Syrma SGS Tech. (SYRMA)

FairStock Score: 60/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• 5-year revenue CAGR of 33.71% shows proven compounding capability.
• Profit growth of 102.51% and latest quarter net profit of ₹110 Cr on ₹1,264 Cr sales indicate strong earnings momentum.
• Piotroski F-Score of 8/9 and Altman Z-Score of 4.06 reflect robust financial health.
• Low debt/equity of 0.12 provides balance sheet cushion.
• Promoter holding of 42.72% aligns promoter interests with minority shareholders.

Concerns

• Valuation is excessive: P/E of 55.72, P/B of 10.84, and EV/EBITDA of 95.50 leave no margin of safety; price is far above Graham Number of ₹186.04 and DCF value of ₹203.14.
• Latest sales growth is only 6.83% despite 102.51% profit growth, suggesting the profit surge may be margin-led and not durable.
• ROCE of 11.67% is modest and does not clearly indicate a wide economic moat.
• Dividend yield of 0.18% is negligible, so returns depend entirely on price appreciation and multiple expansion.

AI Analysis

Let me look at Syrma SGS Tech as a business first. The compounder record is real: five-year revenue CAGR of 33.71% and a 102.51% jump in profit. The latest quarter delivered ₹1,264 Cr revenue and ₹110 Cr net profit. Debt/equity is only 0.12, Piotroski score is 8/9, and Altman Z of 4.06 suggests the balance sheet can withstand stress. That is the good part. But I buy a business at a price that makes sense. At ₹983.50, the market cap is ₹15,855 Cr. The P/E is 55.72, P/B is 10.84, and EV/EBITDA is 95.50. Graham's number is ₹186.04 and DCF intrinsic value is ₹203.14. That means the market is paying far more than any conservative estimate of value. There is no margin of safety; it is negative by 342%. The recent sales growth of only 6.83% bothers me. A 102.51% profit rise on modest revenue growth is often a margin story, and margins can reverse. ROE of 16.12% is decent, but ROCE of 11.67% is not outstanding; this is not a dominant, capital-light franchise. Free cash flow of ₹73 Cr is positive but small relative to the price. I cannot call this a wonderful buy. The promoter holding of 42.72% is good, but at this valuation the market is assuming near-perfect execution for many years. A shareholder gets only 0.18% dividend yield to wait. This is a fast grower, but Benjamin Graham taught me that no matter how good the story, price is part of the investment. At this price, I would leave it on the watchlist, not in the portfolio.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer