Syrma SGS Technology Ltd IPO

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IPO Synopsis

IPO Synopsis
Electronic manufacturing services firm Syrma SGS Technology has join the IPO bandwagon and filed for an initial public offering issue with SEBI to raise upto Rs 1,200 crores. 
The issue comprises fresh issue of equity shares worth Rs 926 crore, and an offer for sale (OFS) of up to 33.69 lakh equity shares by Veena Kumari Tandon.
The company is also looking to raise Rs 180 crore via a pre-IPO placement before filing its red herring prospectus which may reduce the actual IPO size. 
Dam Capital Advisors, ICICI Securities and IIFL Securities are the book running lead managers to the issue.

Objective of the Issue
The net proceeds from fresh issue will be utilised for 
•    funding capital expenditure requirements to expand manufacturing and R&D facilities, 
•    funding long-term working capital requirements besides 
•    general corporate purposes
 

About Syrma SGS Technology Ltd

Syrma SGS, engaged in turnkey electronics manufacturing services, specialises in manufacturing for end-use industries including industrial appliances, automotive, healthcare, consumer products and IT.
The current product portfolio may be categorised as follows: Printed circuit board assemblies (“PCBA”), Radio frequency identification (“RFID”) products, Electromagnetic and electromechanical parts, and Other similar products.
The company has successfully evolved and adapted with the rapid changes in its key markets. For example, for IT industry it manufactured high precision coils for hard disk drives starting in 2005 and USB drives in 2008, while for home entertainment industry, it manufactured set top boxes from 2008 and on the rise of 3G technology in India, it forayed into manufacturing of GSM antennae from 2008 to 2012. Currently the company is working on manufacturing of modules for 5G technology infrastructure. 
Its customers include TVS Motor Company, A. O. Smith India Water Products, Robert Bosch Engineering and Business Solution, Eureka Forbes and Total Power Europe B.V.
The company currently operates through 11 strategically located manufacturing facilities in north India -- Himachal Pradesh, and Uttar Pradesh and south India - Tamil Nadu and Karnataka-- and three R&D facilities, two of which are located in India at Chennai, and Gurgaon, and one is located in Germany.
 

Peer Comparison

Name of the company

Total Revenue (in Rs. crores)

Basic EPS

NAV Rs. per share

PE

RoNW %

Syrma SGS Technology Limited

444.48

3.72

28

NA

18.74%

Dixon Technologies Limited

6,449.75

27.49

125.89

201.96

24.99%

Amber Enterprises India Limited

3,063.62

24.96

486.92

131.02

5.94%

 

Financials

Particulars (in Rs. Crores)

FY21

FY20

FY19

Revenue

438.30

397.08

354.00

EBITDA

52.93

69.90

43.08

PAT

28.62

43.88

20.97

EPS (basic in Rs.)

-11.35

-5.48

-4.44

ROE

18.74%

55.81%

45.45%

ROCE

25.87%

50.46%

36.66%

 

Particulars (in Rs. Crores) (Standalone figures)

FY21

FY20

FY19

Total Assets

867.73

786.88

708.56

Share Capital

0.75

0.70

0.70

Total Borrowings

92.50

113.41

154.04

 

Particulars (in Rs. Crores) (Standalone figures)

FY21

FY20

FY19

Net cash generated from / (used in) operating activities

23.85

70.83

10.04

Net cash from / (used in) investing activities

-94.42

-29.05

-22.15

Net cash flow from / (used in) financing activities

68.01

-20.64

13.34

Net increase (decrease) in cash and cash equivalents

-2.55

21.14

1.23


The Key points are- 

Key Points

  • Strengths

    1. One of the leading design and electronic manufacturing services companies in terms of revenue in 2021, driven by 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
       
  • Risks

    1. Customers do not make long-term commitments and may cancel or change their production requirements 
    2. The strict quality requirements required to be complied with which may add significant expenses to maintain product quality
    3. The global nature of operations exposes the firm to numerous risks such Forex risk, import and export regulations, Covid-19 related shutdowns, changes in laws, etc
    4. Dependence on third party for supply of raw material and delivery of products 
    5. problems with the products designed, manufactured, or serviced that could result in liability claims against the firm
       

How to apply for an IPO?

  • Login to your 5paisa account and select the issue in the current IPO section

  • Enter the number of lots and price at which you wish to apply for

  • Enter your UPI ID and click on submit. With this, your bid will be placed with the exchange

  • You will receive a mandate notification to block funds in your UPI app

  • Approve the mandate request on your UPI and funds will be blocked

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