Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Syrma SGS Technology Limited (NSE: SYRMA) Q4 2026 Earnings Call dated May. 12, 2026
Corporate Participants:
Nikhil Gupta — Head, Investor Relations
Jasbir S. Gujral — Managing Director
Bijay Agarwal — Chief Financial Officer
Satendra Singh — Chief Executive Officer
Analysts:
Aniruddha Joshi — Analyst
Indrajeet Agarwal — Analyst
Sumant Kumar — Analyst
Achal Lohade — Analyst
Praveen Sahay — Analyst
Bhavya Gandhi — Analyst
Bhavik Mehta — Analyst
Renu Vet Bugalia — Analyst
Keshav Lahoti — Analyst
Nikhil Kandoi — Analyst
Tanesha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Cirma SGS Technology Limited’s Q4FY26 earnings conference call hosted by ICICI Security. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr.
Aniruddh DHA Joshi from ICICI securities. Thank you. And over to you Mr. Joshi.
Aniruddha Joshi — Analyst
Yeah, thanks Michelle. ICICI securities is pleased to invite you all to Q4FY26 and FY26 results conference call of Technology. We have with us today senior management team to attend the call. I congratulate the management for posting strong set of numbers. And now I hand over the call to Mr. Nikhil Gupta, head of Investor Relations to introduce the management and take the call forward. Thanks. And over to you Nikhil.
Nikhil Gupta — Head, Investor Relations
Thank you. Anirudh. Hi. Very good morning to all. On behalf of Sima SGS family we welcome you all to Sima SGS Quarter 4 and Fiscal Year 2026 earnings call. We have with us today Mr. JS Gujarat Managing Director, Mr. Jayesh Ghoshi, Director Mr. Satyendra Singh, Chief Executive Officer and Mr. Vijay Agrawal, Chief Financial Officer Cirma HGS to discuss the performance of the company during the fourth quarter and fiscal year 2026 followed by detailed question and answer sessions. Kindly note during this call certain statements that will be made are forward looking which involves several risks, uncertainties, assumptions and other factors that can cause results to differ materially from those in such forward looking statements.
All forward looking statements made herein are based on the information presently available to the management and to the company. And the company does not undertake to update any forward looking statements that may be made during this call. In this regard, kindly review the disclaimer statement in the earnings release and all the other factors that can cause a difference. With this I will now hand over the call to Mr. JS Gujarat Managing Director Cirma HGS. Thank you.
Jasbir S. Gujral — Managing Director
A very warm welcome ladies and gentlemen to the FY26 earning call of Sirma SGS Technology Ltd. When we sit back and sort of reflect on what has happened in the year gone by it gives us a great sense of satisfaction that we have achieved almost all the parameters or exceeded them what we had set for ourselves at the start of the year. Just to recollect we had started off the year with the guidance of about 400 plus crores of EBITDA margin. EBITDA figures a revenue growth of about 30 to 35% and a positive cash flow with exports targeted to cross the 1100 crore mark.
So these were the 4, 5 set of parameters which we had set for ourselves. And when we look at the figures for the year gone by it gives a great sense of satisfaction that we have achieved EBITDA of 545 crore. Even if we exclude the LCOM EBITDA it still stands at 490 plus crores. So with the original start guidance of 400 to 490 crores of operating EBITDA exports, we have targeted 1100 crores. We are at 1200 plus crores working capital cycle. We have said that we will endeavor to bring it down and we have brought it down from 69 days to 63 days.
Ex alcom, this figure is at 58 days. All this has enabled us to generate a positive cash flow, operating cash flow of 290 plus crore which is almost at 53% of the operating EBITDA. So all these four parameters we have sort of exceeded what we had guided the market. If I was to sort of exclude consumer business from our sort of portfolio because consumer is a low margin business and there’s a conscious effort of the management to sustain it at a certain level. My revenues have grown by a healthy 38%.
X Alcom, they have grown by 31%. All the key drivers of superior margin Automotive, industrial, healthcare, exports and odm. They’ve all fired in the right direction. Automotive has grown 39%. Industrial 30%, healthcare 36%, exports 41%. And ODM has also gone up significantly to approximately 17% which is almost like a 80% jump from 453 to 825 crores. Now this gives us a good platform to grow in the coming year. We achieved 1477 crores revenue in the last quarter which is a run rate of approximately 500 crores a month, which translates into 6,000 crores revenue at the same pace without a growth coming in the second half of the year.
My exports at 372 crores give a good run rate of 125 crores which is again equivalent to the next year target of about 1500 crores. So we are well set to capitalize on this consolidation which we have done in the current year and going forward we are very confident that on the three critical parameters which we measure ourselves on is primarily the EBITDA operating cash flow. And the revenue growth on all these three, we would be able to exceed the performance of this year or sustain the performance of this year.
Thank you very much.
Nikhil Gupta — Head, Investor Relations
So now I hand over the call to Mr. Vijay Agrawal, Chief Financial Officer.
Bijay Agarwal — Chief Financial Officer
Hi good morning everyone and welcome to Stirma SGS earnings call for quarter four and full financial year 2026. I’m pleased to report that this has been a landmark year for us defined by strong execution, meaningful margin expansion and and significantly strengthened balance sheet. Let me begin with quarterly numbers first and then I’ll take you through the annual performance quarter four. 2026 was our strongest quarter yet. Consolidated total revenue for the quarter was 1477 crores, up by 56% on a year on year basis and 16% sequently.
