ICICI Securities research report on Syrma SGS Technology
With recovery in auto production and electric vehicles, we expect demand for PCBA to increase resulting in higher domestic sales for Syrma. With correction in input prices, we model its margins to improve and inventory days to reduce. We believe there is still no material impact of China covid wave on the supply chain (China being a key country for sourcing raw materials). However, we do expect exports to be hit in the near term due to steep inflation and likely recession in the developed countries.
Outlook
We forecast Syrma to gain market shares as well as wallet shares in the PCBA and RFID segments. We also model EBITDA margin expansion over FY22-FY25E on the back of operating leverage, benefits of PLI schemes and correction in input prices. We model revenue and PAT CAGRs of 33.3% and 47.9% respectively over FY22- FY25E. Maintain BUY with a DCF-based TP of Rs350 (implied 25x FY25E EPS).
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