Dynacons Systems & Solutions Limited Stock Analysis

Strong YoY revenue growth of 9.5% in Q3 FY2026 (₹340.59 crores vs ₹311.02 crores) and 8.9% for nine months (₹1,021.83 crores vs ₹938.32 crores) / Exceptional profit growth with Q3 net profit up 27.3% YoY to ₹23.49 crores and nine-month profit up 21.2% to ₹65.82 crores, outpacing revenue growth / Significant improvement in gross margins with inventory changes swinging from negative ₹10.62 crores (Q3 FY2025) to positive ₹13.71 crores (Q3 FY2026), indicating better working capital management / Core System Integration segment showing robust growth with revenue up 9.4% YoY to ₹336.79 crores in Q3 and segment profit up 51% YoY to ₹38.86 crores / Strong EPS expansion of 28% YoY (₹18.46 vs ₹14.43) reflecting improved profitability and operational leverage / Diversified revenue streams with Technology Workforce Augmentation Services contributing ₹3.80 crores in Q3, up 22.2% YoY

Sequential revenue decline of 3.3% QoQ (₹340.59 crores in Q3 vs ₹352.39 crores in Q2) suggests potential demand volatility or project lumpiness / Finance costs nearly doubled YoY from ₹3.40 crores to ₹6.46 crores in Q3 (up 90%), indicating increased debt burden or higher interest rates impacting profitability / Depreciation expense surged 920% YoY from ₹0.40 crores to ₹4.10 crores in Q3, suggesting significant recent capex that may pressure margins short-term / Technology Workforce Augmentation segment showing declining profitability with segment profit down from ₹1.50 crores (Q3 FY2025) to ₹1.75 crores despite revenue growth, and nine-month profit down 53% YoY / Employee benefit expenses increased 19.5% YoY in nine months (₹36.73 crores vs ₹31.62 crores) outpacing revenue growth, indicating wage inflation pressures / Regulatory uncertainty with new labour codes effective from November 21, 2025 requiring provisions for potential compliance impact on employee benefit costs

Consolidated revenue from operations rose 9.5% YoY to Rs 34,058.93 lakh in Q3 FY26 (from Rs 31,101.75 lakh). / Consolidated PAT increased 27.3% YoY to Rs 2,349.43 lakh in Q3 FY26 (from Rs 1,845.14 lakh), materially outpacing revenue growth. / Earnings per share strengthened, with basic EPS at 18.46 in Q3 FY26 versus 14.43 in Q3 FY25 (+27.9% YoY). / Profitability expanded: Q3 PAT margin improved to about 6.9% (2,349.43/34,058.93) from about 5.9% (1,845.14/31,101.75) YoY. / Core System Integration segment remained strong, with segment revenue up to Rs 33,679.34 lakh (+9.4% YoY) and segment result up to Rs 3,885.53 lakh (+51.1% YoY).

Finance costs nearly doubled YoY in Q3 to Rs 646.04 lakh (from Rs 339.86 lakh), creating pressure risk if leverage or borrowing costs stay elevated. / Business concentration is high: System Integration contributed about 98.9% of Q3 segment revenue (Rs 33,679.34 lakh of Rs 34,058.93 lakh). / Technology Workforce Augmentation momentum weakened sequentially, with Q3 revenue at Rs 379.59 lakh versus Rs 557.59 lakh in Q2 (about -31.9% QoQ). / Unallocable expenses/depreciation line is much higher YoY in Q3 at Rs 410.33 lakh versus Rs 40.23 lakh, reducing visibility on normalized operating cost structure. / Regulatory accounting uncertainty remains: labour codes effective November 21, 2025 required provisions, and management said final impact may change once full Central/State rules are notified.