An outstanding ups coming away. On business mix side, Industrial vertical contributed maximum as a 31% of our revenue followed by consumer vertical 26%, auto vertical 24% while all verticals showed a solid double digit growth on a year on year basis. IP and railway was the standout segment this quarter growing 182% year on year basis. Our operating EBITDA for the quarter came in 174 crores up by 51% year on year at 11.9% EBITDA margin. CVT grew 61% YoY to 150 crores and PAT rose 67% to 119 crores with PAT margin of 8.1% up by 60 basis points over last year.
On a sequential basis margin moderated slightly. Operating ebita margin was 11.9% versus 12.6% in quarter three primarily due to higher mix of IT business during this quarter quarter. Moving to our annual performance, our total revenue for FY26 came in at 4857 crores reflecting 27% year on year growth. When we see as we have previously guided that we will keep consumer business vertical below 35% which is actually 31% for FY26 and when we calculate our growth extra consumer business my revenue growth is actually 38% on a year on year basis.
More importantly this revenue was or this growth was highly profitable. Operating EBITDA extended 68% year on year basis to 545 crores with operating EBITDA margin improving 270 basis points to 11.3%. Reported EBITDA stood at 582 crores, added 12% EBITDA margin. The profitability story is even stronger at the bottom line. PVT grew at 88% year on year basis to 445 crores with a PVT margin expanding 300 basis points to 9.2%. PAT is about 346 crore rupees for the year up by 87% on a year on year basis with pad margin of 7.1%.
We can see this kind of a leverage where bottom line growth is nearly double the top line growth reflecting a structural improvement on a business model reflecting our operating leverage benefit Reflecting into the business model on revenue mix side Export business constitute 24.25percent of my operating revenue and grew 41% year on year basis. Highlighting our increasing global relevance across vertical IT and revenue is our fastest growth segment 74% year on year followed by auto 39% and healthcare at 36% growth on a year on year basis our OEM revenue for the year is about 17% substantially increased from 12% last year.
Coming to customer concentration, our top five customers contribute around 34% of revenue, top 10 around 47%, top 20 around 63%. My revenue on a full year basis FY26 on the order book visibility as on March end we have about 6,600 crores of total order books together of which auto is about 29%, consumer is about 30%, industrial verticals is about 24%, healthcare is about 5% and IT and railways together is about 11% of my revenue. Coming to balance sheet and capital allocation, we moved from a naked position of 264 crores as an SI 25 into now a net cash position of 467 crores.
This year end total debt reduced sharply from 611 crores to 353 crores. And while cash and equivalents increased to 820 crores at the year end, debt to Equity is now 0.1x and ROCE improved from 12.4% to 16.9% this year. When we calculate ROCE on a goodwill adjusted basis, my actual ROCE is 20.1% the threshold number which we have been tracking. Always coming to working capital performance, our working capital days improved from 69 days to 63 days on a year on year basis reflecting better operational efficiency.
Net working capital days when we calculate on X of ELCOM which we have recently acquired, it is actually 58 days. So on a like to like basis versus last year, the overall improvement into the networking capital days is about 11 days. For the year we generated a healthy operating cash flow of 290 crore rupees which is around 53% of my operating operating EBITDA and this outcome is based on disciplined working capital management and strong profitability delivery. Here the capex investment for the year is about 140 crore rupees and we expect another 100 to 150 crore rupees of capex investment into the current year which is FY27.
We want to update regarding one of our previously announced JV with Premier Energy wherein we were planning to acquire a company called ksolar through that jv. We want to agree that there were certain conditions precedent which we agreed with the sellers for the acquisition and which the seller was not able to fulfill as per the timelines. Hence we decided to drop the same acquisition on JV transaction. To summarize, FY26 has been a strong execution across revenue, profitability cash flows. We enter FY27 with a net cash position improving ROC a diversified and growth revenue base and capacity investments that position us well on the next phase of the growth.
We also want to update the market on our rating upgrade long term rating upgrade from AA minus to AA now showing a strong confidence of all the stakeholders in the market in our credibility. We remain committed to our aspirations of sustained revenue growth of 35% with a sustainable operating EBITDA margin of at least 10 to 10.5% targeting 700 crores of total EBITDA for the next year. FY27. The demand environment across all key verticals auto, industrial, healthcare and the emerging it, railways and the defense maritime business remains encouraging.
With that I’ll hand it over to Mr. Satender Singh, our CEO. Thank you Vijay and
Satendra Singh — Chief Executive Officer
Thank you Gujaratji and everyone on the call. Thank you for joining today. As always, I’ll start my comments with thanking all my 10,000 plus colleagues in our factories, in our offices who work day in and day out to ensure that our customers stay delighted and they help us in the growth story which Gujral ji and Vijay shared with you. Financial year 26 has been a defining year for Surma. It’s the one where we didn’t just grow the top line but we strengthen every pillar of our business, our people, customers, operations and supply chain.
On profitability margin expanded meaningfully across the year. Our gross margin improved from 22.6 to 25.6. Year on year. EBITDA margins improved significantly as they just shared and profit after tax doubled almost year on year and margin touching 7.1%. This clearly reflects operating leverage at scale. We continue to make improvements in our customer acquisition. We acquired several customers and those customers will help us fuel the growth in financial year 27 and onwards. Most importantly, we continue to deepen our engagement with the customers which is reflecting in larger wallet share with many of our customers and maturity of the programs which we execute with them.
