Syrma SGS Technology Q3 Review - Strong Revenue Growth Visibility; Margins To Improve Gradually: Systematix

Systematix Report

Syrma SGS Technology Ltd.'s continued to report weak results (Q3 revenue up 38% YoY and down 1% QoQ, missed our estimate by ~10%; Ebitda margin 5.5%, down 351 basis points YoY and 139 bps QoQ).

A Rs 1.1 billion worth order execution shift to Q4 (reflected in Rs 3.6 billion revenue in January 2024) impacted Q3 revenue; upfront investment on future growth levers (such as building capacities and processes, hiring of senior people etc.) drove other expenses (up 51% YoY) and impacted margin.

The current Rs 48 billion order book (over 1.6 times FY24E revenue; 20% export mix) and the addition of many large global customers last year provide strong growth potential for Syrma SGS Technology.

Tracking current run rate (9 million revenue Rs 20 billion, January 2024 Rs 3.6 billion), management is confident to meet its Rs 30 billion revenue guidance; Ebitda margin will be restricted to ~7.5% on greater mix of consumer products.

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