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    Synergy Green Industries Limited

    SGIL
    Capital Goods·14 May 2025
    Management Summary

    Synergy Green delivered strong Q4 and full-year FY25 results, marked by 11% YoY revenue growth and significant PBDIT margin expansion to 14.77%. The company is aggressively pursuing a 187 crore Capex plan to boost capacity, integrate machining in-house, and expand renewable energy generation, targeting 20% revenue growth and further margin improvement in FY26. While H1 FY26 may see some operational disruptions, management expects growth to accelerate in H2 as new capacities come online, supported by a robust order book.

    Highlights

    5

    • Q4 FY25 Total Income increased 18% YoY to 97.91 crores.

    • Full Year FY25 PBDIT grew 31% YoY to 53.70 crores.

    • Full Year FY25 PAT increased 46% YoY to 16.89 crores.

    • Net worth strengthened by nearly 2.5 times, supported by internal accruals and a successful rights issue.

    • Renewable project (2MW to 10MW) expected to be operational in Q1 FY26.

    Concerns

    3

    • Operational disruptions are anticipated in Q1 and Q2 FY26 due to ongoing construction and commissioning activities.

    • Capacity constraints led to pushing back 40-50 crores worth of orders in FY25.

    • Trade receivables saw a slight increase due to last-minute LCs and growing business from MNC clients on open credit terms.

    What Changed2

    vs Q1 FY26

    Guidance items7 → 13 (+6)Risks discussed4 → 5 (+1)

    Key financials

    Single quarter

    05 metrics
    1. 01Total Income₹363.68 Cr+11%YoY
    2. 02PBDIT₹53.7 Cr+31%YoY
    3. 03PBDIT Margin14.8%+2.2%YoY
    4. 04PBT₹24.99 Cr+60%YoY
    5. 05PAT₹16.89 Cr+46%YoY

    Order Book

    medium confidence

    Total Value

    ₹ 600 crores

    as of 2025-03-31

    range

    Composition

    Mix3 products
    • Wind Castings70.0%
    • Gearbox Castings15.0%
    • Non-Wind Castings (Mining, Plastic Injection, Pumps)15.0%

    Share of order book by product

    Cancellations / Deferrals

    • deferred:Orders worth 40-50 crores pushed back due to capacity constraint.

    "The order book for new capacity is already exceeding 600 crores, and the overall order book is much higher than the growth guidance, but execution is constrained by current capacity."

    Source:
    Q&A

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    ₹187 crores

    Long term borrowings and internal accruals

    Debt

    Gross ₹165 crores

    Liquidity

    Cash ₹52 crores

    52 crores worth of deposits are held, which offset short-term borrowings taken as FDOD loans.

    Guidance & targets

    13
    CategoryTargetPriority
    Revenue
    Revenue Growth
    20%
    		High
    Revenue
    Revenue Growth from Capacity Increase
    60-70%
    		Medium
    Profitability
    PBDIT Margin Expansion
    100 bps
    		High
    Profitability
    EBITDA Expansion from Machining
    3%
    		High
    Profitability
    EBITDA Expansion from Solar
    2%
    		High
    Capacity
    Green Production Share
    50%
    		High
    Efficiency
    Sand Recycling Rate
    98%
    		High
    Capex
    Foundry Capacity Expansion Operationalization
    Operational
    		High
    Capex
    Renewable Project Operationalization (2MW to 10MW)
    Operational
    		High
    Capex
    In-house Machining Phase 1 Operationalization
    Operational
    		High
    Capex
    In-house Machining Phase 2 Operationalization
    Operational
    		High
    Capex
    Capex Payback Period
    Less than 3-4 years
    		High
    Working Capital
    Working Capital Days
    Around 45 days
    		High

    Foundry Capacity Expansion Operationalization

    Q2 FY26
    CurrentUnderway
    TargetOperational

    Why it matters

    This is a key part of the 187 crore Capex plan and crucial for addressing capacity constraints and driving revenue growth.

    The foundry capacity expansion is well underway, and we're expecting to receive these. Operational, received the operational capacity in Q2 of Fy 26.

