Syrma SGS Accelerates Strategic Growth with Strong Q2 FY26 Performance and Key Acquisitions

Syrma SGS Technology Limited has reported a stellar performance for the second quarter and first half of fiscal year 2026, showcasing robust growth and strategic expansion across its diverse business segments. The company's consolidated total revenue for H1 FY26 reached an impressive ₹2,108.7 crore, marking a 4% year-on-year increase. This growth was primarily fueled by strong contributions from the Auto, IT, and Industrials segments. Even more striking, the consolidated EBITDA surged by 60% year-on-year to ₹226.6 crore, while Profit After Tax (PAT) saw an exceptional 94% increase to ₹116.3 crore compared to the previous year. These figures underscore Syrma SGS's operational efficiency and strategic prowess in a dynamic market.

The company's segment-wise performance for H1 FY26 highlights key growth drivers. The Auto segment demonstrated significant strength, growing by 24% to ₹492.5 crore. The IT and Railways segment experienced an outstanding 73% growth, reaching ₹211.0 crore, while Industrials also saw a healthy 20% increase to ₹552.2 crore. Although the Consumer segment experienced a decline, management has been actively working to rebalance the business mix, aiming to bring its contribution below 35% to focus on higher-margin verticals. This strategic re-prioritization is already yielding positive results, contributing to the overall improvement in gross margins by approximately 500 basis points in H1 FY26 compared to the prior year.

Strategic Forays and Future Growth Engines

Syrma SGS is not just relying on organic growth; the company has aggressively pursued inorganic expansion and strategic partnerships to solidify its market position and diversify its offerings. A significant move is the acquisition of a 60% majority stake in Elcome Integrated Systems Pvt Ltd for ₹235 crore. This marks a strategic foray into the high-priority Defense and Maritime business, an area where Syrma SGS previously had minimal presence. Elcome's four decades of expertise in navigation, communication, and surveillance systems for armed forces will provide a robust platform for Syrma SGS to build a design-led Defense Electronics platform, aligning with India's 'Aatmanirbhar Bharat' objectives.

Another pivotal initiative is the joint venture with South Korea's Shinhyup Electronics Co., Ltd. for multi-layer and flexible Printed Circuit Board (PCB) manufacturing. This backward integration strategy, backed by an approved ECMS incentive package of ₹765 crore, aims to reduce reliance on imported PCBs, improve supply chain assurance, and enhance margin profiles. The project, with a planned capital expenditure of ~₹1,595 crore, is on track to break ground in December 2025, with trial production expected by December 2026 or Q4 FY27.

In the renewable energy sector, Syrma SGS has announced the acquisition of a 49% stake in KSolare Energy Private Limited, alongside Premier Energies. This ₹170 crore acquisition positions Syrma SGS in India's fast-growing solar inverter market, which is projected to grow at a 25-30% CAGR. KSolare, with FY25 revenue of ₹342 crore, is a leading manufacturer of solar inverters, and the joint venture plans to establish a new manufacturing facility in Pune to scale production to one million inverters annually, supporting the PM Surya Ghar Muft Bijli Yojana.

Furthermore, the company has formed a Joint Venture with Elemaster S.p.A. of Italy, focusing on European OEM programs in Railways and Industrial Automation. This partnership will leverage Elemaster's strong relationships to enhance design-led manufacturing capabilities and access higher-margin product segments. The successful implementation of the merger of SGS Tekniks Manufacturing Pvt Ltd and SGS Infosystems Pvt Ltd into Syrma SGS Technology Ltd. on October 31, 2025, further consolidates the company's structure, enhancing scale, engineering capability, and delivery reliability.

Management Outlook and Operational Efficiency

Management has expressed strong confidence in sustaining this growth momentum. They reiterated a revenue growth estimate of approximately 30% for FY26 and are confident of exceeding their previous EBITDA margin guidance, expecting it to be north of 9% for the full year. Despite a negative operating cash flow of ₹115 crore in H1 FY26, primarily due to strategic inventory build-up to mitigate supply chain risks and anticipate future demand, management is committed to achieving a positive cash flow of 25-30% for the full year. The company's healthy order book of approximately ₹5,800 crore and the onboarding of 8 new major customers, along with securing long-term framework contracts, provide strong visibility for future revenues.

Syrma SGS is strategically positioned at the cusp of significant demand in the electronics manufacturing industry, supported by favorable government policies and a focus on 'Make in India'. The company's proactive approach to inorganic growth, diversification into high-margin verticals, and continuous efforts to improve operational efficiencies, including reducing networking capital days, underscore its commitment to sustainable and profitable growth. The management's clear vision and disciplined execution are poised to drive Syrma SGS's continued success in the coming years, making it a key player in India's burgeoning electronics manufacturing landscape.