This year operationally we have made several improvements. The utilization of our people resources, utilization of our machines have gone up significantly over FY25. This all the improvements and all the efforts across the operations and across our businesses clearly has been noticed by our customers and by industry alike. We got nine customer awards and 19 industry recognition during the year. As we know the supply chains are going through certain anxieties and our supply chain team and procurement teams across the plant have worked hand in hand with our customers to ensure continuity of supply chain and ensuring that we stay competitive on people.
Our engagement continues to improve and our last great place to work score rows from 83 to 86 this year we continue to upgrade our processes across all the areas of our business. Looking ahead, FY27 reflects strong conviction in our pipeline. Our new customer additions and our operational readiness and our balance sheet, rather strong balance sheet gives us the flexibility to invest in this growth while delivering consistent returns. We remain committed to our long term vision of being India’s leading integrated electronics manufacturing partner.
And this year the FY26 has brought us meaningfully closer to that goal. Thank you everyone on this call and once again to our customers, to our colleagues across the factories for great support and we look forward to similar support in the years ahead. Thank you once again and I’ll hand it over to Nikhil.
Nikhil Gupta — Head, Investor Relations
Yeah, thank you. Sudhinder, over to Michelle. We can go ahead on the Q and A session. Thank you.
Questions and Answers:
Operator
Thank you very much sir. Ladies and gentlemen, we will now begin with a question and answer session. Anyone who wishes to ask questions may please press Star and one on the Touchstone phone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Indrajeet Agarwal from clsa. Please go ahead.
Indrajeet Agarwal
Hi. Congratulations on a good set of numbers and thank you for the chance. Two questions from my side. If you can highlight the CAPEX pending CAPEX on key projects not just for FY27 but also over the medium term PCB and any other projects that you’re undertaking right now.
Bijay Agarwal
Sure, I’ll take this one. So overall, the last project which we are taking over right now is the PCB related business so PCB related we said that we are planning to spend approximately $90 million which is 800 crores of capex over the years for this multi layer line kind of a PCB setup. And this Capex we are spreading across two phases. Initial phase is 400 crores which is going on and off which about 50 crore is already spent till last year. This year we are expecting we’ll be spending around 250 all crore against the same project balance.
100 can go in the next year and the second phase can be spent over the next year. And in mid of FY29 also that’s what we are spreading that multi layer business related 800 crores of capex apart from that organic capex within the system. Normally in this business we are expecting 100 to 100 people crores of capex this year.
Indrajeet Agarwal
Okay, so 100 to 150 is only the organic and then add to that the 250 crore. So broadly overall something around 350 to 400. And when do we expect the incentives or the benefits to come from the government post FY28? Right.
Bijay Agarwal
We are expecting commissioning of the projects towards the end of this year, maybe start of next financial year FY28. Then we will be eligible to claim for the incentives in part basis and generally I expect at least a year will take to get.
Indrajeet Agarwal
This is helpful and second while you touched upon it in the opening remarks, if you can get more granular details on the impact of the current geopoitical tension site. Is there an issue in availability of raw materials? What kind of inflation are you seeing and are we passing that on with what lean lag?
Jasbir S. Gujral
See the supply chain issues are again global in nature and not specific to one company or one industry. So it is a phenomenon where the basic metal prices have gone up. The Middle Eastern crisis has sort of disrupted the supply chain routes, the logistic costs have gone up. Now these things are a part and parcel of the business and when all the companies are impacted, sort of, it’s not unique to us. Having said that we are in constant touch and we have contract arrangements with the customer where there is a pass through mechanism of variation in prices.
Now does it happen on day zero? The answer is no. It is negotiated and then taken into account. We believe that in the current year these things would continue to play out till the situation comes back to normal. We believe that this partial increase in these costs could be offset by better buying. The volumes go up, you get a better negotiation path, operational efficiency and then sharing these costs among the 4 stake, there are basically 4 stakeholders in the entire supply chain. In our case it is our vendor Selma sgs, the customers of Selma and the ultimate consumer.
Now once the situation sort of stabilizes, then the cost impact will be borne by all the four stakeholders. What is the impact of that? We are not very clear right now. But having delivered ebitda margin of 12 odd percent this year, next year we are guiding 10.5 to 11% keeping this turmoil into account. Now if the situation stabilises and we come back to normal situations, if it warrants an upward revision beyond that, we will guide the market accordingly.
Indrajeet Agarwal
Sure. Thank you so
Operator
Much. Thank you. The next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead.
Sumant Kumar
Hi sir. So can you Talk on the IT and railway? We have seen a 182% growth. So can you talk on more sub segment? How other sub segment and what are the the key driver for the segment?
Jasbir S. Gujral
The IT and the railways are a small portion of our revenue. And again we don’t look at the revenues on a quarterly prism. If I look at it on an Overall basis, my IT and railways have gone up from about 240 to about 476 on an annualized basis. This is as we said that the railways we were in touch with the customers and it is essentially the laptop related and the motherboard related business and the memory related business which we do. So going forward we expect this momentum of 80 or 90% not to continue, but it will continue to deliver healthy 30%, 40% growth rates over the coming years.
Sumant Kumar
Okay, thank you so much.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit yourself to only two questions per participant. Should you have a follow up question, please rejoin the team. We’ll take the next question from the line of Achal Lohade from Nuvama Institutional Equities. Please go ahead.
Achal Lohade
Yeah, good morning sir. Am I audible?
Jasbir S. Gujral
Yes, please. Yes
Operator
Sir.
