Dynamic Cables Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Flat order book, weather-driven: The order book held at ~₹720-730 crores for three quarters as an extraordinary, widespread monsoon prevented EPC customers from executing on the ground, delaying their cable orders.
• Gross margin improved ~50-60 bps YoY: The uplift came from favorable customer and product mix, with good orders executed during the quarter.
• H2 recovery hinges on execution clarity: Management expects aggressive project execution in Q3 and Q4, but admits clarity on whether the slowdown will persist will only come in November-December, after the monsoon and early festival season.
• Capacity expansion on track for H2 FY26: Debottlenecking is complete, lifting monthly capacity to ₹135 crores, and the new greenfield plant is scheduled for commissioning by year-end.
• What to watch next quarter: Whether the promised H2 execution rebound materializes once the monsoon and festival season are fully behind, and any update on US tariff clarity that could unlock the export pipeline.

Demand & Order Book

• Monsoon paralyzed execution: An early-starting, late-ending, geographically widespread monsoon created prolonged bottlenecks, leaving cable inventory stuck both with Dynamic Cables and its customers.
• Tendering pipeline is healthy: A lot of tenders are available and work potential exists for customers, but the conversion of EPC contracts into cable orders has slowed because of the execution logjam.
• Demand inflow remained constant: Inflow was steady in Q2 across the four major segments: power distribution, smart metering, renewable energy, and specialty cables.
• H2 is seasonally the heaviest half: The business is typically H2-heavy and Q4-heaviest due to government budgets fueling EPC execution; management expects this pattern to hold and project execution to start aggressively.
• Order book as a leading indicator: Management points to the order book as testimony of how H2 will perform, noting the execution cycle is anywhere between three to nine months.

Management: "We will be able to get this clarity somewhere in November, December, because we are just getting out of the monsoon season, just after the monsoon season, Diwali was also a little early this year, so, as soon as we came out of the monsoon season, we got into the festival season."

Margins & Costs

• Gross margin expanded ~50-60 bps YoY: The improvement was driven by favorable customer mix and product mix, with good orders executed during the quarter.
• Employee and admin costs jumped sequentially: Employee cost rose ~40% and admin cost ~30% QoQ due to incentive bookings, new joinees as the company ventures into new areas, and seeds technical tie-ups; on an annual basis, these costs remain ~10% of revenue.
• Margins are broadly similar across segments: Domestic and export margins are largely benign; product-wise margins vary quarter-on-quarter but are on similar lines at a broad basket level, and smart meter margins are almost similar to power distribution cable margins because the company works with efficient private players.
• Borrowings have dipped: Term liabilities are completely paid off; current borrowings are working capital borrowings that change daily, and earlier LCs to creditors are now direct payments.

Management: "What I always say is that it is a 80-10-10 business roughly; 80% is raw material consumption, 10% is our admin and employee cost, and 10% is our EBITDA margin."

Capacity Expansion

• Debottlenecking complete: Capacity has been enhanced from ₹100 crores to ₹135 crores per month; no more CAPEX is allocated toward debottlenecking, with most completed in the last financial year.
• Greenfield plant on schedule: The new plant (₹35 cr CAPEX) is coming up by the end of this year and will be available from the next financial year, with expected incremental revenues of ~₹200-250 crores.
• E-beam curing facility included: The fungible greenfield plant includes an E-beam curing facility to penetrate more into the renewable energy segment, particularly solar DC cables, enabling the company to increase penetration and wallet share with the same customers.
• Current utilization is ~70%: This is below the optimum 85-90% due to seasonality and product customization, against the post-debottlenecking available capacity of ₹135 crores per month.
• Land banked for future CAPEX: 15,000 sq meters of land has been bought for further CAPEX; the new plant is built on 35,000 sq meters with 50% used, leaving room for brownfield expansion.

Growth Engines & New Markets

• Renewable energy and smart metering are the near-term drivers: These growth areas were developed in the last 2-3 years and are expected to continue; solar cable mix could potentially touch 20% from the current ~12% post-expansion.
• US market on hold pending tariff clarity: Product approvals are ongoing, but management states the current tariff scenario makes it very difficult to market or enter the distribution market in the US; there are currently no US orders.
• Data center ecosystem engagement has begun: The company has started vendor registration and is developing cables used in data centers, but nothing material is expected in the very near term; management expects more clarity on this business ecosystem in about two quarters.
• EHV is a long-term ambition, not a near-term growth driver: EHV requires specific technology, has a very niche market, high project gestation, high CAPEX, and lower asset turnovers compared to the rest of the wire and cable segment.
• Battery energy storage remains unstudied: The company still has to study the cable requirement, what kind of cables would be required, and whether it is a sizable market of interest; research and groundwork remain to be done.

Ashish Mangal: "The US market approvals are going on, but as we were discussing earlier in the call, the major problem there is the tariff scenario. So, in the current tariff scenario, it is very difficult to market or enter the distribution market in the US."

Strategy & Revenue Mix

• Shifting toward private business: The company is trying to reduce government business and increase private business, while maintaining export share in the range of 10% to 15% for the full year.
• Long-term growth target is 1.5x industry growth: If the industry grows 12-13%, the company targets 20%; if the industry grows 8-9%, it targets 13-14%.
• Volume growth equals revenue growth this quarter: Aluminum prices, the key raw material, remained almost constant, so revenue growth directly reflects volume growth, which was slightly lower than Q1's 28%.

Ashish Mangal: "We intend to grow at 1.5x the industry growth. So, if industry growth is around 12-13%, we should grow at 20%. If industry growth is at 8-9%, we would be targeting to grow at 13-14%. So this is the broad area, which we endeavor to grow."

Guidance & Commitments

Key Metrics