Syrma IPO Review – Should you Invest or Avoid?

Syrma IPO (Syrma SGS Technology Ltd IPO) Details

Chennai based Syrma SGS Technology is coming up with IPO, which would open for subscription on 12th August, 2022. Syrma SGS Technology is an engineering and design company engaged in electronics manufacturing. Company had strong revenue growth in the last 3 years. Should you invest in Syrma IPO? What are the risk factors in this IPO? In this article we would provide Syrma IPO Review with detailed analysis.

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About Syrma SGS Technology Ltd

Company is a technology-focussed engineering and design company engaged in turnkey electronics manufacturing services, specialising in precision manufacturing for diverse end-use industries, including industrial appliances, automotive, healthcare, consumer products and IT industries.

According to the F&S Report, among the large bouquet of EMS players in India, they are one of the fastest growing Indian-headquartered ESDM companies.

Company has a track record of technical innovation which involves working with the engineering teams of its marquee customers, and over the years, they have evolved to provide integrated services and solutions to OEMs, from the initial product concept stage to volume production through concept co-creation and product realization.

Company current product portfolio is:

1) Printed circuit board assemblies (PCBA): Its PCBAs are used in products manufactured in the automotive, medical, industrial, IT and consumer products industries, and shall include box-build products;

2) Radio frequency identification (RFID) products: Its RFID products are used in products manufactured in the shipping, healthcare, manufacturing, retail and fintech industries;

3) Electromagnetic and electromechanical parts, which include magnetic products like chokes, inductors, magnetic filters, transformer as well as high volume manufacturing assemblies: Its electromagnetic and electromechanical parts are used in products manufactured in the automotive, industrial appliances, consumer appliances and healthcare industries, among others

4) Other products, which include motherboards, DRAM modules, solid state drives, USB drives and other memory products.

Syrma IPO (Syrma SGS Technology Ltd IPO) Analysis and Review

Syrma SGS IPO Date, Size and Price Band

IPO Opening Date 12-Aug-22
IPO Closing Date 18-Aug-22
Issue Type Book Built Issue IPO
Face Value Rs 10 per equity share
IPO Price band Rs 209 to Rs 220 per equity share
Lot Size 68 Shares
Min Order Quantity 68 Shares
Listing at BSE and NSE
Total Issue Size Rs. 840 Crores
    Fresh issue     Rs. 766 Crores
    OFS     Rs. 74 Crores

Syrma IPO RHP

What are the competitive strengths of Syrma SGS Technology Ltd?

1) Company is one of the leading design and electronic manufacturing services companies in terms of revenue, driven by its focus on quality and customer relationships

2) Consistent track record of financial performance

3) Diversified and continuously evolving and expanding product portfolio and service offerings catering to customers across various industries, backed by strong R&D capabilities

4) Established relationships with marquee customers across various countries

5) State-of-the-art manufacturing capabilities supported by a global supplier network, with a focus on vertical integration

6) Experienced promoters supported by a senior management team with a proven track record of performance

What are the Objects of the IPO Offer?

Syrma IPO Size is Rs 840 Crores which contains both Offer for Sale (OFS) and Fresh issue.

1) Offer for Sale – Rs 74 Crores: Under OFS, selling shareholders would sell the shares and the company would not get any proceeds from this.

2) Fresh issue for Rs 766 Crores: Proceeds would be used for the following:

  • Funding capital expenditure requirements for the development of an R&D facility and expansion / setting up of manufacturing facilities.
  • Funding long-term working capital requirements.
  • General corporate purposes.

Who are the promoters of Syrma SGS Technology Ltd?

Sandeep Tandon, Jasbir Singh Gujral, Veena Kumari Tandon and Tancom Electronics Private Limited are the promoters of the company.

How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 3 years.

