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    Dynamic Cables

    DYCL
    Capital Goods·28 Jan 2025
    Management Summary

    Dynamic Cables reported a strong Q3 FY25 and 9M FY25, driven by robust domestic demand and strategic capacity enhancements. Sales grew 32% and PAT increased 72% for the nine-month period, with the order book reaching INR 682 crores. While export performance faced currency-related headwinds, the company is actively pursuing new market entries and product approvals, alongside ongoing capacity expansion to meet future growth.

    Highlights

    5
    • Sales for the nine months of FY25 grew by 32% over the same period in FY24.

    • Operating margin for 9M FY25 increased by 37% to INR 71.2 crores, maintaining a stable 10.3%.

    • Profit After Tax (PAT) for 9M FY25 surged by 72% to INR 41.2 crores, surpassing full FY24 profits.

    • The order book reached INR 682 crores as of December 31, 2024, reflecting a strong 17.6% YoY growth from INR 580 crores in Q3 FY24.

    • Capacity debottlenecking initiatives have increased the existing plant's annual turnover potential to INR 1,150-1,200 crores.

    Concerns

    2
    • Export contribution declined to 6% in 9M FY25 due to currency issues in African and Asian markets and a strategic focus on strong domestic tailwinds.

    • New product approvals, including for the US market and renewable sector, are lengthy and still in various stages of technical testing and regulatory clearance.

    What Changed2

    vs Q1 FY26

    Guidance items5 → 9 (+4)Risks discussed3 → 2 (-1)

    Key financials

    Single quarter

    04 metrics
    1. 01Sales Growth+32%YoY
    2. 02Operating Margin₹71.2 Cr
    3. 03Operating Margin %10.3%
    4. 04PAT₹41.2 Cr+72%YoY

    Segment breakdown

    Customer Contribution (9M FY25)
    23% Government Sales71% Private Sales6% Export
    Product Contribution (9M FY25)
    61% HV Sales29% LV Cables5% Railway Signaling Cable5% Conductors
    List

    Order Book

    high confidence

    Total Value

    ₹ 682 crores

    as of 2024-12-31

    quantified
    17.6% YoY

    Composition

    Mix2 products
    • Renewable14.7%
    • Domestic Power Distribution74.3%

    Share of order book by product · partial disclosure (89.0% of book)

    "The order book is healthy and provides strong revenue visibility, with incremental orders driven by domestic factors."

    Source:
    Prepared remarks

    Capital allocation

    2
    medium confidence
    CategoryHeadline
    Capex

    ₹35 crores

    from fundraise, balance for working capital

    Debt

    Debt disclosed

    Guidance & targets

    9
    CategoryTargetPriority
    Capacity Expansion
    New capacity operational
    Q2 FY26
    High
    Capacity
    Existing plant annual turnover potential
    INR 1,150-1,200 crores
    High
    Capacity
    Additional capacity from 35 crores CAPEX
    200 crores
    High
    Growth
    Cable business CAGR
    Upward of 20%
    High
    Export Contribution
    Export revenue share
    Around 10%
    Medium
    Working Capital
    Working capital days
    Below 100 days
    High
    Government Sales
    Government sales contribution
    May go down to 15%
    Medium
    Utilization
    Utilization levels
    Around 85%
    High
    Railway Cable
    Railway cable contribution
    5%
    Medium

    Capacity expansion operational status

    Q2 FY26
    CurrentOngoing, machines ordered, vendor selection frozen
    TargetOperational

    Why it matters

    Crucial for future revenue growth and meeting increasing demand, impacting the company's ability to scale.

    I would like to highlight that our ongoing capacity expansion plan is moving as per schedule and is on track to be operational by Q2 FY26.

    How to verify

    guidance_and_targets[category='Capacity Expansion'][metric='New capacity operational']

    Risks & concerns

    2
    RiskSeverity

    Export Market Challenges (Currency Issues, Delays)

    Currency issues in African and Asian export markets led to degrowth and delays in dispatches, prompting a focus on domestic opportunities.Management acknowledged

    medium

    Lengthy Approval Processes for New Products/Markets

    Technical testing and regulatory approvals for new products (e.g., solar, US market) are time-consuming, delaying market entry and revenue contribution.Management acknowledged

    medium

    Q&A highlights

    8

    “So basically, first question regarding the CAPEX, that is going on track, and the machines have been ordered and all the vendor selection, technical specifications, everything is frozen. So, the implementation would take another 6 months or so and by Q2 we would be ready with a new capacity.”

    Clarifies the status and timeline for the announced CAPEX, confirming readiness by Q2 FY26.

    asked by Piyush Sevaldasani

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Financial Performance in Nine Months FY25

    Dynamic Cables delivered a robust performance for the nine months ended December 31, 2024. Sales grew significantly by 32% compared to the same period in FY24. The operating margin increased by 37% to INR 71.2 crores, maintaining a stable percentage of 10.3%. Profit After Tax (PAT) saw a substantial rise of 72%, reaching INR 41.2 crores, which already surpasses the entire PAT for FY24.

    02

    Robust Order Book and Revenue Visibility

    The company's order book stood at INR 682 crores as of December 31, 2024, demonstrating strong revenue visibility. This represents a healthy 17.6% year-on-year growth compared to INR 580 crores in the previous year's corresponding quarter. The order book composition includes approximately INR 70-75 crores from exports, INR 100 crores from the renewable sector, with the balance primarily from domestic power distribution.

    03

    Strategic Capacity Expansion and Debottlenecking

    Dynamic Cables' ongoing capacity expansion plan, involving a CAPEX of around INR 35 crores, is on schedule to be operational by Q2 FY26. This new capacity is expected to add another INR 200 crores to the company's revenue potential. Furthermore, debottlenecking initiatives at the existing plant have enhanced production efficiency, increasing its annual turnover capability from INR 950-1,000 crores to an estimated INR 1,150-1,200 crores.

    04

    Key Demand Drivers for Long-Term Growth

    Management highlighted several 'unstoppable' drivers for long-term growth in the power infrastructure sector. These include the migration from low voltage to high voltage due to increased per capita power consumption, ongoing rural electrification efforts, the burgeoning EV and renewable energy infrastructure (especially solar), and the shift towards underground cabling. These factors are expected to sustain demand for at least the next 20 years.

    05

    Export Market Challenges and US Entry Strategy

    Export contribution for 9M FY25 was 6%, experiencing some degrowth due to currency issues in African and Asian markets, leading to a cautious approach to risk exposure. However, the company aims to restore export contribution to around 10% in coming quarters. Dynamic Cables is also actively pursuing entry into the US market, with one product already approved and others in the pipeline, alongside developing a dedicated sales team, though the approval process is lengthy.

    06

    Focus on Private Sector and Raw Material Price Protection

    The company's customer mix has significantly shifted, with private sales now accounting for 71% and government sales 23% in 9M FY25, a reversal from 80% government sales five years ago. Management expects government sales contribution to potentially decrease further to 15% over time. Dynamic Cables employs a real-time pass-through mechanism for raw material price variations (copper, aluminum), ensuring margin stability regardless of price fluctuations.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.