Rating Rationale
April 10, 2025 | Mumbai
Dynamic Cables Limited
Ratings upgraded to 'Crisil A/Stable/Crisil A1'
 
Rating Action
Total Bank Loan Facilities RatedRs.295.55 Crore
Long Term RatingCrisil A/Stable (Upgraded from 'Crisil A-/Stable')
Short Term RatingCrisil A1 (Upgraded from 'Crisil A2+')
Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

Crisil Ratings has upgraded its ratings on the bank loan facilities of Dynamic Cables Ltd (DCL) to ‘Crisil A/Stable/Crisil A1’ from ‘Crisil A-/Stable/Crisil A2+’.

 

The upgrade reflects the improvement in the business risk profile of DCL, supported by steady growth in revenue and stable operating margin. Revenue increased at compound annual growth rate (CAGR) of 31% over the three fiscals through 2024 and is projected to show a further year on year growth of 20-25% to Rs 1,000-1,020 crore in fiscal 2025 with an estimated 25-30% increase in volumes; revenue is estimated to be Rs 695 crore as of December 2024. Revenue growth will be aided by healthy order inflow from the power, distribution and renewable energy sectors. Orders worth Rs 768 crore (as of February 2025), to be executed in the next 8-9 months, provide sufficient revenue visibility for fiscal 2026. Operating margin was stable at 10.4% as of December 2024 despite volatility in prices of aluminium and copper and is projected at 10-11% over the medium term, given the strong risk management policies of the management. With the continuous focus of the management on adding new customers and diversifying product mix, yielding higher realisation, the growth in the operating income will continue to support the business risk profile.

 

The ratings also factor in strong financial risk profile, with networth and gearing projected at Rs 365-370 crore and below 0.3 time, respectively, as on March 31, 2025 (Rs 214 crore and 0.67 time, respectively, a year earlier). Networth is likely to strengthen, led by higher accretion to reserves and fundraising through preferential allotment amounting to Rs 96.58 crore in June 2024, amid steady business growth. Debt protection metrics will likely remain comfortable over the medium term, aided by steady operating margin and moderate reliance on external debt. Liquidity is adequate, supported by low utilisation of the bank limit during the 12 months through February 2025 and sufficient net cash accrual against debt obligation.

 

The ratings reflect the company’s established market position and strong financial risk profile. These strengths are partially offset by moderate scale of operations and exposure to intense competition and volatility in raw material prices.

Analytical Approach

Crisil Ratings has evaluated the standalone business and financial risk profiles of DCL. Unsecured loan of Rs 2.9 crore as on March 31, 2024, from the promoters has been treated as debt as the loan is likely to be repaid as and when required.

Key Rating Drivers & Detailed Description

Strengths:

  • Established market position: The promoters have experience of over three decades in the conductors and cables industry. This has helped them develop sound understanding of the market dynamics and healthy relationships with customers and suppliers. The company’s market position is supported by diversified clientele and product mix. Increasing revenue share from newly developed products also supports the business risk profile. DCL has lowered its reliance on direct government entities for work to 20-25% of its turnover from 50-55% around five years ago. The company has a fairly diversified presence in the domestic market. Furthermore, the management is focusing on diversification of the product portfolio and has added data centre cables as well as solar cables with advanced technology to its portfolio which is expected to aid further growth and diversification.

 

  • Strong financial risk profile: The financial risk profile is supported by strong networth and gearing estimated at Rs 365-370 crore and below 0.3 time, respectively, as on March 31, 2025, as against Rs 214 crore and 0.67 time, respectively, a year earlier. Improvement in networth can be attributed to additional fund raising, amounting to Rs 96.58 crore in June 2024, and higher accretion to reserve. Improving operating margin and limited dependence on bank debt kept debt protection metrics healthy, with interest coverage ratio estimated at 5-6 times in fiscal 2025. In the absence of any debt-funded capital expenditure (capex) plans, the financial risk profile will likely remain comfortable over the medium term.

 

Weaknesses:

  • Moderate scale of operations: The company is expected to have achieved operating income CAGR of 21-24% in the three fiscals through 2025. However, revenue remained moderate constrained by intense competition. In fiscal 2025, the company achieved operating income of Rs 695 crore as of December 2024 and is expected to record Rs 1,000-1,020 crore with volume growth of 25-30% in fiscal 2025. The order book of Rs 768 crore (as of February 2025) provides revenue visibility for the next 6-9 months. With focus of the management on adding new customers and diversifying the product mix yielding higher realization, the operating income is expected to improve over the medium term.

