Engineering Focus Across Industrial, Automotive And Healthcare Will Unlock Opportunity

Key Takeaways

• Strategic pivot to high-margin sectors, new customer wins, and capacity expansion position Syrma SGS for robust earnings and margin improvement.
  
• Policy tailwinds, export demand, and diversification into ODM and smart technologies provide sustained growth drivers across domestic and global markets.
  
• Shifting to high-margin segments and new manufacturing projects brings margin and growth opportunities but exposes Syrma SGS to cash flow, execution, and global demand risks.

Catalysts

Provides turnkey electronic manufacturing services in India, the United States, Germany, and internationally.

• Syrma SGS has executed a deliberate shift towards higher-value, engineering-intensive verticals (Industrial, Automotive, Healthcare), reducing exposure to low-margin Consumer business. This structural change is expected to sustain and expand EBITDA margins while supporting long-term earnings growth.
  
• Strong tailwinds for Indian manufacturing due to global supply chain realignment and “China+1” strategies are driving increasing interest from global OEMs. Syrma SGS’s recent addition of 20–25 new customers (heavily in Automotive and Industrial) positions the company to benefit from rising export demand, aiding revenue and margin visibility.
  
• Accelerated government initiatives (PLI, Make-in-India, new component manufacturing schemes) are incentivizing domestic electronics value addition. Syrma SGS’s strategic plans to participate in the upcoming component PLI and expand value-added ODM/PCBA capacity can unlock new high-margin revenue streams and further support top-line growth.
  
• Significant recent capacity additions (Pune greenfield, Germany facility consolidation, planned Bangalore expansion) enable onboarding of larger orders and new customers. These investments underpin the company’s stated 30–35% revenue growth guidance over the next fiscal year, directly impacting revenue scale and operational leverage.
  
• Industry demand for IoT, smart devices, and energy-saving solutions—especially in areas such as EVs, metering, and power electronics—remains robust across both domestic and export markets. Syrma SGS’s diversified pipeline (across Automotive, Industrial, Healthcare, Railways) and leading positioning in smart metering electronics offer a long runway for sustained growth in core revenue verticals.

Syrma SGS Technology Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Syrma SGS Technology's revenue will grow by 32.0% annually over the next 3 years.
• Analysts are assuming Syrma SGS Technology's profit margins will remain the same at 5.6% over the next 3 years.
• Analysts expect earnings to reach ₹4.6 billion (and earnings per share of ₹25.94) by about August 2028, up from ₹2.0 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting ₹5.9 billion in earnings, and the most bearish expecting ₹3.8 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 48.0x on those 2028 earnings, down from 66.6x today. This future PE is greater than the current PE for the IN Electronic industry at 38.4x.
• Analysts expect the number of shares outstanding to grow by 0.7% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 15.04%, as per the Simply Wall St company report.

Syrma SGS Technology Future Earnings Per Share Growth

Risks

• The company’s export revenue remains highly sensitive to global tariff uncertainties and muted demand environments in the EU and US, increasing the risk of export growth volatility, which could negatively impact future revenue and earnings.
  
• The strategic reduction in low-margin, high-volume consumer business in favor of high-margin verticals may temper overall top-line growth, especially if ramp-up and order conversion in the Industrial, Automotive, and Health Care segments do not fully offset the loss, thereby putting revenue growth at risk.
  
• The pursuit of higher-margin businesses (Industrial, Automotive, Healthcare, ODM) is accompanied by structurally longer working capital cycles and increasing debtor days, which could pressure free cash flow and net margins if not efficiently managed.
  
• Planned aggressive CapEx and potential entry into new component manufacturing (e.g., bare PCBs) under the government PLI scheme carry execution risks, including technology partnerships and substantial upfront investments, which may weigh on earnings and capital returns if these projects are delayed or do not achieve expected scale/profitability.
  
• The decline in PLI scheme incentives (halved YoY) and increased competition or supply chain/geopolitical issues affecting critical component sourcing could further compress margins and threaten both revenue and net profit growth over the long term.

Valuation

• The analysts have a consensus price target of ₹741.727 for Syrma SGS Technology based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₹887.0, and the most bearish reporting a price target of just ₹555.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹82.1 billion, earnings will come to ₹4.6 billion, and it would be trading on a PE ratio of 48.0x, assuming you use a discount rate of 15.0%.
• Given the current share price of ₹692.65, the analyst price target of ₹741.73 is 6.6% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.