DYNAMATIC TECHNOLOGIES

Dynamatic Technologies, a Rs.1,650 crores company, designs and builds highly engineered products for automotive, aerospace, hydraulic and security applications at its state-of-the-art design, engineering and manufacturing facilities in Europe and India. 

 

We recommend this company due to following strong reasons:

 

1. Dynamatic Technologies is promoted by Mr. Udayant Malhotra, ex technocrat of Hindustan Aeronautics Ltd. He has built the company over past decade as a highly technology driven company. If we see the past events, number of Joint Venture announcements with world's leading companies and number of acquisitions in Europe, we can conclude that promoters are having a distinct passion to take this company into a technology driven, iconic company never ever born before and heard in a country like India particularly in the manufacturing field. 

2. Now some acquisition, tie ups and joint ventures with world's leading companies:

    - Bell Helicopter,as a single source supplier of major airframe assemblies for the BELL 407 GX

    - Airbus, to supply flap track beams for Airbus 330 aircraft series as a sole supplier

      - Boaing,the $85-billion aerospace and defence giant, wants to make India a global hub to make parts for its CH-47 Chinook  helicopters.Initially, Chinook’s ramps, pylons and electrical harnesses will be sourced from India.The ultimate goal will be to source sub-assemblies of more (aircraft) platforms

     - HAL and DRDO for its India army requirements

    -Aero Vironment USA, entered into pact with Dynamatic for manufacture of unarmed aeriel                vehicles (Drones). Aero Vironment has already delivered 24,000 UAVs in the USA and 24 other         leading companies and in India UAVs orders are likely to come from Ministry of Home and               Defence.      

    - BMW, Volkswagen, Mercedes, Ford, Nissan & Audi for auto parts

    - Hyundai India, single source supplier for its specific engine components

  -Mahindra & Mahindra, John Deere, Cummins, Escorts, Caterpiller. Catering to all tractor manufacturers in India with 65% market share.

3. Dynamatic Technology's main growth is coming from aerospace manufacturing because of orders from some leading companies of the world and the margins are very good in this area. Auto components main facilities are in Germany and the cost particularly manpower cost which is Rs. 220 crores annually, is very high. Dynamatic management is planning to shift iron casting and some other non critical operations to India and this will improve margins in coming years. Therefore, in the next 5 years turnover will increase substantially with improved margins.

4. Indian Govt is planning seriously for the first time to manufacture defense products and weapons  in India and already the foreign holding in defense sector has been increased from 26 to 49%. There is likelihood that this percentage will be further increased to 75-100% to facilitate fast implementation of the Govt plan. There is very less doubt that Dynamatic Technologies will be the Infosys of defence and aerospace manufacturing in India.   

5. The current market valuation of the company is Rs. 1,535 crores with annual turnover of Rs. 1,650 crores. Imagine, if turnover  increases manifold with increased margins, this company may command 3-4 times market valuation compared to its sales turnover. If turnover is Rs. 3,000 crores after 5 years, the market valuation God knows, of this company may be more than Rs. 10,000 crores.

6. Dynamatic Technologies is paying Rs.100 crores every year interest on its Rs. 450 crores debt. Management is trying to reduce the debts and in future it will be very much possible for this company to become debt free due to increased market valuation. Imagine, if this entire Rs. 100 crores interest is saved and company has extra profit of Rs. 200 crores annually after 5 years, the targeted valuation will be easily achieved. Page Industries( Jockey brand ) with Rs. 200 crores profit is valued more than Rs. 10,000 crores by the stock market.

7. Competition in the sector of defense and aerospace is going to be very limited and Dynamatic Technologies will be in better position to take advantage of the situation.

8. It is likely that Bell, Airbus and Boeing will give further structures to Dynamatic Technologies to built in future due to its dependability and lower costs. This aspect may create substantial orders for the company.