Syrma SGS shares surge 11% as Q3 results beat estimates

Shares of Syrma SGS Technology saw a strong rally on Friday, jumping by as much as 10.8% to an intraday high of ₹802. The stock rose 9% in January, marking the first time since its September 2022 listing that it posted positive returns in the year's opening month. Over the past year, Syrma SGS has gained 42%. Morgan Stanley maintained an 'equal-weight' stance with a target price of ₹712, following the company's latest quarterly results.

Syrma SGS's third quarter figures surpassed expectations, with revenue increasing 45% year-on-year to ₹1,264 crore and a sequential rise of 10%. Export revenue, comprising 26% of the total mix, grew 24% over the year. The company's EBITDA margin expanded by 350 basis points annually and 250 basis points sequentially to 12.6%. The auto segment saw a 44% increase, while the consumer and industrial segments rose by 43% and 45%, respectively. Healthcare and IT, as well as railways, recorded gains of 48% and 65%. An exceptional item of ₹3.3 crore was linked to labour code adjustments.

Morgan Stanley noted: "The analyst said the company's third quarter earnings were strong and margin-led, beating estimates."

The brokerage highlighted strong export growth and a favourable mix benefit, saying profit after tax was above expectations thanks to margins and a lower tax rate.

The brokerage said working capital intensity rose, and future acquisitions and PLI scheme approvals would be critical areas to monitor. Syrma SGS's performance reflected ongoing strength in electronics manufacturing services, and the market's focus remains on sectoral competitors such as Dixon Technologies, particularly as analysts cite re-rating triggers and attractive valuations for the broader EMS sector.