Why Syrma SGS Is All The Rage After 30 Yrs

Despite global headwinds, the company is emerging as an electronics manufacturing force

- Shelley Singh

It isn't often that you see brokerages falling over each other to get behind a company. But, of late, they have been doing that with one name, especially after its quarterly results in July. Jefferies and Nuvama have issued 'buy' ratings for the company with a 12-month price target of 800. IIFL Capital is even more optimistic, projecting 887 over 12 months.

And, Franklin Templeton mutual fund increased its aggregate shareholding in the company to 5.07% from 4.97% of its total paid-up equity share capital earlier, as per a disclosure to market regulator Sebi in July.

The company in question is Syrma SGS Technology Ltd—its stock has risen 70% in the last one year and closed at 755 a share on 2 September.

An electronic system design and manufacturing services (ESDM) company, it has waited three decades for this moment to arrive. In 2023-24, it added more manufacturing capacity in a single year than it had in the previous 30 years. That was thanks to a Production Linked Incentive (PLI) scheme powered push for electronics manufacturing. And now, there seems to be no looking back.

Riding on favourable government policies, accelerating domestic demand for electronics, and global customers eager to diversify their supply chains away from China, Syrma SGS is getting into a period of rapid expansion that could redefine its place in India's manufacturing ecosystem.

Although exports make up a quarter of its revenue, the US makes up just around 5% of the total. The manufacturer, therefore, is insulated from any potential tariff impact, going ahead.

"The company has a healthy order book and enjoys relatively high domestic exposure compared to many B2B electronic manufacturing services peers. With limited exposure to US exports, it is less vulnerable to tariff headwinds," said Pankaj Kumar, vice president, fundamental research, Kotak Securities.