Syrma's revenue to grow at CAGR of 31% over FY25-28, says JPMorgan; shares up 11% in 2 sessions

Shares of Syrma SGS Technologies have risen as much as 10.89% in two sessions (July 9 and July 10) after global investment bank JPMorgan came out with a positive view on the company.

The stock on Thursday, July 10, hit an intraday high of ₹682.70 on the BSE, in an otherwise subdued session.

JPMorgan expects Syrma SGS to be the third fastest-growing company in the group of companies it tracks from the electronic manufacturing services (EMS) space.

The global investment bank expects Syrma's revenue to grow at a compounded annual growth rate (CAGR) of 31% over FY25-28 and earnings before interest, taxes, depreciation, and amortisation (EBITDA), also known as operating profit, to grow at 9% by FY28.

"We expect growth to be driven by the industrial and automotive segments, with demand stemming from energy meters, power electronics, EVs and ICT," JPMorgan said in a report. Syrma’s FY25 growth slowed down to 20% vs 55% in FY24 due to a defocus on low-margin consumer business; however, that reaped margin dividends as it expanded from 6.8% in FY24 to 8.3% in FY25. With a large part of the consumer headwinds in the base now, we expect revenue growth to accelerate from FY26 onwards, while margins should also see expansion as the consumer mix keeps coming down," analysts at JPMorgan said.

They added, "We believe the other driver of growth over FY27-28 will be high-margin exports, as we expect the current tariff-related uncertainty to get resolved in FY26. We are ahead of the Street by 5-10% on EPS for FY27-28E, as we believe the Street is not fully baking in the upside from exports, which could potentially lead to earnings upgrades,” JPMorgan said in a note.

Meanwhile, JPMorgan has maintained its overall positive view on India's electronic manufacturing services (EMS) sector as well, and it expects the sector to continue its strong growth and forecast 32% CAGR revenue growth by FY30.

“Domestic electronics production itself we forecast to grow at a 25% CAGR led by rising electronics content in products, the ‘Make in India’ push to drive import substitution, and a realignment of global supply chains to India with a China+1 strategy. We expect domestic electronics production to reach $430 billion versus the government’s target of $500 billion,” the global investment bank said.

Noting that the EMS sector is still at a nascent stage with just a 4% share of the global EMS market, JPMorgan said that the opportunity potential is significant, which can keep growth higher for longer.

“India enjoys a structural tailwind in the form of rising electronics consumption led by urbanisation and an increase in disposable incomes driving increased penetration of consumer electronics products as well as increasing electronics content in industrial products," the report said.

The rising content of electronics is seen across products such as industrial (smart meters), automotive (infotainment systems), consumer (mobiles, TVs), railways (control systems), medical (smart equipment), aerospace (navigation systems), and IT (laptops and desktops),” JPMorgan added.