On Tuesday, CLSA has upgraded the rating of Syrma SGS Technology (SYRMA:IN) stock from Hold to Outperform, adjusting the price target upwards from INR 460.00 to INR 495.00. The upgrade follows Syrma's strong performance in the second quarter, marked by a significant rebound in margins and a solid year-over-year (YoY) top-line growth.
Syrma SGS Technology's second-quarter results showed a 17% increase in top-line growth compared to the same period last year, with margins improving to 8.5% from 3.8% in the previous quarter. This improvement was attributed to a higher contribution from the company's high-margin industrial and export segments.
The company has reaffirmed its financial year 2025 (FY25) guidance, projecting a 40%-45% growth in top-line and a 7% margin. CLSA believes these targets are within reach, considering the current trajectory of the company's financial performance. The order book for Syrma SGS Technology has also seen a rise to Rs 48 billion, up from Rs 45 billion in the previous quarter.
CLSA's positive outlook is tempered with a note of caution, emphasizing the importance of consistent growth and margin performance for a sustained re-rating of the stock. The firm has raised the target price for Syrma SGS Technology as it rolls forward its valuation and shifts its recommendation to Outperform from Hold, citing the stock's recent underperformance as a factor in the decision.
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