The ₹1,351 crore market capitalisation company delivered its strongest quarterly performance to date, with operating profit (PBDIT excluding other income) reaching ₹34.24 crores, marking an 11.46% margin—the highest in the company's recent history. This represents a 33.95% year-on-year improvement in absolute terms, demonstrating effective cost management and operational leverage despite volatile raw material prices in the cables sector.
For the nine-month period ending December 2025, Dynamic Cables posted net sales of ₹842.37 crores, reflecting 21.34% growth over the corresponding period last year. The company's ability to sustain double-digit revenue growth whilst simultaneously expanding margins positions it favourably within the competitive electrical cables industry, where peers have struggled with margin compression.
Financial Performance: Margin Expansion Drives Profitability
Dynamic Cables' Q3 FY26 results showcase impressive sequential and year-on-year momentum. Net sales of ₹298.77 crores grew 6.11% quarter-on-quarter and 18.80% year-on-year, recovering strongly from the Q2 to Q3 seasonal dip observed in the previous year. The company's revenue trajectory demonstrates consistent upward momentum, with quarterly sales averaging above ₹280 crores over the past three quarters.
| Quarter | Revenue (₹ Cr) | QoQ % | YoY % | Net Profit (₹ Cr) | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 | 298.77 | +6.11% | +18.80% | 22.42 | 7.50% |
| Sep'25 | 281.56 | +7.45% | +20.25% | 19.64 | 6.98% |
| Jun'25 | 262.04 | -20.88% | +25.65% | 18.21 | 6.95% |
| Mar'25 | 331.18 | +31.68% | — | 23.56 | 7.11% |
| Dec'24 | 251.50 | +7.41% | — | 15.80 | 6.28% |
| Sep'24 | 234.15 | +12.28% | — | 13.85 | 5.92% |
| Jun'24 | 208.55 | — | — | 11.60 | 5.56% |
The most striking aspect of Q3 FY26 performance lies in margin expansion. Operating profit margin (excluding other income) reached 11.46%, up from 10.16% in Q3 FY24, representing a 130 basis point improvement. This margin expansion translated directly to bottom-line growth, with profit after tax margin climbing to 7.50% from 6.28% a year earlier—a substantial 122 basis point gain that reflects both operational efficiency and favourable input cost dynamics.
Interest costs declined significantly to ₹2.94 crores in Q3 FY26 from ₹3.75 crores in Q3 FY24, a 21.60% reduction that highlights the company's deleveraging efforts. With long-term debt falling from ₹12.92 crores in March 2024 to just ₹5.24 crores in March 2025, Dynamic Cables has substantially strengthened its balance sheet, effectively becoming a net cash company with negligible debt-to-equity of -0.01.
Capital Efficiency: Strong Returns on Equity
Dynamic Cables demonstrates impressive capital efficiency metrics that underscore its quality credentials. The company's average return on equity (ROE) of 16.86% places it well above the median for small-cap manufacturing companies, whilst its average return on capital employed (ROCE) of 21.82% reflects superior asset utilisation. Notably, the half-yearly ROCE for FY26 reached 23.32%, the highest level in recent periods, indicating accelerating capital productivity.
Capital Efficiency Highlights
ROE Performance: Dynamic Cables' ROE of 16.86% significantly outperforms the electrical cables sector median, demonstrating efficient use of shareholder capital. Higher ROE indicates better profitability per unit of equity, a critical metric for evaluating management effectiveness in generating returns from invested capital.
ROCE Trajectory: With ROCE climbing to 23.32% in H1 FY26 from an average of 21.82%, the company is extracting greater value from its capital base, signalling improving operational efficiency and pricing power.
The company's balance sheet reveals a conservative financial structure with shareholder funds of ₹373.89 crores as of March 2025, up substantially from ₹213.95 crores a year earlier. This ₹159.94 crore increase in net worth stems primarily from retained earnings, with the company maintaining a modest dividend payout ratio of just 2.91%, preferring to reinvest profits for growth rather than distribute them to shareholders.
Working capital management appears efficient, with the debtors turnover ratio reaching 4.75 times in H1 FY26—the highest on record. This indicates the company is collecting receivables faster, reducing the cash conversion cycle and minimising working capital requirements. Fixed assets stood at ₹83.58 crores in March 2025, up from ₹62.66 crores, reflecting ongoing capacity expansion investments.
Operational Momentum: Consistent Growth Trajectory
Dynamic Cables has delivered consistent revenue growth over the past five years, achieving a compound annual growth rate (CAGR) of 24.07% in sales and 30.51% in EBIT. This growth trajectory reflects both market share gains and successful capacity expansion initiatives. The company's FY25 revenue of ₹1,025 crores represented 33.50% year-on-year growth from ₹768 crores in FY24, demonstrating strong demand for its product portfolio.
