Any current/future new fundraising through debt or equity?

The company does not currently require any equity raising over the next 2-3 years. They have sufficient cash from internal accruals and unspent IPO proceeds (~Rs. 700 crore) to fund acquisitions and organic growth. Recent acquisition and planned capex are being funded through this cash and internal accruals. Debt as of June end stands at approximately Rs. 380 crore (term loan Rs. 90 crore, working capital loan Rs. 290 crore). No immediate plans for fresh fundraising via equity or significant new debt; focus is on consolidating current acquisitions and organic growth. Management remains open to

Any current/future capex/capital investment/strategic investment?

Planned capex of Rs. 200-250 crore in FY24 and approximately Rs. 150 crore in FY25, totaling around Rs. 400 crore over two years for organic growth and capacity expansion. Acquisition-related capex minor, around Rs. 5-10 crore to grow acquired business; acquisition capacity utilization currently ~40%, enabling revenue doubling without significant capex. Land acquisition for new manufacturing campuses: 16-acre plot in Krishnagiri (Hosur) and 6-acre facility in Chennai, aiming to double production space from 8.5 lakh to 1.5 million sq. ft. over time. Focus on shifting from standalone facto

Future growth expectations in sales/revenue/volumes?

The company is confident of exceeding a Rs. 200 crore per month revenue run-rate by the end of the current year, building on historical trends (Page 18). Export revenues are expected to see a significant leg up, especially driven by new contracts in the utility metering (industrial) sector, currently constituting 25-30% of quarterly exports (Page 12). Healthcare business, despite recent declines, remains a focus, with potential for growth as it forms part of the ODM segment (Page 22). New verticals such as railways and medical devices are strategic growth areas intended to diversify revenue st

Future growth expectations in earnings/operating earnings/profits/EPS?

Syrma SGS expects to maintain growth higher than the industry average, with Q1 showing 59% YoY revenue growth and strong order book of ~Rs. 3,500 crore. The recently acquired medical devices business is expected to grow conservatively at 20%-35% over the next 2-3 years, with potential for phenomenal growth if actuals exceed forecast. EBITDA margin accretion from acquisition is estimated at 1% to 1.5% on full consolidation. Gross margins are anticipated around 23%-26%, with opportunities to improve if product mix or export share increases. Operating expenses may initially rise but are e

Current/ Expected Orderbook/ Pending Orders?

Total order book as of June 30, 2023: Approximately Rs. 3,500 crore. Expected revenue execution from order book in next 12 months: Rs. 2,200 to Rs. 2,300 crore. Order book composition: Spread across electric mobility, combustion, industrial, consumer sectors (25%-40% each). Export order book strengthened, with significant growth expected in the railways segment (though starting from a small base). New orders in the recent quarter: About Rs. 1,100 crore. New order intake generally stable unless disruptions occur.

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Syrma SGS Technology LtdQ2 FY23Industrial Manufacturing

Syrma SGS Technology Ltd Q2 FY23 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹1,385P/E: 60.9Market Cap: ₹19.5K CrSector: Industrial Manufacturing

Management growth scorecard

Revenue

Category 2

Margin

Category 2

Fundraise

Order

Yes

Capex

Yes

2 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→The company is confident of exceeding a Rs. 200 crore per month revenue run-rate by the end of the current year, building on historical trends (Page 18).
→Export revenues are expected to see a significant leg up, especially driven by new contracts in the utility metering (industrial) sector, currently constituting 25-30% of quarterly exports (Page 12).
→Healthcare business, despite recent declines, remains a focus, with potential for growth as it forms part of the ODM segment (Page 22).
→New verticals such as railways and medical devices are strategic growth areas intended to diversify revenue streams over 3-5 years, aiming to reduce reliance on automotive and consumer segments (Page 19).
→The recently acquired medical devices business has shown 80%+ CAGR, and while conservative growth estimates are 20-35%, any growth beyond this would be beneficial (Page 9).
→Overall guidance remains bullish, targeting growth greater than the industry average with maintained EBITDA margins (Page 6).

Margin guidance

Category 2

→Syrma SGS expects to maintain growth higher than the industry average, with Q1 showing 59% YoY revenue growth and strong order book of ~Rs. 3,500 crore.
→The recently acquired medical devices business is expected to grow conservatively at 20%-35% over the next 2-3 years, with potential for phenomenal growth if actuals exceed forecast.
→EBITDA margin accretion from acquisition is estimated at 1% to 1.5% on full consolidation.
→Gross margins are anticipated around 23%-26%, with opportunities to improve if product mix or export share increases.
→Operating expenses may initially rise but are expected to normalize as revenue grows, supporting sustainable EBITDA margins in double digits.
→Management reaffirms being on track with guidance and optimistic for new business pipelines and overall earnings growth in FY24-FY26.

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Fundraise plans

→The company does not currently require any equity raising over the next 2-3 years.
→They have sufficient cash from internal accruals and unspent IPO proceeds (~Rs. 700 crore) to fund acquisitions and organic growth.
→Recent acquisition and planned capex are being funded through this cash and internal accruals.
→Debt as of June end stands at approximately Rs. 380 crore (term loan Rs. 90 crore, working capital loan Rs. 290 crore).
→No immediate plans for fresh fundraising via equity or significant new debt; focus is on consolidating current acquisitions and organic growth.
→Management remains open to scouting acquisition opportunities but plans to fund them through existing resources before considering raising new capital.

Order book

Yes

→Total order book as of June 30, 2023: Approximately Rs. 3,500 crore.
→Expected revenue execution from order book in next 12 months: Rs. 2,200 to Rs. 2,300 crore.
→Order book composition: Spread across electric mobility, combustion, industrial, consumer sectors (25%-40% each).
→Export order book strengthened, with significant growth expected in the railways segment (though starting from a small base).
→New orders in the recent quarter: About Rs. 1,100 crore.
→New order intake generally stable unless disruptions occur.

Capex plans

Yes

→Planned capex of Rs. 200-250 crore in FY24 and approximately Rs. 150 crore in FY25, totaling around Rs. 400 crore over two years for organic growth and capacity expansion.
→Acquisition-related capex minor, around Rs. 5-10 crore to grow acquired business; acquisition capacity utilization currently ~40%, enabling revenue doubling without significant capex.
→Land acquisition for new manufacturing campuses: 16-acre plot in Krishnagiri (Hosur) and 6-acre facility in Chennai, aiming to double production space from 8.5 lakh to 1.5 million sq. ft. over time.
→Focus on shifting from standalone factories to campus-based manufacturing hubs to support longer-term growth beyond FY25.
→Existing capex partially funded by Rs. 700 crore of unspent IPO proceeds and internal accruals; no immediate equity raising planned.
→Acquisition payments include Rs. 28 crore milestone-based payouts tied to profitability over 2-2.5 years.

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