Buy Syrma SGS Technology Ltd For Target Rs.2,100 by Motilal Oswal Financial Services Ltd
Robust demand across segments drives growth Operating performance above our estimate
* Syrma SGS Technology (SYRMA) continued its strong operating performance in 2QFY27, with EBITDA rising ~68% YoY despite EBITDA margin contraction of 34bp YoY (due to higher component costs amid supply chain constraints).
* Revenue grew 68%, driven by a strong performance in Auto (26% of sales, up 91% YoY) and Industrial/Consumer (25%/29% of sales, up 86%/57% YoY), followed by IT and Railways/Healthcare (21% of sales, up 69%/61% YoY). Exports (26% of sales) jumped 95% YoY.
* Moreover, SYRMA reported a healthy order book of INR74b (up 28% YoY). Management upgraded its FY27 revenue growth guidance to 40-45% from 35%, with EBITDA margin guidance of 10-10.5% (vs. 10.5-11% earlier). Going forward, the company is expected to report healthy performance, driven by strong order book execution across segments, increasing ODM share (16% in 2QFY27 vs. 13% in 2QFY26) and robust growth in exports.
* Despite a strong operating performance, we largely maintain our FY27/FY28 estimates due to the expected moderation in margins amid supply chain constraints. We reiterate our BUY rating on the stock with a TP of INR2,100 (49x FY28E EPS).
Broad-based growth across segments
* Consolidated revenue jumped 74% YoY to INR19.9b (est. INR17.5b), led by growth across all segments. Auto saw the highest growth of 91%, followed by Industrial/IT & Railways/Healthcare/Consumer (up 86%/69%/61%/57% YoY).
* EBITDA margin contracted 34bp YoY to 9.7% (est. 9.4%) due to gross margin contraction of 270bp YoY. EBITDA grew ~68% YoY to INR1.9b (est. INR1.6b). Adj. PAT surged ~83% YoY to INR1.2b (est. INR984m).
* The order book stood at INR74b vs. INR68b/INR58b as of Jun’26/Sep’25. Auto/Consumer/Industrial/Healthcare/IT & Railways constitute 30%/25%/ 25%/8%/12% of the current order book.
* In 1HFY27, revenue/EBITDA/PAT jumped 71%/76%/91% to INR35.8b/ INR3.5b/INR2.2b.
* CFO for 1HFY27 stood at INR1.2b vs. a cash outflow of INR1.2b in 1HFY26. Gross debt stood at INR7.5b as of Sep’26 vs. INR3.5b as of Sep’25 and INR3.5b as of Mar’26.
* Net working capital days were 63 vs. 73 as of Sep’25.
Valuation and view
* SYRMA continued its strong earnings momentum, driven by growth across all segments. We expect this trend to continue in FY27, led by strong growth in higher-margin segments, such as automotive, industrial, and MedTech.
* We believe the company’s growth trajectory will remain strong, backed by:
1) its focus on low-volume, high-margin business
2) an increase in exports and ODM
3) increasing share of revenue in the industrial, automotive, and MedTech segments
4) foray into bare PCB, HDI, and CCL manufacturing through its JV
5) its expansion into new verticals, such as defense
6) new customer additions (18 added in 1HFY27).
* We estimate a CAGR of 42%/42%/48% in revenue/EBITDA/adj. PAT over FY26- 28. We reiterate our BUY rating on the stock with a TP of INR2,100 (premised on 49x FY28E EPS).
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