DYNAMATECH - Dynamatic Tech.

📊 NSE: DYNAMATECH 🏢 Engineering 📅 Last Updated: 12/13/2025 21:42

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 8.6% YoY in Q2 FY26 to INR 392.38 Cr. Aerospace revenue surged 20.4% YoY to INR 178.52 Cr, Metallurgy grew 6.1% to INR 87.53 Cr, while Hydraulics declined 3.3% to INR 126.29 Cr.

Geographic Revenue Split

Not explicitly disclosed in percentage, but operations are centered in India and the UK (DLUK), with a strategic shift of production from Europe to India due to supply chain reliability issues.

Profitability Margins

Gross margins compressed from 53.9% in H1 FY25 to 50.3% in H1 FY26. PAT margins dropped significantly from 3.3% to 1.8% YoY in H1 FY26, primarily due to exceptional restructuring costs and higher finance charges.

EBITDA Margin

Q2 FY26 EBITDA margin improved to 11.8% (INR 46.24 Cr) from 11.4% YoY. However, H1 FY26 EBITDA margin declined to 11.0% from 11.5% YoY, reflecting higher material costs and operational disruptions in the UK.

Capital Expenditure

H1 FY26 capital expenditure for property, plant, and equipment and intangibles was INR 38.38 Cr, compared to INR 24.94 Cr in H1 FY25, representing a 53.9% increase in investment.

Credit Rating & Borrowing

Not disclosed in available documents; however, finance costs stood at INR 29.46 Cr for H1 FY26, representing 3.8% of total revenue.

⚙️ Operational Drivers

Raw Materials

Aerospace-grade alloys, hydraulic components, and metallurgical raw materials; cost of materials and components consumed represented 49.9% of total revenue in H1 FY26 (INR 381.14 Cr).

Import Sources

Significant sourcing from Europe, which has faced a decline in supply chain reliability, prompting a strategic transfer of production to India.

Capacity Expansion

Current capacity not disclosed in units; however, intangible assets under development increased 125% from INR 10.71 Cr to INR 24.11 Cr in H1 FY26, indicating significant R&D and capacity-building activities.

Raw Material Costs

Raw material costs as a percentage of revenue increased from 46.1% in H1 FY25 to 49.9% in H1 FY26, leading to a 360 bps compression in gross margins.

Manufacturing Efficiency

Aerospace segment shows high efficiency with an EBIT margin of 20.5% in Q2 FY26, whereas Hydraulics EBIT margin plummeted to 3.1% and Metallurgy reported an EBIT loss of INR 4.98 Cr.

📈 Strategic Growth

Expected Growth Rate

15-20%

Growth Strategy

Growth is driven by the Aerospace segment's 20.4% YoY expansion and the restructuring of the Hydraulics division. By moving production to India, the company aims to eliminate losses from the UK unit and improve consolidated margins through lower operational costs.

Products & Services

Aerospace structural assemblies, hydraulic pumps and valves for industrial/agricultural use, and high-precision metallurgical castings.

Brand Portfolio

Dynamatic, Dynamatic Aerotropolis, Dynamatic Limited UK (DLUK).

Market Expansion

Expansion of Indian manufacturing footprint to absorb production previously handled in the UK, targeting improved delivery for global aerospace and hydraulic customers.

🌍 External Factors

Industry Trends

The aerospace industry is seeing strong growth (20.4% segment growth), while traditional hydraulics in Europe are facing headwinds. The company is positioning itself as a low-cost, high-reliability manufacturer by shifting focus to India.

Competitive Moat

Moat is built on high-entry-barrier aerospace engineering and long-term OEM relationships; however, sustainability is currently challenged by high operational costs in the UK hydraulics segment.

Macro Economic Sensitivity

Highly sensitive to European industrial performance and global aerospace demand; H1 FY26 saw an unrealized foreign exchange gain of INR 10.75 Cr.

Consumer Behavior

Not applicable as the company operates in B2B industrial and aerospace sectors.

Geopolitical Risks

European supply chain instability is a primary risk, leading to the restructuring of the UK subsidiary and an exceptional charge of INR 6.88 Cr.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to stringent aerospace manufacturing standards and metallurgical pollution norms; the company maintains 'unmodified' audit conclusions.

Taxation Policy Impact

Effective tax rate for H1 FY26 was 47.8% (INR 12.89 Cr tax on INR 26.97 Cr PBT), significantly higher than the 15.6% rate in H1 FY25.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the successful execution of the production transfer from the UK to India and the potential for further redundancy costs beyond the INR 6.88 Cr already recognized.

Geographic Concentration Risk

Heavy reliance on the UK for the Hydraulics segment has been a major risk, now being mitigated by geographic diversification of manufacturing to India.