24% |
| GRSE EBITDA Margin | 6.00% | 5.20% | 6.80% | 10.20% | 10.40% |
| Data Patterns EBITDA Margin | 45.34% | 37.97% | 42.71% | 38.84% | 40.11% |
| GRSE PAT Margin | 10.80% | 8.90% | 9.96% | 10.39% | 10.68% |
| Data Patterns PAT Margin | 30.22% | 27.37% | 34.95% | 31.33% | 29.34% |
Source: Company financial reports
Data Patterns’ FY26 EBITDA margin was around 40%, compared with 10.4% for GRSE and the reason is largely linked to the nature of their businesses.
GRSE is a large manufacturing and shipbuilding operation. Data Patterns has a different cost structure. Its products are based on proprietary engineering, electronics, and system design.
Once a product moves into production, the economics can improve because the initial development effort does not increase proportionally with every additional unit manufactured.
Employee costs are therefore an important part of Data Patterns’ cost structure. The company employs a large engineering workforce, while GRSE benefits from its much larger revenue base, spreading employee costs over a wider scale of operations.
GRSE’s margin trend is also worth noting because its EBITDA margin increased from 6% in FY22 to 10.4% in FY26, which suggests that operating profit has grown faster than revenue during the period.
Data Patterns’ EBITDA margin has remained considerably higher, although it has fluctuated between 38% and 45% during the period.
Debt Management
The next factor to examine is the balance sheet because, for the defence companies, a strong order book does not automatically translate into financial strength. The way that growth is funded also matters.
Debt Management Snapshot (FY22 to FY26)
| Metric | FY22 | FY23 | FY24 | FY25 | FY26 |
| GRSE Debt (Rs million) | 100 | 90 | 80 | 20 | 310 |
| GRSE Debt/Equity | 0.008x | 0.007x | 0.005x | 0.004x | 0.012x |
| GRSE Interest Coverage | 384.39x | 48.10x | 42.86x | 69.13x | 63.34x |
| Data Patterns Debt (Rs million) | 67.7 | 7 | 0 | 0 | 0 |
| Data Patterns Debt/Equity | 0.012x | 0.001x | 0 | 0 | 0 |
| Data Patterns Interest Coverage | 10.89x | 87.15x | 26.96x | 25.45x | – |
Source: Company financial reports
Both companies have operated with very low financial leverage, as GRSE’s reported debt remained small throughout the period. The FY26 debt figure of Rs 310 m is also very small compared with the company’s revenue and equity base.
Data Patterns moved from Rs 67.7 m of debt in FY22 to zero reported debt from FY24 onwards. The company’s cash position has also strengthened following capital raised through its IPO and QIP.
For GRSE, the small amount of reported debt is largely linked to lease liabilities rather than significant bank borrowing, and the important point is therefore that neither company has relied heavily on debt to finance its growth.
Financial Efficiency
A company’s profitability needs to be considered alongside the amount of capital required to generate that profit.
Three measures are useful here: ROCE, ROE and CFO/PAT.
ROCE measures the return generated on capital employed, while ROE measures the return generated on shareholders’ equity.
CFO/PAT provides another perspective by showing how much operating cash is being generated relative to profit.
Financial Efficiency Snapshot (FY22 to FY26)
| Financial Efficiency | FY22 | FY23 | FY24 | FY25 | FY26 |
| GRSE ROCE | 20.00% | 20.00% | 27.00% | 34.19% | 38.45% |
| GRSE ROE | 16.00% | 17.08% | 23.14% | 28.11% | 31.79% |
| Data Patterns ROCE | 33.00% | 22.00% | 16.00% | 22.00% | 21.00% |
| Data Patterns ROE | 24.00% | 17.00% | 15.00% | 16.00% | 17.00% |
Source: Company financial reports
GRSE’s return ratios have improved considerably as ROCE increased from 20% in FY22 to 38.45% in FY26, while ROE increased from 16% to 31.79%.
One factor behind this is the company’s working-capital structure. Shipbuilding contracts involve milestone-based payments from customers, which can provide GRSE with customer advances during the construction period.
At the same time, Data Patterns shows a different trend: its ROCE declined from 33% in FY22 to 16% in FY24 before recovering to 21% in FY26.
ROE followed a similar pattern, falling from 24% to 15% and subsequently recovering to 17%.
CFO/PAT: Cash Conversion
CFO/PAT Snapshot (FY22 to FY26)
| Financial Year | GRSE PAT (Rs m) | GRSE CFO (Rs m) | GRSE CFO/PAT | Data Patterns PAT (Rs m) | Data Patterns CFO (Rs m) | Data Patterns CFO/PAT |
| FY22 | 1,895.30 | -3,561.10 | -1.88x | 939.7 | 500 | 0.53x |
| FY23 | 2,281.20 | 14,500.00 | 6.36x | 1,240.00 | -170 | -0.14x |
| FY24 | 3,572.70 | -7,070.00 | -1.98x | 1,816.90 | 1,390.00 | 0.77x |
| FY25 | 4,604.00 | 160 | 0.03x | 2,218.10 | -900 | -0.41x |
| FY26 | 6,529.00 | -2,900.00 | -0.44x | 2,713.70 | 800 | 0.29x |
Source: Company financial reports
CFO/PAT is particularly important for defence companies because revenue recognition and cash collection do not always happen at the same time.