The company's employee cost management deserves attention. In Q3 FY26, employee costs remained flat at ₹12.28 crores compared to ₹12.30 crores in Q2 FY26, despite revenue growth of 6.11%. This operating leverage—where revenue grows faster than fixed costs—contributed meaningfully to margin expansion. On an annual basis, employee costs of ₹38 crores in FY25 represented just 3.71% of sales, indicating efficient labour utilisation.
Growth Metrics: Five-Year Performance
Dynamic Cables has demonstrated exceptional long-term growth, with sales CAGR of 24.07% and EBIT CAGR of 30.51% over five years. The company's ability to grow earnings faster than revenue (EBIT growth exceeding sales growth by 650 basis points annually) reflects improving operational leverage and margin expansion—a hallmark of quality compounders in the manufacturing sector.
Industry Context: Navigating Competitive Pressures
The electrical cables industry has faced headwinds over the past year, with the sector delivering negative returns of -14.11% compared to Dynamic Cables' steeper decline of -31.58%. This underperformance of 17.47 percentage points versus the sector average suggests company-specific concerns or valuation adjustments rather than purely industry-wide factors.
Within this context, Dynamic Cables' financial performance stands out. Whilst peers have grappled with margin compression due to volatile copper and aluminium prices, Dynamic Cables has managed to expand margins through operational efficiency and possibly better procurement strategies. The company's gross profit margin of 11.10% in Q3 FY26 represents a 160 basis point improvement from 9.50% in Q3 FY24, indicating successful navigation of raw material cost fluctuations.
| Company | P/E (TTM) | P/BV | ROE % | Div Yield | Debt/Equity |
|---|---|---|---|---|---|
| Dynamic Cables | 17.41 | 3.28 | 16.86% | 0.09% | -0.01 |
| R R Kabel | 37.75 | 6.51 | 15.19% | 0.56% | 0.16 |
| Finolex Cables | 16.55 | 1.93 | 13.58% | 1.11% | -0.47 |
| Universal Cables | 15.84 | 1.24 | 6.72% | 0.60% | 0.54 |
| Advait Energy | 37.82 | 6.62 | 15.70% | 0.12% | -0.28 |
Peer comparison reveals Dynamic Cables trades at a reasonable valuation relative to fundamentals. With a P/E ratio of 17.41x compared to the peer average of approximately 27x (excluding loss-making Quadrant Future), the stock appears attractively priced. More importantly, Dynamic Cables delivers superior ROE of 16.86% versus the peer average of around 13%, justifying a premium valuation that it currently doesn't command.
The company's price-to-book ratio of 3.28x sits comfortably below high-growth peers like R R Kabel (6.51x) and Advait Energy (6.62x), despite comparable or superior ROE metrics. This valuation disconnect suggests either market scepticism about earnings sustainability or simply a lagging re-rating that could materialise as the company continues delivering consistent results.
Valuation Analysis: Attractive Entry Point Despite Technical Weakness
At the current price of ₹291.30, Dynamic Cables trades at a P/E ratio of 17.41x trailing twelve-month earnings, representing a significant discount to its 52-week high valuation when the stock commanded a premium multiple. The company's valuation grade has fluctuated between "Very Attractive" and "Attractive" over the past year, currently sitting at "Attractive" following the recent price correction.
The stock's EV/EBITDA multiple of 11.39x appears reasonable for a company delivering 21% revenue growth and expanding margins. Compared to historical trading ranges and peer valuations, this multiple suggests limited downside from current levels, assuming the company maintains its growth trajectory. The EV/Sales ratio of 1.19x reflects modest market expectations, providing a margin of safety for patient investors.
The PEG ratio of 0.27x stands out as particularly compelling. This metric, which divides the P/E ratio by the earnings growth rate, suggests the stock trades at a steep discount to its growth potential. Generally, PEG ratios below 1.0 indicate undervaluation, and at 0.27x, Dynamic Cables appears significantly mispriced relative to its demonstrated growth trajectory.
Book value per share of ₹154.31 provides a fundamental anchor for valuation. At 3.28x book value, the stock trades at a premium justified by its ROE of 16.86%—when ROE exceeds the cost of equity, trading above book value is warranted. However, the current multiple remains well below the 5-6x book values commanded by faster-growing peers with similar return profiles.
