Recommendation from Electricals Sector

This column gives you scrip chosen by the research team during the fortnight that is fundamentally strong and expected to give good capital appreciation over a time period of 1 year. [EasyDNNnews:PaidContentStart]

Dynamic Cables Ltd : POWERING THE NEXT LEG OF CABLE GROWTH

HERE IS WHY
✓  Strong growth with improving mix
✓  Renewable and export opportunities expanding
✓  Capacity expansion supports future growth

I ndia’s wire and cable industry is expected to grow at around 10–12 per cent CAGR over the next five years, supported by government infrastructure spending, power transmission and distribution investments, renewable energy integration, private capex and urbanisation. Hence, we recommend Dynamic Cables Ltd. as our Choice Scrip. Dynamic Cables is a manufacturer of power infrastructure cables, including high-voltage (HV), low-voltage (LV), power control and instrumentation cables and conductors. The company has progressively shifted its portfolio towards higher-value products, with HV cables accounting for 63 per cent of FY26 sales, followed by LV cables at 29 per cent, conductors at 6 per cent and other products at 2 per cent.

In Q1FY27, revenue increased 33 per cent YoY to ₹349 crore, while operating profit rose 41 per cent to ₹38 crore. Operating margin improved to 10.9 per cent from 10.3 per cent in Q1FY26, supported by a favourable product mix, operating leverage and cost discipline. PAT increased 37 per cent to ₹25 crore. The quarter also marked a meaningful change in the company's geographical profile, with exports contributing 13 per cent of revenue, driven partly by its entry into the U.S. market.

Importantly, the growth was not entirely volume-driven. Management indicated that volume growth was around 5–6 per cent, with the balance largely reflecting higher aluminium prices. Despite elevated input costs, the company protected profitability through variableprice contracts with built-in price escalation clauses, while, for fixed-price contracts, it generally books raw materials alongside orders.

Renewable energy has become one of Dynamic Cables most important growth areas. Solar cable revenue reached around 20 per cent of revenue in Q1FY27, and management expects the segment to maintain a similar contribution for FY27, with a more meaningful increase expected after the new plant ramps up. This represents an important shift in the company's business mix.

The company is currently commissioning a new manufacturing facility, with production expected to commence in September 2026. With an estimated capex of around ₹45 crore and the company's historical asset turnover of 6–7x, the facility provides significant scope for incremental revenue growth. The new capacity is expected to ramp up meaningfully from Q4FY27, with utilisation targeted at around 80–85 per cent within 18 months of commencement. A significant strategic development during Q1FY27 was Dynamic Cables' entry into the U.S. market. The company currently has approvals for HV, LV and MV cables. Management sees the U.S. as a substantial long-term opportunity due to the country's large power infrastructure market and significant replacement demand expected over the next 10–20 years. The company's Order Book stood at approximately ₹811 crore, providing healthy revenue visibility. Beyond its existing portfolio, the company is developing HTLS conductors and data-centre power cables. The company is also exploring EV infrastructure and other specialised applications.

The company's stock trades at around 28.8x P/E, broadly in line with the industry P/E of 28.5x and only modestly above its three-year median P/E of 27.9x. With a three-year sales CAGR of 21.4 per cent, profit CAGR of 38.9 per cent and PEG ratio of 0.74, the valuation appears reasonable relative to its growth profile.

Considering the company's strong execution, improving product mix, healthy financial profile, renewable-energy exposure and multiple avenues for capacity-led growth, we recommend a BUY.

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