Syrma SGS Technology: Strategic PCB Expansion and Q3 Earnings Surge

Syrma SGS Technology has emerged as a focal point in the Indian Electronic Manufacturing Services (EMS) sector following a series of high-impact announcements. The company recently reported a stellar performance for the third quarter of FY26, characterized by a triple-digit surge in net profit. This financial milestone coincides with a massive capital expenditure plan aimed at establishing India's largest Printed Circuit Board (PCB) manufacturing facility in Andhra Pradesh. As the Indian government ramps up incentives for electronics manufacturing, Syrma SGS is positioning itself to capture a significant share of the domestic and export markets.

Record Breaking Q3 Performance

On a consolidated basis, Syrma SGS Technology reported a net profit of Rs 110.3 crore for the quarter ended December 2025, representing a 108.1% increase compared to Rs 53.0 crore in the same period last year. This growth was not limited to the bottom line; revenue from operations climbed 45.4% year-on-year to reach Rs 1,264.2 crore. The sequential performance was equally impressive, with profit after tax jumping 66.3% from the Rs 66.3 crore recorded in Q2 FY26.

The company's operational efficiency showed marked improvement, with EBITDA increasing 67.5% year-on-year to Rs 169.7 crore. The EBITDA margin expanded to 13.3%, up from 11.4% a year ago and 10.7% in the previous quarter. This margin expansion reflects a successful shift in the product mix and the benefits of operating leverage as the company scales its production capabilities across its pan-India manufacturing footprint.

The Andhra Pradesh Mega Project

In a move that signals long-term growth ambitions, Syrma SGS announced an investment of Rs 1,593 crore to build India's largest PCB manufacturing plant in Andhra Pradesh. This project is expected to create approximately 2,100 jobs and serves as a cornerstone of the company's import substitution strategy. Currently, nearly 90% of India's PCB demand is met through imports, creating a massive opportunity for local players.

The facility will focus on multi-layer PCBs and Copper Clad Laminates (CCL) for diverse sectors, including automotive electronics, home appliances, IT, and medical services. This investment aligns with the Andhra Pradesh Electronics Components Manufacturing Policy 2025-30 and is expected to benefit from government subsidies. Management anticipates that once scaled, the PCB business could deliver operating margins between 15% and 20%.

Strategic Shift to High Margin Segments

Syrma SGS is actively recalibrating its business model to move away from low-margin, high-volume consumer electronics. The company is now prioritizing the industrial and automotive segments, which offer better profitability and longer product lifecycles. In the first half of FY26, the industrial segment saw income growth of 20%, while the automotive segment grew by 24%.

This strategic pivot is reflected in the company's order book, which currently stands at approximately Rs 5,800 crore. This provides revenue visibility for the next 18 months. By focusing on high-reliability sectors like healthcare and industrial power electronics, Syrma SGS aims to maintain a sustainable growth trajectory while insulating itself from the price sensitivity of the mass consumer market.

Joint Ventures Strengthening Global Ties

To bolster its technical expertise and market reach, Syrma SGS has entered into two significant joint ventures. In July 2025, the company formed a 75:25 partnership with South Korea's Shinhyup Electronics to manufacture PCBs for the automotive and medical sectors. This was followed by a 60:40 JV with Italy's Elemaster S.p.A Tecnologie Elettroniche in September 2025.

The partnership with Elemaster is particularly strategic, as it establishes a dedicated platform to serve high-reliability customers in the railway, industrial, and medical electronics sectors. By combining Syrma's execution capabilities with Elemaster's deep relationships with European Original Equipment Manufacturers (OEMs), the company is unlocking new growth vectors in the global export market.

Financial Summary and Market Data

The PCB Import Substitution Opportunity

The domestic PCB industry in India is estimated to be worth $1 billion, yet the vast majority of these components are imported. The Indian government has introduced a 30% anti-dumping duty on certain PCB categories to encourage local manufacturing. Syrma SGS, along with other players like Amber Enterprises, has applied for incentives under the Electronics Components Manufacturing Scheme (ECMS).

Jefferies, a leading brokerage, remains positive on Syrma SGS, noting that while PCB plants require an 18-20 month construction cycle, they offer high asset turns and attractive margins once operational. The brokerage has maintained a 'Buy' rating on the stock, highlighting the long-term potential of the PCB sector driven by government support and the global 'China plus one' supply chain strategy.

Market Impact and Analysis

The market has responded positively to Syrma's aggressive expansion and strong earnings. Following the announcement of the Andhra Pradesh investment, the stock surged 10%, hitting a 52-week high. Analysts at Motilal Oswal have set a target price of Rs 1,000, citing the company's robust order book and strategic entry into high-margin verticals.

However, challenges remain. The company is navigating working capital pressures and potential risks from US tariffs, although current American exports represent only 5% of total revenue. To mitigate these risks, Syrma raised Rs 1,000 crore through a Qualified Institutional Placement (QIP) in August 2025, using Rs 750 crore to deleverage its balance sheet and strengthen its financial position for future growth.

Conclusion

Syrma SGS Technology is successfully transitioning from a pure-play EMS provider to a high-tech engineering and design powerhouse. With a record-breaking Q3 performance, a massive Rs 1,593 crore investment in PCB manufacturing, and strategic global partnerships, the company is well-positioned to capitalize on India's electronics boom. While near-term capital expenditure may keep returns range-bound, the long-term outlook remains robust as the company targets a revenue growth of 30% to 35% for the full year.