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Syrma SGS Tech, a giant in the electronic manufacturing service (EMS) sector in the Indian stock market, has created a stir in the market with its excellent and strong financial results during the June quarter (Q1 FY27). The company’s tremendous double growth in net profit and strong sales figures have won the hearts of investors. Due to this, the company’s shares jumped by about 9% during trading on Thursday and reached an intraday high of ₹ 1,468. Let us know all the important details related to this great performance and future outlook.
Company’s performance in June quarter was excellent
Sirma SGS Tech has registered a massive 68% year-on-year growth in its revenue from operations in the June quarter of the current financial year to ₹1,589 crore. This performance has been much better than all market estimates. The company’s net profit doubled and directly crossed the ₹100 crore mark, whereas it was only ₹50 crore in the same quarter of the last financial year. Additionally, the company’s EBITDA jumped 85% to ₹161 crore and EBITDA margin also improved to 10.1% from 9.2% last year, clearly reflecting the company’s strong operational performance.
Which sectors and exports gave impetus to business?
The reason behind this excellent performance of the company is the very strong demand from automobile, consumer electronics and export segments. According to the data, export revenue alone has registered a massive growth of 67% year-on-year, which now accounts for 24 percent of the company’s total revenue. Apart from this, there has been a tremendous increase of 78% in revenue from auto sector, 68% in consumer business, 100% in healthcare, 31% in industrial segment and a record 199% increase in IT and railway segments.
Strong confidence of management and approval to raise ₹1,000 crore fund
Company’s Managing Director J.S. Addressing investors and the market, Gurjal said that Sirma SGS has started FY 2027 in a very strong manner. He expressed full confidence that the company will easily surpass its set target of more than 30% revenue growth. Also, the target of export revenue of ₹1,500 crore and 10.5% EBITDA margin for FY27 has also been reiterated. However, the management also said that the delivery time has been slightly affected due to slight delay in the supply of imported electronic components. To fuel future major expansion plans and drive growth, the company’s board has approved raising funds up to ₹1,000 crore through qualified institutional placement (QIP) or other permitted avenues. Along with this, the company is also working rapidly on its Printed Circuit Board (PCB) project, which will further strengthen its manufacturing capacity in the future. However, due to expansion during this period, the total debt of the company has increased to ₹686 crore, which was ₹353 crore in the previous quarter.
Brokerage houses also got impressed, gave big target price
Seeing these excellent quarterly results of the company and strong future outlook, even the leading global brokerage houses seem quite excited. Foreign brokerage firm HSBC has set a high target price of ₹ 1,750 for investors while maintaining its ‘Buy’ rating on the stock of Sirma SGS Tech. Apart from this, Jefferies has also given ‘Buy’ advice on the stock and said that on the basis of strong demand from auto, consumer and export segments, the company’s performance is expected to be better than expected in future also.