Buy Syrma SGS Technology; target of Rs 629: Prabhudas Lilladher

Buy

Prabhudas Lilladher's research report on Syrma SGS Technology

We are upgrading our recommendation from HOLD to BUY given the recent significant correction in stock price. Syrma SGS Technology (SYRMA) has reported robust earnings growth of 108% YoY for Q3FY25, excluding one-off income of ~Rs160mn from a land sale and Rs21mn loss related to a fire incident at its Noida plant. This performance was driven by a healthy ~350bps YoY expansion in EBITDA margin to 9.1%, attributed to a favorable segment mix (with consumer contribution reducing to 31% of revenue) and improved operating efficiency. SYRMA's revenue grew by 23.0% YoY, supported by 37.8% YoY increase in the auto segment, which contributed ~24% to revenue, and 36.8% YoY growth in the industrial segment, contributing ~31% to revenue. SYRMA has reiterated its EBITDA guidance of Rs 3.05-3.15bn for FY25, with revenue expected to align with industry growth and expected 35% revenue growth, along with EBITDA margins exceeding 7% in FY26. The company aims to improve its RoCE to 14.5% by the end of FY25, with further improvement anticipated in the coming years. SYRMA expects to generate Rs65bn revenue over its current gross block, targeting 6x asset turnover.

Outlook

We have revised our FY25 EPS estimates upward by 4.5% to reflect stronger earnings in Q3FY25, while maintaining our earnings estimates for FY26 and FY27. We estimate FY24-27E revenue/EBITDA/PAT CAGR of 35.1%/40.4%/37.7%, with EBITDA margin expansion of ~80bps. Upgrade to BUY.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Syrma SGS Technology - 30012025 - prabhu