Dynacons Systems & Solutions: 35% PAT growth & 25% Revenue growth in H1-25 at a PE of 32

Riding momentum of FY20-24 with PAT CAGR of 75% & Revenue CAGR of 33%. FY25 outlook strong driven by order book & repeat orders. Sustained margin expansion from FY20 to H1-25.

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1. IT infrastructure company

dynacons.com | NSE: DSSL

DSSL is an IT infrastructure company providing systems integration, networking solutions, facility management services, security solutions, and software services.

2. FY20-24: PAT CAGR of 75% & Revenue CAGR of 33%

3. Strong FY-24: PAT up 71% & Revenue up 27% YoY

4. Strong Q2-25: PAT up 45% & Revenue up 39% YoY

5. Strong H1-25: PAT up 35% & Revenue up 22% YoY

6. Strong & improving return ratios

7. Outlook: Strong expectations from FY25

Analysis of DSSL is limited due to a lack of management commentary and publicly available information about the company. Information from rating agencies indicate to a positive outlook for DSSL.

• significant improvement in the scale of operations in FY2024, and in H1 of FY2025, the same is expected to continue for the entire year FY2025.

• a healthy order book position, which, coupled with a track record of repeat orders from key customers

• CARE Ratings Limited’s (CARE Ratings’) expectations that the company will maintain adequate performance over the medium term supported by its established relationship with reputed clientele and suppliers and vintage in the industry.

• The positive outlook reflects an expectation of improvement in DSSL’s business risk profile over the medium term driven by a healthy order book position with addition of new clients and increase in business from existing clients resulting in improvement in TNW.

• the growth is primarily considering consistent orders from existing as well as new customers and accelerated spending on digital transformation initiatives and cloud adoption

8. PAT growth of 35% & Revenue growth of 25% in H1-25 at a PE of 32

9. Hold?

If I hold the stock then one may continue holding on to DSSL

• DSSL has delivered a reasonable strong H1-25, looks on track to deliver a strong FY25. The margin expansion seen from FY20 onward continues into H1-25

• With limited information on DSSL one needs to keep a quarter to quarter view on performance and keep riding the business momentum till it lasts.

• Given the limited information available about DSSL, it’s important to monitor performance closely on a quarter-by-quarter. One can keep riding the underlying business momentum till it lasts.

• The key driver for DSSL is its consistent margin growth, which has risen from 1.7% in FY20 to 5.7% in H1-25. If this margin expansion slows or reverses, it could signal a potential slowdown in the company's momentum.

10. Buy?

If I am looking to enter DSSL then

• DSSL has delivered PAT growth of 35% & Revenue growth of 25% in H1-25 at a PE of 32 which makes valuations fully priced in the short term.

• Based on information from credit rating agencies, one can expect FY25 to be similar to the performance delivered in H1-25, which at a PE of 32 makes the valuations acceptable from a FY25 perspective.

• From a FY26 perspective, the order book and repeat order of customers can sustain growth momentum. However, the margin of safety is limited at a PE of 32.

• DSSL delivered Rs 11.703 cr of free cash flow against a market cap of Rs 1,994.63 cr. As of H1-25 end it is available on a free cash flow yield of 0.6% (not annualized)

• One could take a bigger call on DSSL if there was management commentary to consider given that its working in an industry where challenges exist.

• in a highly competitive and fragmented industry, along with intensive working capital operations,

• timely realization of its receivables will remain a key

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Previous Coverage of DSSL

Dynacons Systems & Solutions: PAT up 95% & Revenue up 27% in H1-24 at a PE of 18

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