Achal Lohade
Yeah. Thank you for the opportunity. Congratulations for excellent performance. I was just curious sir, while you have kind of indicated on the margin front, I’m just trying to dig a little deeper on this aspect. You know we have touched 12% margin for last two quarters. 12 and a half and 12%. And if we are talking about a similar growth across vertical, why the margin guidance? You know that 10.5 to 11% despite having an improvement on the on account of exports ODM mix going up and third the operating leverage Just curious, you know, given it’s kind of a pass through arrangement for the cost.
Any particular reason apart from the genetic reason what you have given for the margin guidance?
Jasbir S. Gujral
See, as I just said in the preceding question, we would like to err on the side of caution. The current volatility in the global trade in the shipping routes and the geopolitical. The basic metal prices going up would cause a stress on the economy on a macro level which is beyond our control. Hence we would like to err on the side of caution. And we have guided 10 and a half to 11% margin despite having delivered 12% margin. It was very honest. Now if three months down the line when we talk, when we meet you again for the Q1 earning call of FY27th if the situation has stabilized and we have a better picture with revise the guidance, but we’d like again at the expense of repetition, err on the side of caution.
And the pass throughs are there but it doesn’t happen on day zero. It takes time. So keeping all the things into account, we have guided that thing. But the more critical thing which we have guided is that will deliver a 30% absolute increase in EBITDA.
Achal Lohade
Understood. And if you could comment on each of the segments. What is the outlook on the growth path when you have given a broad guidance. If you could give on each of the segments, the key segments
Jasbir S. Gujral
Which
Bijay Agarwal
Segment you want is an echo in your voice which has to come closer to the micro.
Praveen Sahay
Sorry, sorry for that. If you could talk a little bit on each of the segment like auto, consumer, healthcare. You know if the underlying industry growth is as much. If this growth is driven by domestic or export and stuff like that. You know, give little bit more detailing on each of these four, five key segments. Sir,
Jasbir S. Gujral
If we go back to 25, 26, what do we see? We see a 39 odd percent growth in automotive, 30% in industrial, 37, 6% in healthcare, 38% in only consumers and 31, 41% growth in exports. My current order mix which we have order book has the same level of component of each with the automotive accounting for over 30%. Industrial about 25%, healthcare about 5%. So based on this I think we are in a position to deliver a blended growth of about 30 35% for the current year. Individual verticals or annualized basis.
Some would be at 35%, some would be at 28%. The industrial growth would probably be driven by exports and new products which will be manufacturing for the power management units and other things. Automotive would Primarily be driven by domestic though for the first time last year we have crossed 125 crores in automotive exports. They would register some increase over there also. Medtech has grown significantly. The healthcare business has grown significantly from 291 to 395 this year. And we expect this continuous growth to happen.
Which means the next year my Medtech business should cross the 500 crore mark. Consumer, we are cautiously pegging it down at about 30% of our revenue and which this year it’s about 1452 crores and 8,10% growth. It should be about 1600, 1500. 1600 crore rupees. So the blended growth would come in from the dominant sectors of automotive, industrial, healthcare which is Medtech. IT and railways are a small portion of our revenue. They would grow
Achal Lohade
But. Thank you. I’ll call back in the future. Thank you.
Operator
Thank you. The next question is from the line of Bhavya Gandhi from Bajaj Alternate Investment Management Ltd. Please go ahead.
Bhavya Gandhi
Yeah, I. Thanks for the opportunity. My first question is regarding the total order book. Between December and March our order book has grown by almost 3% versus our historical run rate of 7 to 10%. If you can explain is there any slowdown down in terms of order intake or what is the reason for this or better execution or some any other factors. If you can provide
Jasbir S. Gujral
To take this answer.
Bijay Agarwal
So when we see there is higher delivery in this quarter, we have done almost 1500 crores of revenue for the quarter. So this is after executing that quarter four also. So in the previous quarter, in 6400 you should actually see it is out of 6400 crore 1470 already delivered during the quarter. And then additionally we were able to add about 1670 or 1700 crore to reach to 6600 crore level. The growth is even higher than the previous quarter’s net addition. This 200 crore is net addition after the delivery.
Bhavya Gandhi
Right Basis the current order book and run rate, the overall revenue growth for the next year comes to 24% whereas we are guiding for 35%. So are we seeing any order pipeline that we are expecting order intake in coming quarters?
Bijay Agarwal
So we are guiding actually about 35% of a growth for FY27. And this order book is indicating whatever is there in hand today. But this order book has to be over the period over the next few quarters has to be completely continuously upgraded based on the new order additions. And all these orders are not for one year. In this order book there will be many customers who will be giving you orders For a very shorter period, maybe three months, six months, five months, four months that way. So that’s how this operates in a way.
Jasbir S. Gujral
Just to add on, we have achieved a run rate of about 1465 crores in the current quarter which is tagged less than 500 crores a month and that’s the starting point. Now if the starting point is 500 crores or 495 crores a month the run rate and going forward historically the second half is much better than the first half. We are very confident of delivering the figures which Vijay just pointed out and said in my opening comments. My exports are currently at 125 crores run rate and we are targeting 1500 crore plus.
So we are already at a 6000 plus crore revenue level at the current fundraise and the second half typically is a superior half in terms of top line and the resultant figures on the bottom line.
Bhavya Gandhi
Right. In terms of. Yeah, right. Got it, got it. No, wonderful sir. Just in terms of cash we are around 470crores of net cash at this point in time and basis. Your capex that you for the PCB if I’m not wrong we have to spend around 1400 crores so after a year we’ll be short of cash in terms of. If we assume another 200, 300 crores of operating cash flows also next year still will be short of cash. So how do we plan to fund this? Because we only spent 50 crores for the PCB thing.