Financial Year ending / Period ending (Amt in Mns)
Particulars FY20 FY21 FY22
Total Assets 346.7 460.0 914.7
Revenues 404.9 444.5 654.5
Profit After Tax 43.9 28.6 30.6
Profit % 10.84% 6.44% 4.68%

Positive Factors in Syrma IPO

Here are the key reasons to invest in this IPO.

1) It is one of the leading design and electronic manufacturing services companies in India.

2) Company has diversified, expanding product portfolio and service offerings.

3) Company has generated strong revenue growth in the last 3 years. Its revenues grew from Rs 40.4 Crores in FY19 to Rs 65.4 Crores in FY22.

Risk Factors of investing in Syrma IPO

1) Company margins are on declining mode. Its margins were at Rs 4.39 Crores for FY19 (which is 10.8% of revenue) Vs Rs 3.06 Crores in FY22 (which is 4.6% of revenue).

2) Objects of the offer contain Offer for Sale (OFS) also and the proceeds would to selling shareholders and company would not benefit from this.

3) Currently, company long term credit rating is CARE A and short term rating is CARE A1. A downgrade in any of these credit rating could adversely affect its ability to raise capital in the future.

4) Company do not have long term contracts with any of the customers.

5) Investors should read complete risk factors indicated in the RHP before investing in this IPO.

Syrma IPO Valuation

Syrma SGS Technologies IPO price band is Rs 209 to 220 per share.

1) If we consider last 3 years weighted average EPS of Rs 3.47 and the upper price band of Rs 220, P/E works out to 63x.

2) Similarly, if we consider FY2022 EPS of Rs 2.67 and the upper price band of Rs 220, P/E works out to be 82x.

3) Means company is asking the upper band of IPO price of Rs 220 in the P/E ratio of 63x to 82x.

As per the RHP, there are listed peers like Dixon Technologies trading at P/E 110x (Highest) and Amber Enterprises trading at P/E 75x (Lowest) and the industry average P/E is 93x. Hence the Syrma Share Price at P/E range of 63x to 82x is fully priced.

Syrma IPO Dates – Subscription, Allotment and Listing Dates

Offer Open 12-Aug-22
Offer close 18-Aug-22
Finalization of Allotment 23-Aug-22
Initiation of Refunds 24-Aug-22
Credit to Demat Account 25-Aug-22
IPO Shares Listing Date 26-Aug-22

How to buy Syrma IPO online through Zerodha?

You can login to your demat account, visit the IPO section and apply for this IPO during the subscription dates.

You can also apply this IPO on Zerodha. If you do not have Zerodha account, sign-up here and proceed to the next step.

Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.

Follow below steps to apply this IPO in Zerodha platform:

1) Visit the Zerodha portal and login to Console.

2) Go to Portfolio and click the IPOs link.

3) Visit ‘Syrma SGS Technology Ltd IPO’ row and click the ‘Bid’ button.

4) Enter your UPI ID, Qty and the Price which you want to bid.

5) Click on ‘Submit’ IPO application form.

6) Visit the UPI App (net banking or BHIM) to approve the mandate.

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Syrma IPO Review – Should you Invest or not?

Syrma SGS Technology Ltd is one of the leading design and electronic manufacturing services companies in India. It has diversified product portfolio and service offerings.

Company generated strong revenue growth in the last 3 years.

However, the margins are on declining mode.

Its share price is fully priced.

Considering all these positive factors and negative factors indicated above, investors can subscribe to this IPO for medium to long term perspective. Investors may or may not get listing gains.

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Suresh KP

3 comments

  • Manu Bali

    Sir are you interested in investing in this IPO?

  • Pramod Jadhav

    As mentioned by different platforms and news websites GMP (Grey Market Premium) for Syrma SGS technologies limited IPO on the day of its launch is ranging between Rs. 15/- to 20/-. The premium is ranging between Rs. 10/- to 25/- since the announcement of dates of this IPO.

    Therefore, there could be the possibility that those investors looking for listing gain could get the expected return of around 10%.

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