Syrma SGS Technology Ltd IPO

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A) History of Syrma

Syrma is part of the Tandon group, which established its first manufacturing unit in 1976 to produce floppy drives for IBM. The unit was South Asia’s first hard disc drive (HDD) manufacturing unit at the time. Syrma’s Chairman, Mr Sandeep Tandon, has over two decades of experience in the electronics industry. By the year 2000, the group had diversified into high-volume electronics manufacturing services for the world’s leading IT corporations.

Among the group’s products are printed circuit boards (PCBs), magnetic disc drives, magnetic coils, RFID tags, and so on. SGS’s promoters have more than three decades of experience in the electronics manufacturing industry, with operations spread across 11 manufacturing facilities. The company is led by four founders who also serve as directors. The company’s promoters are professionally qualified and hold degrees in electronics engineering/management from prestigious institutions. Mr J S Gurjal, who founded SGS, is now the Managing Director of Syrma.

Acquisitions of SGS and Perfect ID

Syrma has acquired a 20% stake in SGS in November 2020. In FY21, Rs.92.04 crore was invested in Syrma by private equity funds and other shareholders, partly as equity and partly as preference capital, for the purpose of inorganic growth through the acquisition of SGS. Previously, SGS was to be merged with Syrma; however, the merger was called off, and Syrma now owns 100% of SGS. The former SGS promoters now own 9.23 percent of Syrma, for a total of 37 percent.

SGS, founded in 1986, is an Indian EMS firm that primarily assembles PCBs for its customers. Syrma and SGS have no overlap in terms of customer and geographical profile, thereby diversifying the segment and client profile on a consolidated basis. In October 2021,

Syrma also acquired a 75% stake in Perfect ID India Private Limited. PerfectID now manufactures RFID label tags and passive inlay tags in addition to its existing capabilities for manufacturing RFID hard tags, expanding its RFID product portfolio.

Products of the Company:

1. RFID Tags – They offer a complete catalog of high-performance LF/HF/UHF epoxy or silicone tags designed for extended use under even the harshest conditions.

2. RFID Readers – They also provide RFID solutions include custom tags, readers, and software for various applications, such as asset tracking, product authentication, and performance measurement.

3. Critical Communication Solutions:

The Critical Communication division of the company was established in 2001 as 3G Wireless Communications Pvt Ltd, a market leader in the Indian Two-way radio market and a well-known name in the radio industry. Later, it was merged into Syrma Technology Pvt. Ltd, which continued to support public safety, oil and gas, and paramilitary forces in the Digital Radio Communication domain. 

4. Printed circuit board assemblies

They make PCBAs which are used in products manufactured in the automotive, medical, industrial, IT and consumer products industries, and shall include box-build products.

5. They also make Custom Magnetic Chokes, Magnetic Inductors and Magnetic Transformers. These electromagnetic and electromechanical parts are used in products manufactured in the automotive, industrial appliances, consumer appliances and healthcare industries, among others. 

Considering the advancement of electric vehicles, the company has also commenced manufacturing of controllers of the EV battery management systems in 2020. 

B) Manufacturing Units of Syrma IPO

They currently operate through 11 strategically located manufacturing facilities in India’s north (Himachal Pradesh, Haryana, and Uttar Pradesh) and south (Andhra Pradesh) (i.e. Tamil Nadu and Karnataka).

The manufacturing facilities in Tamil Nadu are in a special economic zone, and the manufacturing facility in Haryana is part of the Electronic Hardware Technology Park scheme, which allows companies to receive certain tax and other benefits for the products manufactured at these facilities.

C) R&D Facility of Syrma IPO

They have three dedicated R&D facilities, two of which are in India, in Chennai, Tamil Nadu, and Gurgaon, Haryana, and one in Stuttgart, Germany. The R&D facilities are outfitted with cutting-edge research and development infrastructure. They are also supported by a team of 106 full-time employees dedicated to engineering and R&D as of March 31, 2022.

D) Revenue Contribution from Different Industries (in Fy22)

Automotive = 20%
Consumer = 21%
Healthcare = 13%

Industrial = 35%

IT = 10%

Railways  & Others = 1%

E) Marque Customers of Syrma IPO

TVS Motor Company Limited, A. O. Smith India Water Products Pvt. Ltd., Robert Bosch Engineering and Business Solution Pvt Ltd, Eureka Forbes Limited, CyanConnode Limited, Atomberg Technologies Private Limited, Hindustan Unilever Limited, and Total Power Europe B.V. 

F) How they get Raw Material Supply?