Bijay Agarwal
So this year for the PCB business of the grocery fee and for the same it will be partly funded through debt and partly through internal accruals. And there is a JV partner also 25% of this capex has to be funded by the JV partner also together. So that’s how this has to be funded against the current cash. Net cash position is 470 but actual cash on the balance sheet is about 820crore rupees. We are confident of using this cash on the balance sheet for the growth purpose going forward. And cash flow side we don’t see any challenge over here.
Bhavya Gandhi
Just wanted to understand on the PCB capex we will not fall short of cash. Right? That is what I wanted to understand.
Jasbir S. Gujral
Will not fall short of cash. You see what we spend we have projected about $40 million which is about 400 crores or whatever. 360, 400 crores for the current year and next year we’ll get a 50, 60% subsidy of that. So this will be a sort of circular thing that you Spend in one year, you get back a subsidy in the next year then you again invest partly from that subsidy, partly from your cash flow than the borrowing and you get back. So we don’t. We have a plan for cash flow that we will not fall short of cash for this project over its execution life cycle.
Bhavya Gandhi
Perfect. Really helpful. Really helpful. Wonderful. That’s it from mine. Thank you so much.
Operator
Thank you. I request to all the participants to kindly use your handsets while asking the questions and also self mute yourself when the management is speaking for an optimum audio quality in the conference. Thank you. We’ll take the next question from the line of Bhavik Mehta from JP Morgan. Please go ahead.
Bhavik Mehta
Hi. Thank you. So my first question is you recently received ECMS approval for flexible PCB and copper laminate. So any color you can provide in terms of the capex which will go into this and over what time frame we could expect.
Bijay Agarwal
So we got approvals for PC and copper clad laminate plus HBI and flex pcb that’s another one. So both put together we will sending another 800 crores for those projects but that project capex may get executed somewhere between FY28 to 20 FY30 this entire 800 crore.
Bhavik Mehta
Okay, got it. The second question is on working capital and cash flows. How should we think about working capital for next year will keep on coming down and hence the OCF will keep on going up in FY27.
Jasbir S. Gujral
See with the defense business coming in our portfolio and we have reached a 63 days working capital cycle the endeavor would be to say if we can bring it down down further how much by three days, five days I really can’t say But I think we should be all rest assured that working capital management and capital allocation is one of the prime focus of the management. We are willing to sacrifice top line growth if the working capital cycle is elongated. We are not chasing growth at the expense of working capital cycle.
We’ll be selective in our customers, we’ll be selective in the verticals. Selective means that we’ll do our due diligence to ensure that each vertical has its own typical working capital cycle. We would like to have the best working capital cycle in that vertical and that is reflected in the way we have brought down the working capital cycle over the last four years. I think when we started off it was 90 odd days
Praveen Sahay
And
Jasbir S. Gujral
From 90 days last year we came down to 69 days this year if 69 was to compare Apple to Apple. If I were to exclude El com both from the Revenue and the working capital. My days have come down from 69 to 58 which is an 11 days reduction. 11 days on 69 is almost like a 16% reduction efficiency improvement in my working capital cycle. So that would remain the focus of the management and I think everyone should be rest assured that we will not let this slip out on an annualized basis quarter on quarter.
There could be some variation.
Bhavik Mehta
Okay, got it. Thank you.
Operator
Thank you. The next question is from the line of Renu Vet Bugalia from IFL Capital. Please go ahead.
Renu Vet Bugalia
Yeah. Hi. Good morning team. So if you can throw some more insights in terms of the value add products and inputs that we’re targeting within the industrial segment and how do we see these applications scaling up in our portfolio over the next two years? Some more insights would be helpful. That’s the first question.
Jasbir S. Gujral
See the value addition. The superior value addition as I was saying in my opening remarks comes in from ODM business from exports within these each vertical. Each vertical has its own margin profile and a Medtech and medtech. Now what do we see that we have seen our ODM business growing up from 453 crores to 825 crores. Now this is almost a growth of.
Achal Lohade
70%
Jasbir S. Gujral
Growth. My exports have gone up by 41%. Our effort in the current year is to try and sustain the ODM growth to around 16, 17%. I don’t see it going up beyond 17% because we are planning targeting to grow by 35%. 30, 35%. I personally don’t see that in the current year my export, the ODM growth would grow. If you’re able to sustain it at 17% it means we have grown the ODM business by another 30%.
Renu Vet Bugalia
70% of the revenue mix.
Jasbir S. Gujral
Yeah, yeah, yeah. No, no, no. See if my overall revenue goes up by 35% and if the ODM business has to sustain at 17% this also has to grow by that a 30% growth on 8 25. If you have to grow the ODM business by another 250 crore rupees next year in 2627. We’ll endeavor to sustain this in the coming year. But the profitability would come in from working capital management exports, MedTech and ODM. And of all these verticals we are showing a very healthy growth over the last year and we expect this growth to continue.
My Exports grew by 41% last year. I expect them to cross the 1500 crore mark from the 1200 crore against the target of 1100 crores which we had saved so a 300 crore in exports absolute increase in exports adds to the margin profile long term growth.
Renu Vet Bugalia
Now I’m just wanting to ask what percentage of the ODM business would be housed in the industrial segment or how would be the ODM split across key end segments in which you operate
Jasbir S. Gujral
Is typically all odm. So if I was to take my healthcare business which is 395crores it’s all broadly back of the hand calculation. We have to split it into the thing but back of the hand calculation out of the 825 crores. 395 crores is MedTech. So remaining comes in from consumer and industry. Automotive has very little over business.
