Dynamatic Technologies’ (DTL) Q3FY25 performance was impacted by its hydraulics division. Key points: 1) Aerospace division sustained its strong showing due to refined product mix and better inventory management. 2) Hydraulics division suffered mainly due to overseas market. 3) Metallurgy division continued to face external headwinds, though there is diversification opportunity in this segment. We expect challenges in the hydraulics division to persist, though the aerospace division is likely to gain further, as newly won contracts come up for execution. Taking cognizance of 9MFY25 performance, we slash our FY25E/FY26E EBITDA by 29%/26%. We roll-over the valuation to FY27E, resulting in a revised TP of INR 9,330 (earlier INR 10,250). Maintain BUY.
OutlookWe still maintain the multiple as 45x due to potential turnaround of metallurgy division and improving overall margins, driven by aerospace segment. We roll over our valuation to FY27E. Our revised TP works out to INR 9,330 (earlier INR 10,250). We maintain BUY rating on the DTL stock.
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