    How to verify

    capital_allocation.capex.purposes[description='Foundry Capacity Expansion']

    Risks & concerns

    5
    RiskSeverity

    Concentration to Wind Industry

    The company's product portfolio is heavily concentrated in wind castings, though facilities can produce for other industries with some lag. — Management acknowledged

    medium

    Volatile Commodity Prices

    Volatile commodity prices could impact profitability, but key commodities are hedged with customers on a quarterly basis. — Management acknowledged

    low

    Operational Disruptions from Capex Activities

    Some operational disruption is expected in Q1 and Q2 FY26 due to construction and commissioning activities, which may have a marginal impact on output. — Management acknowledged

    medium

    Capacity Constraints

    Limited capacity compared to peers has led to pushing back orders, but this is being mitigated by ongoing capacity expansion. — Management acknowledged

    high

    Increased Trade Receivables

    Trade receivables saw a slight increase due to last-minute LCs and growing business from MNC clients operating on open credit terms, though these are considered low risk. — Management acknowledged

    low

    Q&A highlights

    7

    “See if you look at the last year guidance what we gave around 200 basis point or 150 to 200 basis point growth in the EBITA margins and also, we given a guidance of 370 crores top line. If you look at the actual outcome EBITA remains same, more or less, within a just a half, a percent deviation. And the top line has against 370. We did 364 or maybe around 2% short of the guidance what we give. Once the new capacity comes in place, I don't see any reason there should be any challenge. In fact, if you look at the current year, the order book is much, much higher than what we are given a growth guidance. But we're constrained by the capacity constraint. So, we need to push back some of the schedules to this 3rd and 4th quarter, because once the capacity comes in hand, we'll be able to take the more orders.”

    Analyst challenged past guidance misses and current capacity issues, prompting management to explain funding delays and confirm capacity as the primary bottleneck for growth.

    asked by Aditya Mutha

    2 min read5 chapters

    Detailed Narrative

    01

    Robust FY25 Performance and Capacity Utilization

    Synergy Green reported a strong financial performance for Q4 and full-year FY25. The company achieved a near-peak capacity utilization of 88% in FY25, reflecting robust demand. Full-year total income grew 11% YoY to 363.68 crores, while PBDIT increased 31% to 53.70 crores. The PBDIT margin expanded by 224 basis points, reaching 14.77% for FY25, demonstrating strong operational efficiency.

    02

    Strategic Capex for Capacity Expansion and Backward Integration

    The company has embarked on a significant 187 crore Capex plan, strategically divided into foundry capacity expansion, renewable energy projects, and in-house machining. The foundry expansion, aiming to increase capacity to 45,000 MT per annum, is expected to be operational by Q2 FY26. A 97 crore investment in in-house machining, planned in two phases for Q3 and Q4 FY26, is a key backward integration initiative designed to improve contributions and expand EBITDA by 3%.

    03

    FY26 Growth Outlook and Margin Targets

    Synergy Green has provided an optimistic outlook for FY26, projecting a 20% revenue growth, supported by a robust order book and the new capacities coming online. Management also anticipates a further 100 basis points expansion in PBDIT margins for FY26. This growth is expected to be predominantly in the second half of the fiscal year, as the benefits of the Capex projects begin to materialize.

    04

    Managing Operational Disruptions and Working Capital

    The company acknowledges that construction and commissioning activities will lead to some operational disruptions in Q1 and Q2 FY26, potentially causing a marginal impact on output. However, these temporary adjustments have been factored into planning. On the working capital front, management aims to maintain working capital days around 45, noting that increased short-term borrowings are largely offset by 52 crores worth of deposits from the rights issue.

    05

    Product Mix and Market Strategy

    Synergy Green's product portfolio is heavily concentrated in wind castings, accounting for 70-70% of its business, with gearbox castings making up 15%. The company emphasized the strategic importance of both wind and solar energy for India's Net 0 targets, highlighting wind's lower land requirement per megawatt. The order book for new capacity is already exceeding 600 crores, indicating strong market demand for its products.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.