Shareholding Pattern: Stable Promoter Base
Promoter holding has remained rock-solid at 68.18% over the past five quarters, with no dilution or stake reduction. This stability signals promoter confidence in the business outlook and eliminates concerns about potential overhang from promoter selling. The promoter group, led by Ashish Mangal (31.81%) and Rahul Mangal (21.85%), has maintained consistent shareholding through periods of both stock price strength and weakness.
| Quarter | Promoter % | FII % | MF % | DII % | Public % |
|---|---|---|---|---|---|
| Dec'25 | 68.18% | 0.53% | 0.00% | 1.03% | 30.26% |
| Sep'25 | 68.18% | 0.56% | 0.00% | 1.57% | 29.69% |
| Jul'25 | 68.18% | 1.49% | 0.00% | 1.64% | 28.68% |
| Jun'25 | 68.18% | 1.27% | 0.00% | 1.62% | 28.93% |
| Mar'25 | 68.18% | 1.07% | 0.00% | 2.17% | 28.57% |
Foreign institutional investor (FII) holding has declined from 1.49% in July 2025 to 0.53% in December 2025, reflecting a 96 basis point reduction. This selling pressure from FIIs, who reduced exposure by 0.93 percentage points in Q3 FY26 alone, partially explains the stock's underperformance. Similarly, other domestic institutional investors (DII) reduced holdings from 1.57% to 1.03% during the quarter, indicating institutional profit-booking at higher levels.
The absence of mutual fund holdings (0.00% across all quarters) represents a notable gap in the institutional investor base. Mutual fund participation typically provides stability and liquidity to small-cap stocks, and the lack thereof may contribute to higher volatility and limited institutional sponsorship. As the company scales and potentially enters broader indices, attracting mutual fund interest could provide a re-rating catalyst.
Importantly, promoter holdings remain entirely unpledged (0.0%), eliminating any concerns about forced selling or financial stress at the promoter level. This clean capital structure provides comfort to investors and removes a common risk factor associated with small-cap stocks.
Stock Performance: Severe Technical Correction
Dynamic Cables has experienced a brutal correction over the past year, declining 31.58% compared to the Sensex's 8.56% gain—a negative alpha of 40.14 percentage points. This underperformance accelerated in recent months, with the stock falling 35.34% over three months versus the Sensex's 3.49% decline, and 28.86% over six months versus the Sensex's marginal 0.44% gain.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +2.05% | -0.44% | +2.49% |
| 1 Month | -13.78% | -3.79% | -9.99% |
| 3 Month | -35.34% | -3.49% | -31.85% |
| 6 Month | -28.86% | +0.44% | -29.30% |
| 1 Year | -31.58% | +8.56% | -40.14% |
| 2 Years | +38.91% | +15.73% | +23.18% |
| 3 Years | +187.92% | +37.91% | +150.01% |
| 5 Years | +1955.03% | +72.58% | +1882.45% |
The longer-term picture, however, tells a dramatically different story. Over three years, the stock has delivered returns of 187.92% versus the Sensex's 37.91%, generating alpha of 150.01 percentage points. The five-year return of 1955.03% (a near 20-bagger) versus the Sensex's 72.58% demonstrates the wealth-creation potential of the business for patient, long-term investors who can withstand volatility.
Technical indicators paint a uniformly bearish picture. The stock trades below all key moving averages—5-day (₹287.06), 20-day (₹317.41), 50-day (₹332.63), 100-day (₹371.94), and 200-day (₹386.41)—indicating sustained selling pressure. The overall technical trend shifted to "Bearish" on December 8, 2025, at ₹323.50, and has remained under pressure since.
Weekly and monthly MACD indicators both flash bearish signals, whilst Bollinger Bands show bearish readings on both timeframes, suggesting the stock remains in a downtrend with limited near-term technical support. The relative strength index (RSI) provides the sole bullish signal on a weekly basis, hinting at potential oversold conditions that could precede a technical bounce.
Technical Warning: High Volatility Stock
Dynamic Cables exhibits high beta of 1.35, indicating 35% greater volatility than the broader market. The stock's 55.35% annualised volatility over the past year places it firmly in the "High Risk" category. Investors should expect sharp price swings in both directions and size positions accordingly. The negative risk-adjusted return of -0.57 over one year reflects poor compensation for the volatility endured.
Investment Thesis: Quality Business, Challenging Technicals
Dynamic Cables presents a classic dichotomy between fundamental strength and technical weakness. The company's financial trend assessment remains "Positive" as of December 2025, driven by robust revenue growth, expanding margins, and strong return ratios. The quality grade of "Average" reflects solid long-term financial performance, zero debt, and consistent growth, though institutional participation remains limited.