Renu Vet Bugalia
Got it.
Jasbir S. Gujral
Crores is both industrial and consumer but I don’t have the figures of how much of this is among it.
Renu Vet Bugalia
Sure. And so secondly just follow up and happen on the margin side while I understand you would add to be slightly more conservative here but given that the ODM portfolio exports both are expected to further improve in terms of mix rupee has been in our favor which would probably help offset some of the costs headwinds that you’re sitting on is operating leverage still do you think that the quarterly run rate which you are doing in the second half or mid of the year of 12% will see headwinds of about 200 basis point or you think the cushion are very thin here and we may not have beyond 100bps margin cushion
Jasbir S. Gujral
End of the day the current situation in the market wallet and everything. I think we expect that we should have the luxury of being conservative let’s put it that way. But no point Tomorrow I say 12 and I give 11 you’ll skim me down. Why it is 11 so we’d like to have the luxury of being conservative.
Renu Vet Bugalia
Absolutely. And so lastly just your thoughts on now we are seeing larger players also foray into electronics ems focusing on industrial and other segments. So how do you see the India EMS market growing? And also do you feel that competitive intensity in the domestic space may increase even for experienced veterans like semi SGS here despite newer entrants entering in the space. So for example as Larsen has recently announced a significant foray in electronics 50 billion rupees of capex in the next two years.
So that’s why I’m just trying to connect the dots and see how we’re looking at the market outlook.
Jasbir S. Gujral
See okay now we have been in the industry for 40 years. We’ve been exporting since 96 when China was at its prime and our exports have grown Domestic, There are big players already in the country. Whether it was flec, whether it is Jabil, whether it is Mina, they were present, not now. They have been present for quite a while. We are competing with the tier 2 level global EMS companies. Competition, competitive intensity would increase. Am I afraid of it? No. Am I mindful of it? Yes. And how do we take care of that?
I think we can give a far better cost structure than the big corporate within the country. We have to be relentless in our focus on cost control, frugality, efficient buying. And as we get integrated to the global supply chains with our global customers, it gives us the confidence that we are doing something right. Otherwise my exports would not have gone up by 41%. There are companies all around the world who are competing for the same business. So we are very mindful of the emerging competition.
But we welcome it. We can’t stop it. So welcome it.
Renu Vet Bugalia
Got it. Understand? All right. Thank you and best wishes. Thank you.
Operator
Thank you. The next question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Keshav Lahoti
Thank you for the opportunity. I just want to understand when you talk about, you know, 30, 35% addressable growth in your business going forward for multiple years, so the growth. Is industry growing so fast or is it more like you are gaining market share or is it like you are, you know, getting a new product segment? How should we see this growth?
Jasbir S. Gujral
I think you have hit the nail on that. You have provided all the answers in your question. We are gaining market share, we are expanding our portfolio. Medtech was not there in my portfolio a couple of years back. It is now contributing approximately 7, 8% of my revenue. Defense has just been added. So that’s an incremental sort of of a vertical two or three. We are now migrating to bigger contracts with bigger customers. So it’s not one piece which gives me the confidence of a 30, 35% growth rate.
It’s a mosaic of all the customers put together global domestic verticals. My ODM business which gives me the confidence of delivering what I’m say. And this is backed by a very detailed working by our teams going down to industries, customers, sku of customers, what are the plans of the customers or they intend to grow. What is the wallet share which we’ll be taking? And to us growth is just a figure. To me what is more satisfying is the quality of growth. And the quality of growth comes in when I gain market share from my competition, when I gain wallet share from my competition.
And on both these two fronts, I Think our teams are doing a phenomenally good job.
Keshav Lahoti
Got it. What would be the addressable market growth? You know, as you get better to multiple segment but blended what would be the addressable market growth? And lastly when you talk about this growth in FY28 you will be entering PCB manufacturing business. So possibly this growth would be faster because of entry in that segment.
Jasbir S. Gujral
Yes, the PCB business would kick in somewhere in 2728. So whatever growth I am projecting today for the next year is for the businesses in my portfolio. 2728 would be the first year when my PCB business will kick in. If it gives me a 400 crore, 300 crore, 700 crore, whatever is the figure that will be incremental to this crore. So if you are saying we grow by let’s take a round figure of 30% or 35%. You’ll have to calculate on 4800 crores. It will result into some resultant figure. Add another 30 35% that will be the organic growth in 2728.
Add the PCB to that. So 2728. Logically the growth should be superior to 30 35% because of the addition of the PCB verdict.
Keshav Lahoti
One of my question was what would be the addressable market growth area.
Jasbir S. Gujral
See the addressable market is so huge. What are we talking of? We are not even a billion dollar company. If you take the likes of Jabil and all that they will be multi billion 20, 25 billion dollar companies. So I think addressable market is sort of just a feel good factor that this is the biggest market. What we are addressing, what we are concentrating is the market is there. We should be able to consistently deliver 30 35% growth over the next two to five years. Organic coupled with inorganic when we grow big.
Satendra Singh
Maybe if I just quick add on. As a business we are addressing not only India, we are addressing global like if you see our Numbers we are 25% of our revenue comes from exposure exports. And global addressable market for reference is about north of 600 billion. So. And today what we reported to you is give or take about 500 million plus revenue. So there is, there is huge potential for growth. And that’s the market we are looking at addressing overall.
Keshav Lahoti
Got it. That is very helpful. Thank you so much.
