Syrma SGS FY26: Margin expansion, net cash, and a bigger capex runway

Syrma SGS Technology Limited closed FY26 with a combination that markets typically like to see together: solid revenue growth and sharper profitability. Consolidated total revenue for FY26 stood at INR 4,856.9 crore, up 27% year-on-year. Reported EBITDA grew to INR 582.3 crore, while profit before tax rose to INR 445.4 crore and profit after tax to INR 345.8 crore.

The year also showed clear margin improvement. Reported EBITDA margin expanded to 12.0% in FY26 versus 9.7% in FY25. PBT margin improved to 9.2% from 6.2%, and PAT margin to 7.1% from 4.8%. Management attributed the improvement to a favorable mix and operating leverage, with stronger contribution from automotive, industrial, healthcare, exports, and ODM.

What grew in FY26 and where it came from

FY26 segment disclosure showed growth across all verticals, but at different rates. Automotive revenue rose 39% YoY to INR 1,139.0 crore. Industrials increased 30% to INR 1,398.5 crore. Healthcare grew 36% to INR 395.2 crore. The IT and Railways segment, while smaller in absolute size, grew 74% to INR 433.6 crore.

Consumer remained the largest single vertical by revenue, rising 8% YoY to INR 1,452.7 crore. Management reiterated its approach to keep consumer at a controlled level because it is a lower-margin business, and indicated FY26 consumer mix at around 31%.

Exports were a material contributor. The company reported export revenue at 25% of operating revenue, growing 41% YoY in FY26. In the earnings call, management said exports exceeded its earlier target.

Q4 FY26: strongest quarter, but a cautious margin tone

Q4 FY26 was described by management as the strongest quarter so far. Consolidated total revenue was INR 1,476.8 crore, up 56% year-on-year and 16% sequentially. Operating EBITDA for the quarter was INR 174.1 crore with an operating EBITDA margin of 11.9%. Reported EBITDA stood at INR 186.0 crore, PBT at INR 150.4 crore and PAT at INR 119.2 crore.

While profits grew strongly, management noted that sequential operating EBITDA margin moderated versus Q3, citing a higher mix of IT business in Q4.

Balance sheet shift: from net debt to net cash

A notable FY26 outcome was the balance sheet improvement. Total debt reduced from INR 611.1 crore at March 31, 2025 to INR 353.1 crore at March 31, 2026. Total cash and equivalents including investments increased to INR 820.3 crore, resulting in a net cash position of INR 467.2 crore at year-end.

Financial ratios in the presentation reflected the same trajectory. Debt-to-equity reduced to 0.1x in FY26 from 0.3x in FY25. ROCE improved to 16.9% from 12.4%, and goodwill-adjusted ROCE was presented at 20.1%.

Working capital also improved. Net working capital days reduced to 63 days in FY26 from 69 days in FY25. On the call, management stated that excluding the acquired Elcome business, the working capital cycle was about 58 days.

Cash flow and capex: heavy investment year, larger runway ahead

FY26 operating cash flow was INR 289.6 crore, and the company presented OCF to EBITDA conversion at 53.2%. However, investing cash flows were materially negative, with capex and investments shown at INR 742.0 crore in FY26.

Capex remains an important forward variable. For FY27, management guided organic capex of INR 100 crore to INR 150 crore. Separately, management discussed a large PCB-related capex program of about USD 90 million, indicated as roughly INR 800 crore, to be spent across two phases. Phase 1 is about INR 400 crore, with about INR 50 crore already spent till the prior year. The company expects to spend around INR 250 crore in FY27 and about INR 100 crore in the following year for Phase 1, with Phase 2 spread further into the later years including mid FY29.

Management also indicated the commissioning timeline for this PCB project as end of FY27 or start of FY28, after which incentives can be claimed on a part basis, and that it may take about a year to receive incentives.

In addition, management stated it received approvals for copper clad laminate and for HDI and flex PCB, and that both projects together would involve another INR 800 crore of capex, expected to be executed between FY28 and FY30.

Key management updates: incentives, order book, and a dropped acquisition

On incentives, management quantified PLI numbers in the call. The CFO stated gross PLI for FY26 at approximately INR 80 crore and net PLI at approximately INR 38 crore after sharing, and Q4 PLI at about INR 10 to 12 crore.

Order book visibility disclosed during the call was about INR 600 crore as of March-end, with the stated mix of auto at about 29%, consumer at about 30%, industrial at about 24%, healthcare at about 5%, and IT and railways together at about 11%.

The company also updated the market on a previously announced plan involving a JV with Premier Energies to acquire Ksolare. Management said the transaction was dropped due to conditions precedent not being fulfilled by the seller within the agreed timeline. It stated that expenses were very small and charged to P&L. Management also clarified that the company still intends to enter renewable energy, and now plans to pursue a greenfield project for inverter business and related products.

FY27 guidance: growth ambition, margin conservatism

For FY27, management reiterated its aspiration of sustained revenue growth of 35% with a sustainable operating EBITDA margin of at least 10% to 10.5%. It also stated a target of INR 700 crore of total EBITDA for FY27.

The margin guidance drew investor questions because FY26 EBITDA margin was 12.0%. Management explained the more conservative stance as a function of ongoing geopolitical disruptions affecting shipping routes, higher logistics costs and basic metal price increases, combined with the time lag in passing through cost increases.

Takeaways

FY26 showed Syrma SGS delivering operating leverage, improving margins and strengthening the balance sheet to net cash. Segment growth was broad-based, with automotive, industrial, healthcare, exports and ODM highlighted by management as key drivers.

FY27 begins with two distinct narratives running in parallel. One is near-term execution, where management is guiding for 35% revenue growth but with more conservative margin assumptions due to cost volatility and pass-through timing. The second is medium-term capability building, with multi-year PCB and related projects that can reshape the company’s manufacturing depth, but also raise execution and capital allocation scrutiny as spending ramps up.