The valuation grade of "Attractive" suggests the stock offers compelling value at current levels, trading at reasonable multiples relative to growth and return metrics. However, the technical trend remains firmly "Bearish," creating a disconnect between fundamental value and market price action. This divergence often presents opportunities for contrarian investors willing to look past near-term volatility.
The company's Mojo Score of 46/100 translates to a "SELL" rating, downgraded from "HOLD" on December 8, 2025. This rating reflects the heavy weighting given to technical factors and near-term momentum, which currently overshadow the improving fundamental picture. For investors with longer time horizons and tolerance for volatility, the current price may represent an opportunity to accumulate a quality business at distressed valuations.
Key Strengths & Risk Factors
✓ KEY STRENGTHS
- Margin Expansion: Operating margin reached 11.46% in Q3 FY26, the highest on record, demonstrating pricing power and operational efficiency
- Strong Growth: Five-year sales CAGR of 24.07% and EBIT CAGR of 30.51% reflect consistent market share gains and scaling benefits
- Superior Returns: ROE of 16.86% and ROCE of 21.82% significantly exceed sector averages, indicating excellent capital efficiency
- Debt-Free: Net debt-to-equity of -0.01 provides financial flexibility and eliminates refinancing risk
- Stable Promoters: 68.18% promoter holding with zero pledging demonstrates strong alignment and financial stability
- Working Capital Efficiency: Debtors turnover ratio of 4.75x (highest ever) reduces cash conversion cycle
- Attractive Valuation: P/E of 17.41x and PEG of 0.27x suggest significant undervaluation relative to growth
⚠ KEY CONCERNS
- Technical Weakness: Stock in bearish trend, trading 44.51% below 52-week high with all moving averages showing resistance
- Institutional Exodus: FII holding declined from 1.49% to 0.53% over two quarters; zero mutual fund participation
- High Volatility: Beta of 1.35 and 55.35% annualised volatility create significant price risk for investors
- Sector Underperformance: Stock declined 31.58% versus sector decline of 14.11%, underperforming by 17.47 percentage points
- Small Cap Liquidity: ₹1,351 crore market cap limits institutional participation and increases volatility
- Limited Dividend: 0.09% dividend yield and 2.91% payout ratio provide no income cushion during corrections
- Negative Momentum: Negative alpha of 40.14% over one year reflects sustained underperformance versus market
Outlook: What to Watch
POSITIVE CATALYSTS
- Sustained Margin Expansion: Further improvement beyond 11.46% operating margin would validate pricing power
- Institutional Buying: Entry of mutual funds or reversal of FII selling could provide technical support
- Technical Reversal: Break above ₹317 (20-DMA) would signal potential trend change
- Capacity Utilisation: Higher utilisation of expanded capacity (fixed assets up 33% in FY25) driving operating leverage
- Sector Recovery: Improvement in cables sector sentiment could narrow valuation discount versus peers
RED FLAGS
- Margin Compression: Any decline below 10% operating margin would signal competitive pressure
- Growth Deceleration: Quarterly revenue growth falling below 10% YoY would concern investors
- Working Capital Deterioration: Rising debtor days or inventory buildup indicating demand weakness
- Technical Breakdown: Break below ₹230 (52-week low) would trigger further selling
- Continued Institutional Selling: Further reduction in FII/DII holdings amplifying downward pressure
"Dynamic Cables exemplifies the challenge of small-cap investing: exceptional fundamentals meet brutal technical reality, creating opportunity for patient capital and risk for momentum-focused traders."
The Verdict: Quality Business at Distressed Valuation
Score: 46/100
For Fresh Investors: The technical picture remains too weak to recommend fresh purchases despite attractive fundamentals. Wait for technical stabilisation above ₹317 (20-DMA) before initiating positions. For aggressive investors with 3+ year horizons, current levels offer compelling risk-reward, but expect continued volatility. Consider building positions in tranches rather than lump-sum investment.
For Existing Holders: The improving fundamental trajectory (21% revenue growth, expanding margins, strong ROE) supports holding through the technical correction. The stock's five-year track record demonstrates wealth-creation potential for patient investors. However, those with shorter time horizons or low risk tolerance should consider reducing exposure on any technical bounce towards ₹320-330 levels.
Fair Value Estimate: ₹380-420 (30-44% upside from current levels), justified by 17-19x P/E on FY27 estimated earnings of ₹22-23 per share, assuming sustained 20%+ growth and margin stability.
Note- ROCE = (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance does not guarantee future results. Stock market investments carry inherent risks, including the potential loss of principal.
