Syrma SGS Technology Limited

Syrma SGS Technology reported a consolidated total revenue of ₹1,146 crores for Q2 FY26, marking a 37% year-on-year growth. For the first half of FY26, total revenue stood at ₹2,109 crores. Operating EBITDA for Q2 FY26 was ₹116 crores, a 56% YoY increase, with a margin of 10.1%. H1 FY26 operating EBITDA reached ₹211 crores, growing 64% YoY, also at a 10.1% margin. PAT for Q2 FY26 was ₹66.3 crores (5.7% margin) and for H1 FY26 was ₹116 crores (5.5% margin).

The company made significant inorganic moves, acquiring a 60% stake in Elcome, a 50-year-old defense electronics company with a top line of ₹200 crores and 24-25% EBITDA margins, expected to consolidate in Q4. A joint venture with Italy's Elemaster aims to cater to the Indian market initially and integrate into the global supply chain. Additionally, through Premier, Syrma acquired 49% of KSolare, a solar inverter company with ₹300 crores in revenue, with Syrma manufacturing modules at its Pune facility.

As of September end, the total order book stood at approximately ₹5,800 crores. This includes a 35% contribution from the auto segment and another 35% from consumer and industrial segments, with healthcare contributing 6-7%. The company onboarded 8 new major customers with a potential to generate $100 million in revenue in the next year. A long-term framework contract with one major customer has the potential to yield $250 million over a 2-3 year period.

The PCB project received ECMS approval from the Government of India and land has been allotted in Andhra Pradesh. Groundbreaking for construction is expected in December, with trial production targeted for December 2026 or Q4 FY27. The total investment for the PCB project is estimated at ₹1,500 crores, with a maximum revenue potential of ₹2,500 crores. The first phase capex is ₹800 crores, with state capital incentives expected in FY27-28, and central incentives at 5-6% of revenue over 6 years.

Working capital days increased to 73 days as of September end, 4 days higher year-on-year. Management aims to reduce this to below 65 days within the next 2-3 quarters. Operating cash flow for H1 FY26 was negative ₹115 crores, primarily due to incremental investment in working capital, including ₹100 crores in higher inventory. The company expects to achieve a positive operating cash flow of 25-30% for the full year.

The industrial sector's contribution increased to 26% in H1 FY26 from 21% in H1 last year, and the auto sector's contribution rose to 24% from 21%. The consumer sector contributed 32% in H1, with a goal to bring it below 35%. A slight sequential decline in gross margin in Q2 was attributed to a business mix shift, with the IT business taking a larger portion (around 5%) of total business.