Dynacons Sys.

Dynacons Systems & Solutions reported a robust Q3 FY26, with revenue from operations reaching INR341 crores, marking a 10% year-on-year growth. EBITDA saw a significant 49% year-on-year increase to INR41 crores, leading to an improved EBITDA margin of 11.9%. Profit after tax for the quarter stood at INR23 crores, up 27% year-on-year, reflecting strong operational leverage and an enhanced solutions mix. For the nine-month period, revenues reached INR1,022 crores with EBITDA of INR110 crores and a net profit of INR66 crores, representing a 21% year-on-year growth.

The company strengthened its position as a leading IT system integrator, successfully going live with 38 banks under the Core Banking as a Service initiative for NABARD. Key project wins included an enterprise application platform deployment for RBI, a INR250 crores order approximately, a digital workplace solution for LIC, and mandates from J&K Bank, SBI, and Bank of Baroda. These wins underscore Dynacons' execution strength in mission-critical financial structure programs and contribute to strengthening enterprise digital infrastructure capabilities.

Dynacons' margin improvement is attributed to a disciplined execution and an improving solutions mix, with a growing contribution from higher-margin data center and cloud offerings, which has moved from 14% to 37% over the years. The company's focus on annuity-based engagements and value-added services, including Device-as-a-Service (DaaS) and digital workplace offerings, is expected to further strengthen profitability and enhance long-term client engagements. Management expressed confidence in sustaining and growing these improved margins, noting that PAT margins also reflect the EBITDA gains.

As of December 31, 2025, Dynacons held a revenue book of approximately INR2,389 crores, providing strong revenue visibility. Additionally, a robust order pipeline of approximately INR3,083 crores, spanning data center, cloud, networking, managed services, and workplace solutions, supports future growth momentum. The average execution timeline for the order book is estimated at around two years, with some projects extending up to five years, primarily for services implementation and as-a-service contracts.

The company's recent capital expenditure is primarily directed towards its As-a-Service business, which involves acquiring assets on lease, leading to the creation of Right to Use (ROU) assets, valued at INR39.4 crores as of September end. Dynacons funds these investments through a mix of internal accruals and lease options, aiming to maintain a steady Return on Capital Employed (ROCE) despite the increased capital deployment. Management emphasized prudence and sustainable growth in this segment.

Dynacons leverages its nationwide presence, deep technology experience, and strong OEM partnerships to compete effectively, even against larger companies. The company's proven track record in mission-critical IT deployments, private cloud rollouts, and core banking solutions provides a competitive edge. Management clarified their business model is not traditional SaaS, but rather Device-as-a-Service and platform/solution-as-a-service, viewing AI tools as productivity enhancers rather than competitors.

While the immediate focus remains on India due to its strong growth story, Dynacons is also exploring geographic expansion into APAC (particularly Southeast Asia) and later the Middle East and Europe. This expansion is supported by international partnerships and global IT alliances. The company views AI as a positive force, enhancing productivity and strengthening cybersecurity solutions, addressing both AI-driven opportunities and security concerns, as AI is crucial for both security and securing AI systems.