Operator
Thank you. The next question is from the line of Praveen Sahai from PL Capital. Please go ahead.
Praveen Sahay
Thank you for opportunity and many congregations for a very good set of numbers. The first question is related to the export. So as you had a guided for 15 crore for 27 and also in the last call you had highlighted the strong EU market exposure is driving your number. So if you can give some color on the how the YIWU market and what, how much is the contribution and how is the growth going there.
Jasbir S. Gujral
See Mike, the growth in exports last year has been 41% and what we are targeting this year is less than 30%. If I do 1560 it will be about 30%. So I am guiding 15. And these are based on the customer which we have on board where we have started supplying some of the new customers which we have onboarded this year, which means till March 26 would go on stream on a pilot basis in 2627. That gives me the confidence that 2728 the customers which would have 2, 5, 10, 15, 20 crores of revenue in FY 2627 would have the potential to close the 50 crore revenue, 100 crore revenue, 40 crore revenue in 2728.
So we believe that with the existing customers already sort of reaching their what you call regular offtake level, the new customers which you have onboarded which would be doing the prototyping this year, the growth of exports of about 25% minimum over the coming years is a distinct possibility and we will be able to achieve that if some of the major customers which you have onboarded, they have the potential to further accelerate the export growth. But for the time we are being conservative and putting in a target of 20 to 30%, 25 to 30% export growth for the coming years.
Praveen Sahay
Any contribution from the EU can you highlight?
Bijay Agarwal
Sorry. So if you are talking about EU FTA that has a positive impact in a way that there is, we are maybe sentimentally, psychologically there will be a larger business of opportunities that are available which we can expand further in terms of number. Yes, in few of the select cases there was a duty applicable about one for one and a half percent that will be. That is something is a financial benefit one can look for going forward. See,
Jasbir S. Gujral
These FTA agreements don’t typically have a immediate positive or negative impact. You see, it takes time for the negativity to set in inactivity it is slightly faster. In case of positivity, it is slightly slower. But long term impact is very, very positive. And I believe that we are very well positioned to take benefit of the FTA which the government of India has signed with eu, with America, with New Zealand, with Canada and other.
Praveen Sahay
Okay, next question is related to the to the Sigma and Premier which decided to not go with the case solar acquisition. So is there Any expense related to that we have accounted and related to that There
Jasbir S. Gujral
Was very little expense related to the caseholder acquisition. Whatever has been spent has been charged off to the pnl. There were certain conditions precedent which case Solar had to comply with. When they expressed their inability to comply with we both decided that it was best to drop the team. So we have dropped the plans to acquire KSolar but I would like to reiterate that we have not dropped the plan clients to be not to be in the renewable energy space. We have very solid intent of entering the renewable energy space market in the inverter business and the related products instead of inorganic acquisition we would not be putting up a greenfield project.
Currently we are evaluating various proposal which we have got from the technology partners. I would not be able to give color on that because nothing is formed up. But I think in the coming quarter or something we should come back to shareholder plans on that. But renewable energy space is very much in our focus for future growth.
Praveen Sahay
Thank you. And anything on the PLI benefit for a full year? Last quarter you had given indication of a 30 to 32 crore for 26 how much we had done PLI benefit we received
Bijay Agarwal
Gross PLIs for the full year would be approximately 80 crore rupees. And post sharing we are expecting it will be net PLI would be approximately 38 crore rupees for the year FY26.
Praveen Sahay
Thank you sir and all the best.
Operator
Thank you. The next question is from the line of Nikhil Kandui from Access Capital. Please go ahead.
Nikhil Kandoi
Thank you for the opportunity and congratulations for a good set of results. Just can I help you with the Q4PLI number also?
Bijay Agarwal
Q4PLI. Q4PLI would be approximately proportional number will be approximately 10 crore rupees.
Nikhil Kandoi
Okay, so just wanted to understand that the order inflow of 6200 crores majority inflow from consumer and IT business around 44%. And if I include also that is that comes down to 70. You just want to understand that these are your relatively lower margin business where the ODM share from these things are very low. The guidance of 10.10.5 because of the increasing share of lower margin business. Is that right? Understanding apart from the supply chain issue which you highlighted.
Bijay Agarwal
So order book is just an indication here. First of all, order book is not is a clear reflection of the same similar way percentage for the full year of the business. Because in order book you can see current order book for industrial business is 24% only because in industrial segment customer generally does not give you full maybe more than 12 months. Kind of a order book initially. So that’s how. That’s how Generally it follows my business needs. Mostly we are expecting it should remain same as it was in FF by 26 consumer should be around 30, 32% IT business.
Yes, it is growing. It can be around IT plus railways around 10% and about 25% of auto business and 28 to 30% of industry business. Keeping the same my margin would be in check. Yes, as Mr. Vidyal has already guided. We are expecting because it business is also slightly growing and maybe some bit of geopolitical factors which are also impacting that thing including raw material prices increase. That’s where we are guiding for this margin.
Nikhil Kandoi
Okay, so one last question from myself against so in more light on the smart metering business. How much is it? No other book. And how much did we did in FY26? And a related question that would be that kindly consider Elitecom business to be a similar to smart meter business which is high working capital intensive but also giving us high margins.
Bijay Agarwal
So smart metering business we have done in the current year approximately 250 to 60 crores of total business in the order book. I need to check exactly what the number is. But as Mr. Gujaral has already explained that we are going slightly selective here keeping the working capital balance in mega year. And that’s how we are falling.