For GRSE, operating cash flow has been highly volatile; in FY23, CFO was positive at Rs 14,500 m, while FY24 and FY26 saw negative CFO.
This reflects the nature of shipbuilding: cash flows can increase when milestone payments are received and decline as inventory and work-in-progress build up ahead of future milestone collections.
Data Patterns also has a long working-capital cycle. Customer testing, inspection, acceptance and quality approvals can delay collections. As a result, cash flow can remain weak even when the company reports accounting profits.
Its CFO was positive in FY22, negative in FY23, positive in FY24, negative in FY25 and positive again in FY26.
Therefore, neither company’s CFO/PAT ratio should be interpreted in isolation for a single year. Read the ratio alongside contract milestones, inventory, receivables, and the timing of customer payments.
Recent Q1 FY27 Performance and Management Outlook
The latest quarterly performance provides a more current picture of how both companies are executing.
Q1 FY27 Performance (GRSE vs Data Patterns)
| Metric (Rs million) | GRSE | Data Patterns |
| Revenue from Operations | 18,150 (+39% YoY) | 1,160 (+17% YoY) |
| Total Income | 19,140 (+38% YoY) | 1,280 |
| EBITDA | 1,490 | 314 (-2.2% YoY) |
| EBITDA Margin | 8.20% | 27.00% |
| PAT | 1,730 (+44% YoY) | 221 (-13.2% YoY) |
| PAT Margin | 9.53% | 19.00% |
| Order Book | Rs 135,962.6 million | Rs 9,200 million |
Source: Company Financial Report
GRSE started FY27 with strong revenue growth, and it increased 39% YoY to Rs 18,150 m, while PAT increased 44% to Rs 1,730 m.
Management attributed the performance to accelerated execution across 19 vessels under concurrent construction. The company’s order book stood at Rs 135,962.6 m, with shipbuilding accounting for around 95% of the order book.
Data Patterns also reported revenue growth, but the profitability trend was different. Revenue increased 17% YoY to Rs 1,160 m. Gross margin remained high at 78.9%, but EBITDA declined 2.2% to Rs 314 m and PAT declined 13.2% to Rs 221 m.
Management attributed the pressure to higher employee costs following the addition of 82 engineers, the timing of customer inspections, and a provision of Rs 20 m for long-standing receivables and facility maintenance.
Also, if we look at the management outlook, Data Patterns expects FY27 revenue growth of 20-25%, while management expects EBITDA margins to normalise in the 35-40% range.
The company’s firm order book stood at Rs 9,200 m as of June 2026. Including negotiated contracts and orders received in July, the opportunity pipeline rises to around Rs 26,540 m. Management is also targeting approximately Rs 20,000 m of fresh order inflows during FY27.
On the other hand, if we look at the GRSE, management has indicated that major new orders, including Next-Generation Patrol Vessels, are expected to start contributing revenue from FY28 after the design and equipment-ordering phase.
The company is also pursuing a greenfield shipyard outside Kolkata by 2028 to overcome the draft limitations of its existing riverine facilities.
Valuation
Valuation Snapshot (GRSE vs Data Patterns)
| Valuation Metric | GRSE | Data Patterns |
| Share Price | Rs 2,361 | Rs 4,402 |
| Market Capitalisation (Rs million) | 270,450 | 246,450 |
| P/E | 41.4x | 91.2x |
| P/B | 10.3x | 14.2x |
| EV/EBITDA | 30.5x | 65.0x |
| Dividend Yield | 0.83% | 0.23% |
| Historical PEG | 1.14x | 3.00x |
Source: Company Financial Report (Market data dated 24 Sep 2026)
The valuation gap between the two companies is significant. GRSE trades at around 41.4 times earnings, while Data Patterns trades at approximately 91.2 times earnings.
The difference is also visible in price-to-book and EV/EBITDA multiples, where GRSE trades at around 10.3 times book value and 30.5 times EBITDA, compared with 14.2 and 65, respectively, for Data Patterns.
The historical PEG ratio provides another way of looking at the valuation. Using FY22-FY26 PAT CAGR, GRSE’s PE divided by its historical earnings CAGR works out to around 1.14. For Data Patterns, the corresponding figure is around 3.
However, this should not be treated as a forward PEG because it uses historical earnings growth.
For Data Patterns, using the midpoint of management’s 20-25% FY27 revenue-growth guidance gives a forward growth-adjusted multiple of around 4.05.
Conclusion
GRSE and Data Patterns represent two different parts of India’s defence ecosystem. GRSE has delivered faster revenue growth and operates with a large shipbuilding order book, while Data Patterns has substantially higher margins and a technology-focused product portfolio.
Both maintain low financial leverage; as of September 2026, GRSE trades at a lower valuation across key multiples, while Data Patterns carries a higher valuation alongside its higher-margin business model.
Future performance will depend on order execution, capacity expansion, new product development, and the conversion of order pipelines into revenue and cash flow.
Investors should consider their individual financial objectives, risk appetite, and investment horizon before making any investment decision.
Happy investing.
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