Syrma SGS shares surge up to 11%, set for best January since listing after strong Q3

Shares of Syrma SGS Technology Ltd. gained as much as 11% on Friday, January 30, after it reported a strong set of third quarter earnings, surpassing Street estimates. The stock then cooled of slightly from the opening highs.

The company's revenue increased 45% from the previous year to ₹1,264 crore and was up 10% from the previous quarter. Export revenue growth, which makes 26% of the mix, was at 24% from the previous year.

The company's earnings before interest, tax, depreciation and amortisation (EBITDA) margin expanded by 350 basis points annually and by 250 basis points sequentially to 12.6%.

The exceptional item of ₹3.3 crore was related to labour code.



Syrma SGS witnessed strong growth across segments. The segments did not see any changes in the mix.

The auto segment gained 44%, consumer segment was up 43%, industrial increased 45% and healthcare and IT and railways were up 48% and 65%, respectively.

Syrma SGS said electronics manufacturing services (EMS) continued to witness strong traction across industry verticals on both domestic and global export markets. The company remained strong and is aspiring to grow in line with industry growth rates, it added.

Brokerage firm Morgan Stanley has an 'equal-weight' rating on Syrma SGS with a target price of ₹712 apiece.

The analyst said the company's third quarter earnings were strong and margin-led, beating estimates. Its revenue and EBITDA were meaningfully ahead of estimates as well.

Its export growth was strong with a rising mix benefit. Profit after tax beat expectations, aided by margins and lower tax rate.

The working capital intensity increased and acquisitions and PLI approvals are the key monitorable, the brokerage said.

Shares of Syrma SGS gained nearly 10.8% to hit an intraday high of ₹802 apiece. The stock was up 6.1% at ₹767.85 apiece around 10.10 am on Friday. It has gained 42% in the past year. The stock is up 9% in the month of January, which will be the first instance that the stock will deliver positive returns in the first month of the year since its listing in September 2022.

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