SYRMA - Syrma SGS Technology Limited Share Price

For the quarter ended June 30, 2025, Syrma SGS Technology Limited's management expressed a positive outlook, highlighting a significant improvement across key financial metrics. The company's EBITDA margins increased from 5.2% in Q1 of the previous year to over 10% this quarter, while gross material margins rose from 15% to 24%. Year-over-year, revenue grew by 25%, EBITDA by 50%, profit before tax (PBT) by 27%, and profit after tax (PAT) by 32%.

The management noted robust export growth, increasing from Rs. 180 crores in Q1 FY '25 to Rs. 232 crores in Q1 FY '26, a 29% year-over-year rise. They emphasized the ongoing strategic shift in their operations, particularly in high-margin sectors like automotive and industrial segments, which are expected to contribute significantly to future growth.

In terms of forward-looking guidance, the management projects a revenue growth of 30%-35% for the entire fiscal year. They aim to maintain EBITDA margins of around 8.5%-9%, excluding other income. The order book as of Q1 FY '26 stands between Rs. 5,400 crores to Rs. 5,500 crores, with a strong focus on the automotive sector (35%-40%) and industrial sector (25%-27%).

Management announced a joint venture for manufacturing printed circuit boards (PCBs), addressing a market that is estimated at $5 billion but predominantly imports 90% of its requirements. The initial CAPEX planned for this initiative is $91 million. They expect EBITDA margins of 12%-15% from this venture once fully operational.

In summary, management believes they are on a solid growth trajectory, bolstered by strategic adjustments, an increased focus on profitability, and an expanding export footprint.

Question 1: "What is the order book position as of the end of Q1 '26 and the mix within that order book?"

Answer: Our order book stands at approximately Rs. 5,400 crores to Rs. 5,500 crores as of June '25. The breakdown is as follows: the auto segment comprises 35% to 40%, the consumer segment is 25% to 27%, industrial is about 25% to 27%, healthcare is 6% to 8%, which includes med tech. The remainder encompasses IT and Railways.

Question 2: "What is your guidance for the full year regarding both top line and margin?"

Answer: We expect a robust top-line growth of 30%-35% compared to last year's figures. As for margins, we are guiding towards an operating EBITDA margin in the range of 8.5% to 9%, excluding other income but inclusive of any foreign exchange impacts.

Question 3: "What can we expect from the PCB manufacturing joint venture regarding CAPEX and anticipated revenue?"

Answer: The initial Phase-1 CAPEX for the PCB plant is projected at $91 million, spent over 3-4 years. We expect to achieve an EBITDA margin of 12%-15%. Once stabilized, margins might improve to 18%-20%. Revenue generation should begin around Q4 FY '27, with initial capacity targeting around 1.5 to 2 million square meters annually.

Question 4: "What is the expected timeline for the PCB plant and initial production?"

Answer: We anticipate the joint venture project execution will commence by Q2 FY '26, with construction slated to proceed swiftly. Full commercial production is expected to begin around Q4 FY '27 or early FY '28, depending on timely government approvals for the PLI scheme.

Question 5: "Can you provide clarity on the margins in automotive and industrial categories?"

Answer: In the automotive segment, our margins are generally higher due to our role as a Tier 1 supplier. While the industrial segment varies with exports typically offering better margins, we have not experienced a decline in margins across the verticals. Instead, we foresee continued improvement due to operational efficiencies and effective purchasing.

Question 6: "What are the expectations around your exports for FY '26?"

Answer: We aim to achieve over Rs. 1,000 crores in exports this fiscal year. The export mix is currently approximately 24%-27%, with growth expected to continue primarily from Western Europe and North America. We anticipate that tariff uncertainties will stabilize, facilitating more substantial orders.

Question 7: "Regarding the working capital cycle, what changes should we expect?"

Answer: Our net working capital days are stable at 69. While we are targeting a reduction below 65 days, improvements may not be immediately visible each quarter due to the complexities of different segments. Overall, we are confident in achieving a more efficient working capital management as revenues increase and orders mature.

This summary encapsulates key questions and respective management answers from the Q&A section of the earnings call, aligning with requested specifics on numbers and forward guidance.