Nikhil Kandoi
Elicrom and smart meeting business, are they almost similar? Because not in terms of industry but in terms of high working capital and high margins which can impact future working capital days for us.
Jasbir S. Gujral
The smart metering business is not a high margin business. It is a normal industrial. It would come lower in the industrial category. So in terms of margin profile the two businesses cannot be compared. One is a solution superior very high margin business. The smart metering business is not a very high margin business. It’s a moderate 15 odd person gross material margin business. 12 to 15% gross margin material business. But it has the same elongated working capital cycle. Hence the profitability of a smart metering business.
If you are not choosy about your customers, if you change revenues would be suspect in case of defense despite its longer working capital. But since it’s a very high margin business, it’s a OD and you give a solution to the customer. It is offset such that even the higher working capital cycle results in a very superior EBITDA margin business. And if I just share that, if we were to exclude L. Com business from our working capital for a minute and exclude its revenue, my working Capital cycle for my business is down from 69 to 58 days.
With Elcom it is down to 63 days. Elcom on its own would be. Defense is. The business is notorious for long, three to five months, six months working capital cycles. But since it forms a very small portion of our revenue, I don’t see it negatively impacting my overall working capital cycle significantly.
Nikhil Kandoi
Got it. If I can add one more question, sir. What will be the percentage of order book from ELCOM in the total order book?
Bijay Agarwal
In the total order book, Elcom’s order book would be approximately 5%.
Nikhil Kandoi
Okay, thank you. That’s all from myself.
Operator
Thank you. This will be the last question for today from the line of Tanesha from DAM Capital. Please go ahead.
Tanesha
Yeah. Hi sir. Good morning and congratulations on a great set of numbers. I have two questions. First one being that while we’re on track to grow at around 30, 35% for FY27, can you possibly discuss, you know, how we’re going to get that growth? Possibly some client additions which you would have added through FY26 and for what applications would that be across segments which will sort of help us get that growth. And the second question would be. So I’m assuming that the defense number is coming in the industrial piece right now and you know, if we exclude that we have seen some softness out there as indicated by you for smart meters.
But going forward, X of the defence business, you know, some color on the applications in industrial which would sort of help us continue the growth profile. Thank you.
Jasbir S. Gujral
Okay. Now going forward we are projecting a growth of 30, 35% and that’s backed by the orders which we have in hand and the visibility that you have received from the customers. We expect the businesses to grow deeply sort of at the same pace. Automotive distiller has grown by 39%. Healthcare has grown by 36%. Industrial including Alcom has gone by 30, excluding Elcom it would be slightly lower. But some of the new customers in the power management sector and the UPS sector and those industrial electronics and controls would give us the revenue in the next year.
We have added how many customers last year, Bridget?
Bijay Agarwal
So 32 customers is what we have added onboarded in the last year and, and of which if we talk about industrial, about seven customers they have onboarded on the industrial segment. In fact if we talk about applications, it is varying across fuel injection systems, solar trackers, data center applications, related motherboards, liquid processing machines for SMCC as well FMC applications, those kind of applications for which we have added with customers Here and when we talk about these 32 customers have a potential to add at least a thousand crore plus in my current year revenue of 526 and full potential maybe about 2500 crore plus in a long term basis.
Tanesha
Got that. Thank you. That was helpful and congratulations and wishing you all the best for the new year.
Jasbir S. Gujral
Thank you.
Operator
As that was the last question for today I would now like to hand the conference over to Mr. Gujral for closing comments. Thank you. And over to you.
Jasbir S. Gujral
Thank you. On a overall basis a very satisfying year but that’s past. We have to focus on what we are going to do in the future and as we have all the time being saying that we would like to build a sustainable business which has superior margin profile which has a decent component of exported OTM and all these plants I think we are well poised to achieve that. We are relentlessly focusing on quality and environment and a small issue but would like to share with you that we are the first company in the country to get a certification for automotive electronics information security for automotive industry known as Tritex.
I didn’t know it. About six, seven months back we were informed by one of our overseas customers which we are starting off the production somewhere towards the end of the year which will give us a series production in 2728 to get this certification. So Tyson, so we are relentlessly focused on building top notch factories with solid processes to give us operational efficiencies. We are among the first Indian company to have a real time monitoring system on our SMP lines. It is being inducted in phases over all the plants and the initial results have been very very encouraging.
We have seen a 5% to 7% improvement in the operational efficiency. So I think broad customer base, solid customers, reputed blue chip companies, leaders in their vertical, very strong set of operational parameters in place at the plants and hunger for growth and hunger for learning. I think these 23 factors define the DNA of Therma SGS. I think going forward in couple of years when we again talk I think firma would be at a different platform level in terms of revenues and product mix which it is servicing and the customer profile which it.
So this is a journey, it’s not a 100 meter sprint, it’s a marathon which we are running but mindful of meeting the street expectations on a quarterly and annual basis. So I think we are well poised to be among the top leading companies globally. Also currently I was told we are ranked somewhere about 65 globally. I was reading in some EMS magazines so the effort is to that. Keep graduating that Sirma SGS is the first brand which is recalled in the mind of a potential customer when he’s looking for a TMS or ODM business.
With this, I thank everyone for the support. All the stakeholders, the vendors, the employees, the bankers, the investors. For the faith we post in the management of Dharma sgs. And we, on our part, would ensure that we build our institution which is past excellent in the country. Thank you.
Operator
Thank you, members of the management. Ladies and gentlemen, on behalf of ICICI securities, that concludes this conference. We thank you for joining us. And you may now disconnect your lines. Thank you.