 

  • Exposure to intense competition and volatility in raw material prices: The main raw material includes copper and aluminum which has seen lot of volatility in the past. These raw materials form ~75-80% of overall RM cost and any sharp variations can impact the company’s operating performance. However, the company’s strong pricing power wherein majority of RM price changes are passed on to the customer, mitigates the risk to an extent. The conductors and cables industry is highly fragmented, which restricts the ability of players to command pricing and grow rapidly, thus constraining profitability. The profitability remains vulnerable to any sharp and sudden commodity price fluctuations; however, with sound policies to hedge the volatility in the prices of raw materials, the company’s operating margin rose to ~10.4% as of December 2024. Sustenance of operating margin at 10-11% amid improvement in revenue will therefore remain a key rating sensitivity factor.

Liquidity: Strong

Expected net cash accrual of Rs 68-100 crore per fiscal will sufficiently cover annual debt obligation of Rs 2-7 crore in fiscals 2025 and 2026. The entire term debt is expected to be paid in full by fiscal 2026. Cash and bank balance was ~Rs 31 crore as on September 30, 2024. Fund-based limit of Rs 60 crore was utilised ~29% in the 12 months through February 2025. Internal accrual, cash and equivalent and unutilised bank lines will be sufficient to meet debt obligation as well as working capital requirement.

Outlook: Stable

DCL will continue to benefit from the extensive experience of the promoters and their established relationships with clients.

Rating sensitivity factors

Upward factors:

  • Sustained increase in operating income to Rs 1,300-1,400 crore aided by volume growth and sustenance of operating margin leading to higher net cash accrual
  • Sustenance of financial risk profile and working capital cycle

 

Downward factors:

  • Decline in revenue or fall in operating margin below 7% leading to lower net cash accrual           
  • Stretched working capital cycle or large, debt-funded capex affecting the financial risk profile and liquidity

About the Company

Set up in 1986 as a partnership firm -- Dynamic Engineers -- by the Mangal family, the entity got reconstituted into a private-limited company in 2007 and was converted into a public-limited entity with the current name in 2017. The company manufactures conductors and cables such as low-voltage, medium-voltage and high-voltage power cables, aerial bunches cables, aluminum conductors (steel-reinforced and aluminum alloy conductors) and railway signaling cables. It has three manufacturing facilities at Jaipur in Rajasthan. Mr Rahul Mangal and his brother, Mr Ashish Mangal, manage the business.

Key Financial Indicators

As on / for the period ended March 31

Unit

9MFY25*

2024

2023

Operating income

Rs crore

694.20

768.17

669.21

Reported profit after tax (PAT)

Rs crore

42.10

37.77

31.01

PAT margin

%

6.06

4.92

4.63

Adjusted debt / adjusted networth

Times

-

0.67

0.55

Interest coverage

Times

-

3.76

3.88

 *Unaudited

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs.Crore) Complexity Levels Rating Outstanding with Outlook
NA Bank Guarantee NA NA NA 85.00 NA Crisil A1
NA Bank Guarantee NA NA NA 30.00 NA Crisil A/Stable
NA Cash Credit NA NA NA 60.00 NA Crisil A/Stable
NA Credit Limit Under Gold Card NA NA NA 4.00 NA Crisil A/Stable
NA Letter of Credit NA NA NA 105.00 NA Crisil A1
NA Long Term Loan NA NA 31-Mar-26 11.55 NA Crisil A/Stable
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 75.55 Crisil A/Stable   -- 24-01-24 Crisil A-/Stable 31-05-23 Crisil BBB+/Positive 28-02-22 Crisil BBB+/Stable Suspended
      --   --   -- 11-05-23 Crisil BBB+/Positive 17-02-22 Crisil BBB+/Stable --
Non-Fund Based Facilities ST/LT 220.0 Crisil A1 / Crisil A/Stable   -- 24-01-24 Crisil A-/Stable / Crisil A2+ 31-05-23 Crisil BBB+/Positive / Crisil A2 28-02-22 Crisil A2 Suspended
      --   --   -- 11-05-23 Crisil A2   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 85 Bank of Baroda Crisil A1
Bank Guarantee 30 Bank of Baroda Crisil A/Stable
Cash Credit 59.45 Bank of Baroda Crisil A/Stable
Cash Credit 0.55 Bank of Baroda Crisil A/Stable
Credit Limit Under Gold Card 4 Bank of Baroda Crisil A/Stable
Letter of Credit 35 Bank of Baroda Crisil A1
Letter of Credit 70 Bank of Baroda Crisil A1
Long Term Loan 11.55 Small Industries Development Bank of India Crisil A/Stable
Criteria Details
Links to related criteria
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)

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