Dynamatic Technologies cash flow declines as inventory rises

Dynamatic Technologies Limited generated Rs 30.46 crore of operating cash flow in the six months ended 30 September 2026, down from Rs 51.93 crore a year earlier, as a Rs 87.36 crore inventory build and a Rs 34 crore increase in other assets reduced cash conversion despite higher profit.

Why did Dynamatic Technologies’ operating cash flow decline?

Dynamatic Technologies’ operating cash flow declined because working-capital outflows more than offset higher cash flow before those movements. Operating cash flow before movements in working capital rose to Rs 128.92 crore in the six months ended 30 September 2026 from Rs 88.76 crore in the corresponding 2025 period, while profit before tax after exceptional items increased to Rs 51.53 crore from Rs 26.97 crore.

Cash generated from operations nevertheless fell to Rs 38.79 crore from Rs 53.93 crore. After net income-tax payments of Rs 8.33 crore, compared with Rs 2 crore a year earlier, net cash generated from operating activities was Rs 30.46 crore, against Rs 51.93 crore in the prior-year half.

The difference between the pre-working-capital measure and cash generated from operations widened during the period. Dynamatic Technologies recorded a Rs 90.13 crore reduction from working-capital movements in the 2026 first half, compared with a Rs 34.83 crore reduction in the corresponding prior-year period.

How much cash did inventory and other assets absorb?

Inventory was the largest individual working-capital cash outflow, absorbing Rs 87.36 crore in the six months ended 30 September 2026, compared with Rs 37.53 crore in the corresponding 2025 period. The year-on-year increase in this cash outflow was Rs 49.83 crore, exceeding the Rs 30.46 crore of net operating cash generated in the current half.

Other assets absorbed a further Rs 34 crore of cash, compared with Rs 6.92 crore in the prior-year half. On the balance sheet, inventories stood at Rs 491.78 crore at 30 September 2026, up from Rs 411.84 crore at 31 March 2026, while other current assets increased to Rs 157.05 crore from Rs 123.98 crore.

Some movements partly offset those requirements. Trade receivables provided Rs 9.55 crore of cash in the cash-flow statement, compared with Rs 3.15 crore in the earlier period, and trade payables provided Rs 18.54 crore, against Rs 5.89 crore. Other financial liabilities provided Rs 9.12 crore, whereas they used Rs 5.97 crore in the prior-year half.

The balance-sheet trade receivables balance was broadly unchanged at Rs 318 crore at 30 September 2026, compared with Rs 318.45 crore at 31 March 2026. Other current liabilities used Rs 5.64 crore of cash during the half, compared with a Rs 5.33 crore source of cash in the corresponding 2025 period.

Did revenue and segments support higher first-half profit?

Dynamatic Technologies reported revenue from operations of Rs 877.54 crore for the six months ended 30 September 2026, up from Rs 763.31 crore a year earlier, while profit after tax rose to Rs 43.25 crore from Rs 14.08 crore. Profit before tax increased to Rs 51.53 crore from Rs 26.97 crore; the prior-year period included Rs 6.88 crore of exceptional items.

Aerospace remained the largest revenue segment, contributing Rs 413.02 crore in the 2026 first half, compared with Rs 351.44 crore in the prior-year period. Hydraulics revenue rose to Rs 256.44 crore from Rs 232.41 crore, and Metallurgy revenue increased to Rs 207.67 crore from Rs 179.41 crore.

Aerospace segment result was Rs 69.10 crore, compared with Rs 65.78 crore a year earlier. Hydraulics segment result increased to Rs 23.08 crore from Rs 4.30 crore, while Metallurgy reported a Rs 1.04 crore profit after a Rs 6.51 crore loss in the corresponding prior-year half.

Finance costs in the income statement increased to Rs 30.42 crore from Rs 29.46 crore. The cash-flow statement recorded Rs 27.89 crore of interest paid during the half, up from Rs 24.86 crore, alongside Rs 14.20 crore of lease-liability payments compared with Rs 13.18 crore a year earlier.

How did Dynamatic Technologies fund its cash requirements?

Dynamatic Technologies generated Rs 11.79 crore from financing activities in the six months ended 30 September 2026, reversing a Rs 17.94 crore financing cash outflow in the corresponding 2025 period. Proceeds from long-term borrowings were Rs 74.84 crore, while long-term borrowings repaid were Rs 30.22 crore.

Net short-term borrowing proceeds were Rs 14.64 crore, compared with Rs 1.69 crore in the preceding-year half. Financing cash inflows were reduced by Rs 27.89 crore of interest paid, Rs 14.20 crore of lease-liability payments and Rs 5.38 crore of dividends paid.

Investing activities used Rs 30.93 crore, compared with Rs 39.47 crore in the previous first half. Purchases of property, plant and equipment and intangible assets were Rs 32.72 crore, below Rs 38.38 crore a year earlier, while net changes in bank deposits provided Rs 1.73 crore rather than using Rs 1.64 crore.

Cash and cash equivalents were Rs 64.62 crore at 30 September 2026, compared with Rs 52.52 crore at the start of the financial year. The cash-flow statement reported Rs 11.32 crore from the combined operating, investing and financing movements, and an Rs 0.78 crore exchange-rate effect on cash.

What happened to Dynamatic Technologies’ borrowings and liabilities?

Dynamatic Technologies’ total borrowings increased to Rs 590.82 crore at 30 September 2026 from Rs 529.38 crore at 31 March 2026. Non-current borrowings rose to Rs 275.50 crore from Rs 249.36 crore, and current borrowings rose to Rs 315.32 crore from Rs 280.02 crore.

The Rs 61.44 crore rise in reported borrowings occurred alongside positive financing cash flow of Rs 11.79 crore. Total liabilities increased to Rs 1,150 crore from Rs 1,056.01 crore, while total equity rose to Rs 841.42 crore from Rs 793.52 crore over the same period.

Current liabilities were Rs 743 crore at 30 September 2026, compared with Rs 670.19 crore at 31 March 2026. Trade payables totalled Rs 287.81 crore, including Rs 47 crore due to micro and small enterprises, against total trade payables of Rs 255.76 crore at the preceding financial year-end.

Lease liabilities moved in the opposite direction to borrowings, declining to Rs 102.01 crore from Rs 108.51 crore. Non-current lease liabilities fell to Rs 78.18 crore from Rs 84.01 crore, while current lease liabilities decreased to Rs 23.83 crore from Rs 24.50 crore.

Conclusion

Dynamatic Technologies’ first-half figures show that higher revenue and profit did not translate into higher operating cash flow. A Rs 87.36 crore inventory outflow and Rs 34 crore increase in other assets reduced operating cash generation to Rs 30.46 crore, while the company relied on greater borrowing inflows and recorded a Rs 61.44 crore increase in total borrowings.

The next disclosed transaction is the planned transfer of Dynamatic Technologies’ unmanned aerial vehicle, or UAV, vertical to Dynauton Limited for Rs 29.18 crore, expected on or before 31 December 2026 subject to approvals and consents. The board also approved a proposed Rs 37.45 crore subscription to Dynauton shares on 24 October 2026; both events were non-adjusting after the 30 September reporting date.