They have a strong supplier network to back them up. In Fiscal 2022, they have purchased raw materials and components from 1,669 suppliers. Aside from India, suppliers are located in 21 countries, including the United States, Singapore, and China.

In 2022, they have imported 74% of the raw material. This means that the company is heavily reliant on imported raw materials. Furthermore, the recent depreciation of the rupee, as well as the increase in the cost of imported items due to higher freight charges, will have an impact on the company’s gross margin.

In the last 3 years, the Gross Margins have reduced from 44% to 28%. 

Objects of the Syrma SGS Technology Ltd IPO:

(i) OFS (74 Cr) Offer for sale of 3,369,360 Equity Shares, aggregating up to 74 Crores shall be received by Veena Kumari Tandon. (ii) Fresh Issue (766 Cr) The funds of 766 will be used for a) funding capital expenditure requirements for development of a R&D facility and expansion / setting up of manufacturing facilities b)Funding our working capital requirements

Syrma SGS Technology Ltd IPO Details:

Open Date: Aug 12 2022
Close Date: Aug 18 2022
Total Shares: 3,369,360
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue
Issue Size: 766 Cr.
Lot Size: 68 Shares
Issue Price: ₹ 209-220 Per Equity Share
Listing At: NSE,BSE
Listing Date: Aug 26 2022

Promoters And Management:

(i) Sandeep Tandon is the Executive Chairman of the Company. He holds a bachelor of science in electrical engineering from the Andrew and Erna Viterbi School of Engineering, University of Southern California. He has completed the YPO Presidents’ Program from the Harvard Business School. He has approximately 18 years of experience in the electronics manufacturing sector. He has previously been associated with Celetronix Inc., USA. (ii) Jasbir Singh Gujral is the Managing Director of the Company. He holds a bachelor of commerce (honours) from the University of Delhi. He is a fellow member of the Institute of Chartered Accountants of India. He was a director of SGS Tekniks Manufacturing Private Limited.

Financials of Syrma SGS Technology Ltd IPO:

Particulars (in Cr) 2022 2021 2020
Revenue 646 438 397
Cost of Material Consumed 465 276 221
Gross margins 28.02% 36.99% 44.33%
Employee Benefits Expenses 43 28 26
% of Revenue 6.66% 6.39% 6.55%
Other Expenses 107 80 75
% of Revenue 16.56% 18.26% 18.89%
EBITDA 10% 12% 18.90%
PAT 30 28 43
No. of Shares (Post IPO) 17.48 17.48 17.48
EPS 1.72 1.60 2.46
NPM 4.64% 6.39% 10.83%
Net-worth 543 238 101
RONW 5.52% 11.76% 42.57%

Comparison With Peers:

They have shown Dixon Technologies and Amber Enterprises as its peer. But they are not strictly comparable.

Recommendation on Syrma SGS Technology Ltd IPO:

Review and Recommendation of Syrma SGS Limited IPO by InvestorZone is 4/10 1. It is one of the leading design and electronic manufacturing services companies in terms of revenue in Fiscal 2021, driven by the focus on quality and customer relationships. 2. Syrma has, over the years, diversified and expanded their product portfolio. The diversification and expansion of their product portfolio is primarily driven by the continuously evolving needs of their customers and technological advancements in the industry. 3. Syrma has established and will continue to focus on strengthening long-standing relationships with well-known customers across the end-use industries that they cater to. 4. Revenue has shown good growth in the last 3 years. However, due to pressure on raw materials cost, the Gross Margins, EBITDA Margins and PAT margins are continuously declining. 5. EPS of Fy22 is just 1.22 and P/E is 180. Looks high. 6.M.cap = ~3800 Crores (Looks high).

Registrar of Syrma SGS Technology Ltd IPO:

  1. Link Intime India Private Limited

Company Address:

Syrma SGS Technology Ltd Plot B27, Phase II, Zone B, MEPZ-SEZ, Sanatorium, Tambaram, Chennai 600 045 Phone: 022 40363000 Email: Website

Discussion on Syrma SGS Technology Ltd IPO:


    In the month of May-22, Malabar Select Fund, Malabar Midcap Fund, IIFL Special Opportunities Fund -Series 9 and IIFL Special Opportunities Fund -Series 10 purchased shares of Syrma SGS at Rs.290 per share. However, the IPO is priced lower than what funds purchased three months ago.

    Why this Kolaveri?

    Perhaps the market is not yet ready to value the company at more than Rs.220 per share. Imagine if this IPO had come 8-10 months ago during a market bull run; it would have cost more than Rs.500. That is why beer markets are truly investor’s best friend.

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