Syrma SGS Technology stock surges 34% in 6 sessions following strong Q3 numbers | Stock Market News

Shares of Syrma SGS Technology, a leading Electronic Systems Design and Manufacturing (ESDM) company, have witnessed a sharp rebound, surging 34% over the past six sessions to the previous close of ₹563.45. The rally follows the company’s strong December quarter performance, which was released on January 28. 

The company’s performance over the past two quarters has been in sharp contrast to previous periods, as it has shifted its focus to higher margin segments such as Industrial, and lower working capital. Analysts believe this could significantly enhance its Return on Capital Employed (RoCE) profile.

Analysts remain optimistic about Syrma, expecting a 500 basis points (bps) improvement in RoCE over the next two years. Additionally, they view its entry into high-end IT laptops as a new growth driver, while a recovery in European exports from FY2026 could further support margin expansion.

Syrma has lowered its FY2025 revenue guidance to ₹41-42 billion from ₹45 billion. However, it has maintained its EBITDA guidance at ₹3.1 billion, indicating a continued shift away from its low-margin consumer business, which holds a dominant share of its order book.

The company’s current order book stands at ₹53 billion, with the consumer segment contributing 40%, industrial 30%, and automotive 30%, while the rest comes from healthcare, railways, and other sectors.

Better product mix drives strong performance

In Q3FY25, Syrma’s sales grew 23% year-on-year (YoY), lagging behind its EMS peers over Q2FY25-Q3FY25. However, a better product mix drove a margin beat, with a higher share of the margin-accretive industrial segment.

The lower-margin Consumer segment grew just 6% YoY, though it still accounted for 41% of the company’s 9MFY25 sales. Due to an improved product mix, Q3FY25 operating profit margin (OPM) increased to 9.1%. The company expects PLI benefits worth ₹150 million-170 million in FY25, having already realised ₹140 million in 9MFY25, nearly flat YoY.

The company reported a 165% jump in its consolidated net profit to ₹53 crore. In the same period last year, the net profit stood at ₹20. In the preceding September quarter, the company reported a net profit of ₹40 crore.

The Union Budget 2025 has proposed a significant increase in allocations for semiconductors and mobile production. The budget for semiconductors has surged 83% to ₹7,000 crore, while the Production-Linked Incentive (PLI) scheme for mobile phones has increased 55% to ₹9,000 crore.

Stock delivers 110% return in 2 years

From a trading price of ₹255 per share two years ago, the stock has surged 110% to its current market price of ₹534 per share. Between March 2023 and December 2023, the stock experienced a one-way rally, gaining 166% to reach a fresh all-time high of ₹705 per share.

Following the company’s December quarter performance, domestic brokerage firm Kotak Institutional Equities upgraded its rating on the stock to ‘Add’ and raised its target price to ₹550 per share from the earlier target of ₹450 per share.

Meanwhile, Jefferies has retained its ‘Buy’ call on the stock with a target price of ₹690 per share. The brokerage finds the stock’s risk-reward profile favourable compared to peers such as Amber, Kaynes, and Dixon.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.