SGIL - Synergy Green

📊 NSE: SGIL 🏢 Castings & Forgings 📅 Last Updated: 12/14/2025 14:03

💰 Financial Performance

Revenue Growth by Segment

Direct exports, gearbox, and non-wind segments are the primary growth drivers, while domestic wind and OEM exports saw muted growth due to customer scheduling. Total income for H1 FY26 was INR 159.75 Cr, representing a 4.87% decline from INR 167.93 Cr in H1 FY25, though the company maintains a 20% full-year growth guidance.

Geographic Revenue Split

Exports are a significant contributor, showing approximately 50% growth in H1 FY26. The company benefits from a favorable exchange rate with dollar realizations at INR 88 versus an estimated INR 84, which significantly enhances export profitability.

Profitability Margins

Gross margins typically stabilize around 61-62%, though they reached 69% in Q2 FY26 due to inventory accounting (WIP adjustments). Profit After Tax (PAT) for H1 FY26 stood at INR 5.74 Cr, down 19.27% from INR 7.11 Cr in H1 FY25 due to higher finance and depreciation costs.

EBITDA Margin

PBDIT margin improved to 15.56% in H1 FY26 from 14.13% in H1 FY25, a 143 basis point increase. The company has provided guidance to expand operating margins to 18-20% over the next 2 years, driven by machining value-addition and logistics optimization.

Capital Expenditure

The company is undergoing a large capex cycle to increase capacity from 30,000 tons to 45,000 tons. Future plans include a Phase 2 expansion to reach 100,000 tons. Networth increased to INR 104 Cr as of March 31, 2025, from INR 46 Cr, supported by a rights issue to fund these expansions.

Credit Rating & Borrowing

The financial risk profile is moderate to comfortable with an interest coverage ratio of 3.08 times in fiscal 2024. Total outside liabilities to adjusted networth (TOLANW) improved to 2.25 times as of March 31, 2025, from 3.25 times the previous year.

⚙️ Operational Drivers

Raw Materials

Specific raw material names are not explicitly listed, but they are described as 'stable' and represent the primary component of the 61-62% gross margin cost structure.

Capacity Expansion

Current capacity is being increased to 45,000 tons (45K). Long-term plans involve reaching 100,000 tons by adding 30,000 tons in Phase 2. The company secures customer orders before committing to these capex expansions to mitigate utilization risks.

Raw Material Costs

Raw material costs are currently stable. The company manages these costs by calculating 'total output' (revenue plus change in inventory) to determine appropriate contribution margins, avoiding distortions from power and manpower costs included in WIP.

Manufacturing Efficiency

Efficiency is being improved through the integration of machining and the transition to high-capacity wind energy generator parts (more than 4 MW), which offer better margins.

Logistics & Distribution

The company expects significant savings in distribution costs by moving machining closer to the foundry in Kolhapur, contributing to a planned 5-6% margin expansion.

📈 Strategic Growth

Expected Growth Rate

20%

Growth Strategy

Growth will be achieved by expanding capacity to 45,000 tons, increasing the share of high-value machined components, and onboarding new large-scale OEMs like Envision, Nordex, and Adani. The company is also diversifying into solar and non-wind segments to reduce sector-specific cyclicality.

Products & Services

High-capacity wind energy generators (over 4 MW), gearbox components, solar energy components, and machined castings.

Brand Portfolio

Synergy Green Industries Ltd (SGIL).

New Products/Services

New products for high-capacity wind generators (>4 MW) and solar components are expected to drive the target margin expansion to 18%+. Machining services are also being scaled as a value-added offering.

Market Expansion

Expansion is focused on direct exports and increasing the share of business with top global OEMs. New customer additions like Envision and Nordex are expected to contribute INR 25-30 Cr each in the final months of the current fiscal.

🌍 External Factors

Industry Trends

The industry is shifting toward larger wind turbines (4 MW+). SGIL is positioning itself by augmenting infrastructure specifically for these high-capacity generators to boost revenue and profitability over the medium term.

Competitive Landscape

The company competes in the Indian and global wind casting market; competitors are not specifically named but the company monitors 'synergy share of business' among top OEMs.

Competitive Moat

The company's moat is built on its ability to secure long-term commitments (up to 2028-2029) from global OEMs like Vestas and Nordex before initiating capex, ensuring high utilization and specialized technical alignment with customer needs.

Macro Economic Sensitivity

The business is highly sensitive to global wind energy demand and renewable energy fiscal policies.

Consumer Behavior

Shift toward renewable energy sources (wind and solar) is driving the order book, which currently stands at INR 435 Cr.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to standard manufacturing and pollution norms; the company must comply with SEBI Listing Obligations and Disclosure Requirements (LODR) for financial reporting.

Taxation Policy Impact

Tax expenses for H1 FY26 were INR 2.73 Cr, representing an effective tax rate of approximately 32.2% of Profit Before Tax.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the 45% growth required in H2 FY26 to meet the 20% annual guidance, which depends heavily on customer scheduling and order execution.