Syrma SGS Technology forms subsidiary for semiconductor arm, stock rises 4%

Brokerage firm Systematix lowered its recommendation on the stock to ‘hold’ from ‘buy’ earlier while cutting the target price from Rs 700 per share to Rs 596.

Shares of Syrma SGS Technology jumped nearly 4 percent in early trade on November 28, post incorporation of a subsidiary. At 9:15am, the Syrma SGS Technology stock was trading at Rs 578 on NSE.

Syrma SGS Technology Limited has incorporated a wholly-owned subsidiary company (WOS) named Syrma Semicon Private Limited (SSPL), according to a filing with BSE.

SSPL intends to engage in various aspects of the computer and electronics industry. These include designing, manufacturing, buying, selling, assembling, exporting, importing, distributing, and acting as an agent or dealer for a range of electronic products. The focus areas involve memory chips, memory modules, PCB assemblies, and other storage products.

Syrma SGS Technology stock call: Check brokerage view, target price

Brokerage firm Systematix lowered its recommendation on the stock to ‘hold’ from ‘buy’ on November 3 while cutting the target price from Rs 700 per share to Rs 596, implying a potential upside of up to 14 percent against earlier projections of 34 percent due to lower earnings estimates for the next three fiscals.

The brokerage said it expects margin improvement on superior product mix and remains constructive after an 80 percent return in its scrip in the last 6 months and at 40x FY25E P/E.

Also Read: Syrma SGS Consolidated September 2023 Net Sales at Rs 711.73 crore, up 52.44% Y-o-Y

Nuvama also reduced the target price to Rs 710 from Rs 760 per share in an earlier report owing to weak earnings while retaining the recommendation at ‘buy’. The brokerage expects more margin dilution during FY23-26E period as 50 percent of incremental sales would come from the consumer vertical.

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Additionally, SSPL aims to work with printers, readers (whether magnetic or otherwise), CRT displays and terminals, and various other electronic and communication equipment. The scope extends to encompass parts, components, assemblies, and subassemblies used in the computer and electronic industry, such as voice coils, voice coil actuator assemblies, antenna coils, smart cards, and radio frequency identification devices.

Syrma SGS Technology stock performance

Syrma SGS Technology stock has given a return of 53.46 percent over the last six months. The benchmark Nifty50 index has given a return of 6.43 percent over the same duration.

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