Dynamic Cables Ltd Q1 FY2026 Concall Summary

Key Takeaways

• Record Q1 with seasonal dip: Revenue and profitability hit all-time Q1 highs, though revenue fell ~20%-21% QoQ in a purely seasonal move typical for the power sector.
• Volume-led growth, price a slight drag: Volume grew 28% YoY while revenue grew 26%, the gap explained by aluminum prices being ~3%-4% lower year-on-year.
• Order book provides strong visibility: The ₹734 crores order book, with six-to-nine-month execution timelines, underpins the near-term growth outlook.
• Margins seen as stable: Management believes it can maintain EBITDA margins in the 10%-10.5% range going forward, with small variations driven by product and revenue mix.
• What to watch next quarter: Progress on the new plant commissioning, the pace of US product approvals, and any shift in the product mix that could move margins.

Demand & Order Book

• Order book health: Order book growth is very healthy and encouraging for future growth; any delays are more on the transmission side than the distribution side.
• Execution cycle: The order book translates to revenue over six to nine months, providing visibility for the quarters ahead.
• Distribution follows transmission: Distribution is a by-product of transmission; as transmission capacity grows, distribution capacity ramp-up follows.
• Product mix snapshot: HT sales comprised 51% of revenue, LT sales 40% (including solar cables), and conductors the rest; solar cables alone were 10% of total sales.
• No margin split by voltage: Management declined to break out the order book by low-voltage and high-voltage cables, stating there is no margin differentiation between them, it depends on product specification.

Management: "I mean, we can give the order book, but just to clarify, there is no margin differentiation between low voltage and high voltage cable. It all depends upon the product specification of which the order is coming."

Capacity Expansion

• New plant on track: Machinery for the new greenfield plant in Reengus is in transit and the project is on schedule for commissioning in the second half of FY '26.
• Revenue potential: The new plant is expected to generate incremental revenue of ₹200-₹250 crores, a 6x to 7x multiple on the ₹35 crores investment, with ramp-up targeted by FY '26 or FY '27.
• Land bank for future phases: The company acquired ~15,000 square meters of land last quarter near existing plants; total land area is 35,000 sq meters, with 15,000-20,000 sq meters currently used and the rest kept for future CAPEX.
• Optimum utilization target: Optimum capacity utilization is pegged at 80%-90%; monthly potential capacity touched ₹125 crores in March '25, though actual dispatch depends on customer delivery schedules.
• Fungible capacity: Management cautioned that there is no particular measurement of capacity because all machines are fungible and orders are customized, making standardized utilization metrics difficult.

Management: "Sir, just to give clarification for all the listeners, just to let you know that there is no particular measurement of the capacity in our business because all our machines are fungible and all our products or the orders are customized."

Margins & Costs

• EBITDA margin guidance: Near-term EBITDA margin is expected to stay in the 10% to 10.5% range, driven by product mix and revenue mix; the company believes it can maintain this level going forward.
• Gross margin band: Gross margins have traditionally been 18%-20%, with small variations quarter-to-quarter based on revenue mix.
• Other expenses spike: Other expenses jumped ~45% YoY, largely due to freight expenditure, sales commission, power and manufacturing expenses; this line item generally runs at ~5% of revenue but varies quarter-to-quarter.
• No margin differential disclosed: When asked about margin differences between domestic and export orders, management said margins are almost common but vary from order to order depending on product mix, without giving a specific differential.

Export & US Market Entry

• Export growth trajectory: Q1 export numbers were much better than last year, and good growth is expected in overall FY '26; the US market is not yet contributing.
• US approvals underway: Approval has been received for two products for the US market, with a pipeline of other new products awaiting approval.
• US revenue timeline: Management expects US sales to kick off by the end of this financial year or the early part of the next financial year, post the current tariff era.
• Tariff strategy: The company will enter the US market post the tariff era and will adopt its business according to the market trend at that point.
• Go-to-market approach: Once the approval process is completed, the company will approach the distribution channel in the US; it operates a principle-to-principle business model, not a distributor-led, branding-led one.

Management: "I think we will be coming or we will be entering the U.S. market post the tariff era. So, whatever would be the market trend at that particular point of time, we will have to adopt our business also accordingly."

Balance Sheet & Capital Allocation

• Debt reduction path: Net debt stood at ₹60 crores; the company expects to be free from all long-term debt by year end, leaving only working capital debt.
• Preference share deployment: ₹71 crores of the ₹97 crores raised has been utilized till June 30, mostly in working capital, with ₹19 crores in CAPEX.
• Future CAPEX funding: CAPEX for further expansion will come from internal accruals; no much variation in debt level is expected from the current level.
• LC creditors: The ₹90 crores in LC creditors is normal-course working capital financing that varies quarter-to-quarter.
• No backward integration: The company has no plans for backward integration or strategic tie-ups at the moment.

Product & Strategy Choices

• Railway cables deprioritized: Volumes in railway cables have dipped significantly because the company does not see good margin in that segment going forward.
• Solar DC cable in pipeline: A solar DC cable is in the pipeline, while other products at the R&D stage have not yet been disclosed.
• No EV cables: The company is not manufacturing or supplying any EV cables.
• Growth ambition: The company intends to grow at 1.5x the industry growth rate, though it did not state its current market share or whether it is gaining or losing share.
• No near-term geographic expansion: The company is not planning a manufacturing facility expansion towards Northern or Southern India in the near term.

Management: "Because it is a completely different way of doing business. It is more distributor-led, sales branding-led, which we are not into. We are into principle-to-principle business."

Guidance & Commitments

Key Metrics