Syrma SGS Q3 FY24 concall notes (rough cut)
- Flattish Q3, push out of delivery/revenue of 100-110 crores during Q3 resulted in flattish revenue.
- Management has guided for 3000 crores revenue in FY24, which means Q4 shall be ~980 crores (January 2024 company did revenue/shipment of 362 crores so sounds on track). Margin for full year is guided in 7 to 7.5%. So Q4 might have EBITDA of 85 cores to 115 crores or 8 to 12% margin range.
- Margins in Q3 were also impacted by unused capacity which was ramped up recently. Company hired talent to address the upcoming growth hence sequential increase in operational cost.
- FY25 revenue guidance is of 40-45% growth so this might put revenue in 4200 crore to 4350 crores range. While EBITDA margin guidance is 7-8%.
- Exports grew YoY 50%.
- Commissioned new facility at Gurgaon, Noida and few others. Cumulatively April – to December- smt capacity increased from 3.2 m tonne per hour to 6.3m tonne per hour
- Net debt low at 65-80 crores.
- Capex in 9m was 240 crores capex. 40-50 crores capex planned in next quarter.
- Gross block is 720 crores including 150 crores of CWIP. Asset turnover should be in 6x to 7x range once fully utilised (current asset turnover is in 4x to 5x range).
- 4500 crore order backlog (OB). Exports book about 20% of OB. Exports to grow further in coming year on the back of healthcare. Order book break-up – consumer – 40%, industrial – 30%, auto-18-20%, healthcare-8-10%.
- Focussed on maintaining or increasing margin of each vertical however commenting on overall margin is difficult due to mix changes. IT business (I think laptops) will have entirely different margins (I believe 1-2% based on earlier calls).
- Strategy is to grow at industry+ rate for next several years.
- Railway business has just started. Base of railway expands then it will not fluctuate much. Railways is long gestation business. Next year 70-75 crores contribution from railways possible.
- Healthcare should be about – 335 to 400 crore next year.
- 9M CFO – negative. Likely to be positive on year end basis in FY24. Next year net working capital days should come down, currently just over 70 days and target to bring it to 60 days.
- Large accounts and volume-based business will help in reducing working capital days so company is targeting ROCE of 25% in one to two years. Capital employed is around 1500.
- Johari digital did a revenue of 30 crores with 30% EBITDA margin, revenue was flat YoY. Next year target is to grow it by 25-40%
- Onboarded few high-volume clients in IOT, Energy, Automative, etc. In consumer no change in clients. New clients will contribute from FY25 to FY26.
- Hired consultant - McKinsey for operating efficiency, and to understand where to double down.
Below is my own work on how FY24 and next year will look based on lower and upper range guidance by management:
FY23 | FY24E | FY25E - lower range | FY25E - higher range | |
---|---|---|---|---|
Revenue | 2048 | 3000 | 4320 | 5040 |
EBITDA/operating margin | 9% | 7% | 7% | 8% |
EBITDA | 192 | 210 | 302 | 403 |
PAT % of EBITDA | 64% | |||
PAT | 135 | 194 | 258 | |
Mcap to PAT (PE ratio) | 68 | 48 | 36 |
Disclosure: Bought today in fall so biased.
Disclaimer: I am not a financial advisor and nor a SEBI registered Analyst. The content shared here is only for learning purpose. All the names mentioned here are for example purpose. I may buy more, exit or partly sell the stock/bonds without any prior intimation.
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