Key Highlights of the 2QFY26 Result
Syrma SGS reported a stellar set of numbers in 2QFY26 with Revenue/EBITDA/PAT growth of 38%/62%/77% YoY. 2QFY26 revenue mix – 24% Auto, 32% Consumer, 23% Industrial, 7% Healthcare, 14% IT & Railways. Export revenue at 23% of revenue in 2Q, grew 38% YoY. Company remains on track to achieve the FY26E guidance of Rs 1,000 cr export revenue. USA contributes only 5-6% of total revenue currently. Order book at end of 2Q stood at Rs 5,800 cr vs Rs 5,500 cr QoQ. Order book mix – 35% Auto, 25% Consumer, 25% Industrial, 6- 7% Healthcare and balance from IT & Railways. Syrma onboarded 8 major customers during the quarter.
Auto & Industrial – Key growth drivers: The Auto/Industrial segment revenue grew by 24%/20% YoY during 1HFY26 driven by EVs within auto segment as well as the smart meter and data center demand within industrials. Within IT segment, laptops have emerged as a growth driver with both the customers ramping up production.
Key strategic announcements: 1) JV for PCB manufacturing (75:25 JV between Syrma SGS and Shinhyup Electronics). Facility to set up in Andhra Pradesh. Phase 1 capex at Rs 765 cr for multi-layer PCBs. Facility eligible under AP Electronics Components Manufacturing Policy and Centre’s ECMS (component PLI scheme). 2) Ksolare Energy acquisition: 49:51 JV between Syrma & Premier Energies to acquire Ksolare Energy, a leading manufacturer of solar inverters and power conditioning units. 3) 60:40 JV with Elemaster, a leading European electronic design company. JV to focus on European OEM programs in Railways and Industrial Automation. 4) Foray into defence electronics: Syrma SGS to acquire 60% stake in Elcome Integrated Systems Pvt. Ltd, a company involved in design, integration and lifecycle support of navigation, communication and surveillance systems deployed on naval and maritime platforms. This helps the company to enter the defence segment which presents a high margin opportunity besides providing diversification.
Maintain BUY – Raise Target Price to Rs 1,120
Syrma SGS is at an inflection point in its growth journey. Company has taken multiple steps over the last few months to diversify its product mix as well as backward integrate its supply chain. These measures will enable the company to maintain its high earnings growth trajectory along with margin improvement. At the current price of Rs 894.0, the stock is currently trading at a P/E of 62.2x/39.7x of its FY26E/FY27E EPS of Rs 14.3/Rs 22.4 respectively. We value the stock at P/E of 50x FY27E EPS of Rs 22.4 to arrive at our TP of Rs 1,120, thus providing an upside potential of 25.3%.
