Dynamic Cables Ltd Q4 FY2026 Concall Summary

Key Takeaways

• Core product growth strong at 20%, headline dragged by exits: Q4 overall growth of 7% masks 20% growth in core power cables, as the company discontinued low-margin low-voltage conductors and railway signaling cables.
• March raw material spike froze order booking: A sudden rise in aluminium and PVC prices caused customers to defer purchases, limiting order book growth to just 11% and disrupting Q4 execution against a high base.
• Greenfield capacity delayed to September 2026: Regulatory approvals, import machinery delays from Iran-related logistics, and AERB compliance pushed the new plant back, but trial production is expected in 3-4 months, making capacity available for the seasonally stronger H2 FY27.
• Two strategic entries signal ambition beyond current market: A tie-up with TS Conductor Corp for high-voltage carbon-core conductors and a new B2B wire business both leverage existing institutional relationships to expand the addressable market.
• What to watch next quarter: Whether April-May order booking recovers as raw material price acceptance kicks in, progress on the new plant's trial production timeline, and any early traction in the re-established US distributor connects.

Core Growth vs. Reported Headline

• 20% core product growth: Excluding discontinued low-voltage conductors and railway signaling cables, core power cable products grew 20% in Q4, composed of 12% realization growth and 8% volume growth.
• Discontinued lines were a deliberate margin call: Railway signaling cables faced intense competition; management chose to dedicate capacity to higher-margin power cable products where demand and margin profiles are better. FY26 contribution from railway signaling was zero vs. 4% in FY25.
• Conductors degrew as expected: The conductor segment saw a degrowth, consistent with past commentary about shifting away from low value-add products.
• Employee expense decline is an accounting artifact: The apparent decline reflects one-time bonuses and incentives booked in the Q4 FY25 base that were rationalized and amortized through FY26, not any reduction in workforce or compensation.
• Other expenses at 4.1% of sales reflect mix trade-offs: Direct expenses like freight vary by whether the company or customer bears them, driven by product mix, market mix, and geographic mix, making quarter-on-quarter comparisons less meaningful.

Mangal: "whenever there is a start of such disruption of such magnitude, at the start of the disruption, there is definitely a fear and scare or deferment which leads to deferment of consumption, but gradually it the acceptance also starts kicking in."

Order Book & Demand Dynamics

• March raw material spike froze B2B purchasing: A sudden, sharp rise in aluminium and PVC prices caused customers to step back and defer order booking, a normal phenomenon in B2B markets when pricing moves violently.
• April-May booking shows acceptance returning: Management noted that acceptance of higher raw material prices has begun, and power infrastructure cannot be deferred indefinitely because power consumption is rising, particularly in summers, putting distribution infrastructure under pressure.
• Order book still grew 11% despite the March freeze: The deferment was concentrated in the final month of the quarter; the full-year order book expansion remained positive.
• High base amplified the Q4 slowdown: Q4 FY25 had grown approximately 38-39%, making the year-on-year comparison particularly demanding even before the March disruption and product discontinuations.

Capacity Expansion: Delay & New Timeline

• Greenfield plant delayed on three fronts: Regulatory body approvals slowed the project start, import machinery shipments were delayed by Iran war-related logistics disruptions, and AERB Board compliance requirements added time.
• September 2026 go-live now guided: Civil work and machine installation are in final stages; trial productions are expected in the next 3-4 months, with commercial production starting September 2026, ahead of the seasonally stronger H2 FY27.
• H1 FY27 will be managed from existing capacity: Current capacities are sufficient for the H1 order book and anticipated business projections.
• Capex will remain recurring, not one-off: Growth will demand continued capital expenditure each year; the program may not be as intense as FY26 but the rising base means year-on-year capex is structural.
• Next capex cycle not yet crystallized: Directionally there will be additional capex, but how much, when, and where are currently undecided.

Mangal: "there is no definitive date, but yes, we are kind of guiding that based on the developments at the site level, at the plant level, we should be able to go live by September."

Strategic Expansion: High-Voltage Conductors & B2B Wires

• TS Conductor Corp tie-up opens high-voltage conductor market: The partnership provides access to carbon core technology for high-voltage conductors, a technology limited to few players globally and with very few Indian manufacturers holding such a tie-up.
• PGCIL approval is the gateway: This partnership is a stepping stone to enter the high-voltage conductor market, where vertical expansion of power T&D is seen as a large future opportunity.
• Revenue timeline is distant: Type testing and approvals will take approximately one year; no hard timeline exists for when this will materialize into revenue and sales.
• Existing capacity is fungible for HTLS conductors: If approvals are secured and the company is competitive in bids, it can deliver from current capacity in H2 FY27.
• B2B wire business leverages existing relationships: The company will confine itself to the B2B wire market, not the B2C distribution-led wire market, using its existing institutional supply capabilities and B2B relationships as an add-on product in its cable bouquet.
• Margins and ROCE for B2B wires too early to call: Management intends to maintain financial discipline and expects margins to remain similar to the existing business, but no specifics are available.

Management: "We will confine ourselves to the B2B wire market and leverage our existing DNA because in cables, we are already a B2B supplier to many of the B2B players and would like to leverage those relationships, those markets, those institutional supply capabilities to so it's just an additional add-on product which we have introduced in our bouquet of cables."

Exports & US Market Re-entry

• FY26 exports saw a slight degrowth: March quarter exports were typically zero or non-existent, and earlier tariff problems delayed US market entry plans.
• US distributor interest dried up for 6-8 months: Tariff-related disruption caused a gap where US distributors lost interest in procuring from India; with tariffs now reduced and policy stabilizing, the company is re-establishing connections.
• US go-to-market has restarted from scratch: The company has begun afresh in its go-to-market strategy with US distributors.
• FY27 contribution expected but unquantified: There should be some contribution from the US market in FY27, but how much is too early to comment.
• Long-term export share target: 10% in the long term, increasing to 15% in the medium to long term.

Management: "We are trying to re-establish our US connects and with the distributors and trying to basically we have to start afresh in terms of our go-to-market strategy. But we have started afresh, I should say."

Margins, Mix & Financial Health

• Gross margin is not the right metric, per management: Operating profit is the correct measure; gross margin varies with product mix, customer mix, and market, and most orders carry price variation clauses that pass through raw material costs, while firm-price orders are hedged at booking.
• Raw material volatility has limited bearing on the business model: The pass-through and hedging structure means sudden aluminium and PVC price spikes do not translate directly into margin compression.
• Net debt is entirely working capital: March is a heavy quarter for cable manufacturers; on-books debt reduced from INR66 crores to INR40 crores, with no expected jump in finance costs.
• Credit rating enhancement lowered financial costs: Continued financial discipline and lower interest charges, driven by the rating upgrade, marked a reduction in financing costs.
• Asset turn guidance of ~6x: The average asset turn of around six times over the last 10 years is the guidance for the future as well.
• Corporate guarantee from Indo Krates withdrawn: Indo Krates is only a property holding company with no business operations.

Guidance & Commitments

Key Metrics