SYRMA - Syrma SGS Tech.

📊 NSE: SYRMA 🏢 Electronics - Components 📅 Last Updated: 12/14/2025 14:04

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for Q2 FY26 reached INR 1,146 Cr, representing a 37% YoY growth. For H1 FY26, total revenue was INR 2,109 Cr. The Industrial segment grew by 30% YoY in H1 FY26. The IT segment increased its contribution to 5% of total business in Q2 FY26. FY25 consolidated revenue was INR 3,787.19 Cr, up 19.43% YoY from INR 3,170.96 Cr in FY24.

Geographic Revenue Split

Export revenue for Q2 FY26 was INR 270 Cr, growing 40% YoY and contributing 23% of total operations. For H1 FY26, exports reached INR 502 Cr, a 35% YoY increase. The company has a long-term target to increase export contributions to 30% of total revenue (aspirational goal) from the current levels to capture higher margins.

Profitability Margins

Gross margins saw a slight sequential decline in Q2 FY26 due to a higher mix of the lower-margin IT business (5% of revenue). However, PAT margin for Q2 FY26 was 5.7% (INR 66.3 Cr), up from 4.8% in FY25. PBT margin for Q2 FY26 stood at 7.8% (INR 89.5 Cr), compared to 6.2% in FY25.

EBITDA Margin

EBITDA for Q2 FY26 was INR 124 Cr, up 53% YoY, with a margin of 10.7% (an improvement from 9.5% in Q2 FY25). Operating EBITDA margin for Q2 FY26 was 10.1% (INR 115.2 Cr), representing a 56% YoY growth. Management initially guided for 8.5% to 9% EBITDA margins for FY26 but expects to exceed this based on H1 performance.

Capital Expenditure

The company is planning a significant capital expenditure of INR 1,500 Cr for backward integration into PCB manufacturing. This investment is expected to generate steady-state annual revenues of approximately INR 2,500 Cr by FY29, based on an estimated asset turnover of 1.5x.

Credit Rating & Borrowing

Total consolidated debt as of March 31, 2025, was INR 611.2 Cr, up 6% from INR 576.3 Cr in FY24. The Debt-to-Equity ratio remained stable at 0.3 in FY25. Net Debt to EBITDA (LTM) was 0.7 as of September 2025, down from 0.8 in FY25.

⚙️ Operational Drivers

Raw Materials

Flexible PCBs and various electronic components are primary inputs. Specific raw material names like copper or silicon and their individual cost percentages are not disclosed in the available documents.

Capacity Expansion

The company is commissioning a large integrated electronics manufacturing facility in Pune. Additionally, the planned PCB manufacturing unit is designed to reach a revenue capacity of INR 2,500 Cr. A dedicated design center for MedTech ODM has also been established in Pune.

Raw Material Costs

Raw material costs are influenced by the business mix; for instance, the IT segment's expansion to 5% of revenue in Q2 FY26 led to a slight decline in gross margins due to different procurement costs and value-add profiles.

Manufacturing Efficiency

Capacity utilization improvements contributed to ROCE increasing from 9.9% in FY24 to 12.4% in FY25. Adjusted ROCE (excluding surplus IPO money and goodwill) was 16.0% in FY25.

📈 Strategic Growth

Expected Growth Rate

30%

Growth Strategy

Growth will be driven by a shift toward high-margin segments (Industrial, Automotive, Healthcare) and long-term framework contracts. The company onboarded 8 major customers in Q2 FY26 with $100 million revenue potential for next year and signed a $250 million contract over 2-3 years. Backward integration into PCBs and the acquisition of a defense vertical provide new revenue streams.

Products & Services

Electronic Manufacturing Services (EMS), Original Design Manufacturing (ODM) services, inverters (via KSolare), flexible PCBs, automotive electronics, industrial control systems, healthcare/MedTech devices, and defense electronics.

Brand Portfolio

Syrma SGS, KSolare (Inverters).

New Products/Services

New product launches include inverters through the KSolare acquisition and flexible PCBs through backward integration. ODM revenue already contributes 38% of total revenue, focusing on higher value-add designs.

Market Expansion

Targeting a 30% growth in exports to reach INR 1,100 Cr in FY25, focusing on international markets for Industrial and MedTech segments to capture higher margins.

Strategic Alliances

The company acquired KSolare to enter the inverter market and has acquired a defense-focused entity to establish a new vertical in defense electronics.

🌍 External Factors

Industry Trends

The EMS industry is seeing a shift toward 'China Plus One' strategies and domestic manufacturing incentives in India. Syrma is positioning itself by expanding its Pune footprint and moving into high-growth segments like Railway electronics and MedTech.

Competitive Landscape

The company competes in the EMS and ODM space, focusing on differentiating through technical complexity in Automotive and Industrial verticals rather than low-margin consumer electronics.

Competitive Moat

The moat is built on 30+ years of R&D, a high share of ODM business (38%), and long-term customer framework contracts (e.g., a $250M multi-year deal) which provide high switching costs and revenue visibility.

Macro Economic Sensitivity

The company is sensitive to global trade policies, specifically American tariffs which impact the industrial portfolio, though the segment still achieved 30% growth in H1 FY26.

Consumer Behavior

There is a strategic shift to reduce reliance on the consumer sector in favor of more stable, high-margin industrial and automotive demand.

Geopolitical Risks

Trade barriers and tariffs (e.g., US tariffs) pose risks to the export-oriented segments, which the company aims to grow to 30% of total revenue.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to domestic and international regulations including data privacy, environmental standards, and safety norms. Compliance is managed by dedicated internal teams.

Environmental Compliance

The company monitors evolving environmental and safety regulations to avoid penalties and operational disruptions, though specific ESG costs are not listed.

⚠️ Risk Analysis

Key Uncertainties

Product mix volatility can cause quarter-on-quarter margin variations. For example, the IT segment's growth to 5% of revenue impacted gross margins sequentially in Q2 FY26.