Reduce Dynamatic Technologies: target of Rs 5960: ICICI Securities

ICICI Securities's research report on Dynamatic Technologies

Dynamatic Technologies (DTL)’s Q1FY26 EBITDA of INR 3.78bn shrank 5.7% YoY. Key points: 1) Revenue expanded 7.1% YoY, as: i) aerospace grew 27.3%; ii) hydraulics slipped 10.9%; and iii) metallurgy remained stable. 2) EBITDA margins receded to 10.2% (vs. 11.6% in Q1FY25) owing to margin erosion across segments. 3) Aerospace retains its lead revenue-driver position; pressure persists in metallurgy amid ongoing weakness in the German automotive sector and broader geopolitical uncertainties. 4) Net debt spiked YoY/QoQ to INR 4.35bn (vs. INR 4.05bn, as of FY25-end). We expect the aerospace segment to continue shining while pressure lingers in other segments. That said, there are developments in the offing in the metallurgy division too. We reinitiate coverage with a REDUCE rating and TP of INR 5,960, based on 40x FY27E EPS.

Outlook

We reinitiate coverage with a REDUCE rating and TP of INR 5,960, based on 40x FY27E EPS broadly in line with the listed peers.