Syrma - To Continue Outperforming Its Peers Given Strong Visibility On The Order Book: ICICI Securities

ICICI Securities Report

We met Jasbir Singh Gujral, Managing Director, Syrma SGS Technology Ltd. Takeaways:

1. The company is evaluating opportunities in the field of Outsourced Semiconductor Assembly and Test. The company will benefit from the subsidies offered by the governments as it could potentially make this business line return on capital employed attractive.

2. It is likely to add new global clients, thereby continuing growth in the export market (more than 20% compound annual growth rate over FY24-26, in our view).

3. Syrma is aiming to on-board IT original equipment manufacturer customers for end-to-end assembly capabilities.

4. It is aiming to fund capex via remaining IPO proceeds and internal accruals.

With expect Syrma to continue outperforming its peers given strong visibility on the order book. We remain constructive – maintain 'Buy' with a discountd cash flow-based target price of Rs 711 (implied price/earning of 57 times FY25E).

Key risks

• Sharp increase in input prices and competitive pressures

Major increase in input prices and/or increase in competitive pressures will likely result in downside to our estimates.

• Delays in launch of new plants/products

Any delays in launch of new products and/or plants may result in lower earnings than estimated.

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