Syrma SGS Technology Limited is a technology-focussed engineering and design company engaged in turnkey electronics manufacturing services ('EMS'), specialising in precision manufacturing for diverse end-use industries, including industrial appliances, automotive, healthcare, consumer products and IT industries. The manufacturing infrastructure enables them to undertake a high mix of products with flexible production volume requirements. They are leaders in high mix low volume product management and are present in most industrial verticals. Further, they are one of the leading PCBA manufacturers in India, supplying to various OEMs and assemblers in the market. They Company is also amongst the top key global manufacturers of custom RFID tags. The current product portfolio may be categorised as follows:- Printed circuit board assemblies ('PCBA'): The PCBAs are used in products manufactured in the automotive, medical, industrial, IT and consumer products industries, and shall include box-build products;- Radio frequency identification ('RFID') products: The RFID products are used in products manufactured in the shipping, healthcare, manufacturing, retail and fintech industries;- Electromagnetic and electromechanical parts, which include magnetic products like chokes, inductors, magnetic filters, transformer as well as high volume manufacturing assemblies: The electromagnetic and electromechanical parts are used in products manufactured in the automotive, industrial appliances, consumer appliances and healthcare industries, among others; and- Other products, which include motherboards, DRAM modules, solid state drives, USB drives and other memory products. They currently operate through 11 strategically located manufacturing facilities in north India (i.e. Himachal Pradesh, Haryana and Uttar Pradesh) and south India (i.e. Tamil Nadu and Karnataka). The presence in these states enables them to efficiently cater to the requirements of our customers in north and south India. The manufacturing facilities in Tamil Nadu are located in a special economic zone and the manufacturing facility in Haryana has been set up under the Electronic Hardware Technology Park scheme, which allow them to avail certain tax and other benefits in respect of the products manufactured out of these facilities. In addition, the manufacturing facilities are strategically located in Tamil Nadu, Karnataka and Haryana, which allow them to cater to the export requirements (in light of the proximity of these facilities to the respective city airports and Chennai port). In addition to the existing manufacturing, and engineering and design services offerings, they have also started the 'Zone of Autonomous Creation' in 2018 in Chennai, Tamil Nadu pursuant to which they provide quick prototyping services where a design concept is provided to them by the customers and they help create an early form of the final product. It has a dedicated line for PCB assembly with an autonomous team that has procurement, process, quality, and new product introduction (NPI) engineers independent of the manufacturing facilities. They have three dedicated R&D facilities, two of which are located in India at Chennai, Tamil Nadu and Gurgaon, Haryana respectively, and one is located in Stuttgart, Germany. They are supported by a team specifically earmarked for engineering and R&D comprising of 106 full time employees, as on March 31, 2022. While they provide the design and engineering services and original design manufacturing services across all the end-use industries they serve, these services have been primarily focussed on the healthcare, industrial and automotive industries end-use industries in the last three Fiscals. As per financial performance, Syrma SGS has posted total income/net profits of Rs 404.88 Cr / Rs 44.21 Cr (FY20), Rs 444.48 Cr / Rs 32 Cr (FY21) and Rs 1,032.41 Cr / Rs 56.58 Cr (FY22). So company has posted very good growth over last couple of years. They have posted an average EPS of Rs. 4.53 and average RoNW of 15.38% for last two fiscals. Issue is priced at a P/BV of 5.19 as per NAV of 42.36 on 31.03.22. If we attribute latest earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 121 and as per FY22 earnings P/E is around 69, which looks fully priced. As per RHP, comparison between listed players is shown in above table. On BRLM's front, 2 lead managers are associated with this IPO, and have handled around 35 IPOs in last three fiscals.HDFC Bank Limited: This is 9th IPO from this BRLM. From last 8 IPOs, 3 opened below issue price and remaining opened above issue on the day of listing. As of now, 5 are trading below issue price and other are trading above issue price. ( As on 21.05.22)Kotak Mahindra Capital Company Limited: This is 28th IPO from this BRLM. From last 10 IPOs, 4 opened below issue price and remaining opened above issue on the day of listing. As of now, 5 are trading below issue price and other are trading above issue price. ( As on 21.05.22) As per financials, Syrma SGS Technology Limited has shown very good growth, RoNW is 7.83% and P/E is respectively 121 and 69 as per FY21 and annualised FY22 earnings, which looks fully priced. Company is in EMS sector and has very good growth opportunities. So except valuations on all parameters company is good. Also we have seen huge selling pressure in peers group companies. Performance of BRLMs are average. So, we give NEUTRAL rating for this IPO and one may buy it from open market if there is any price correction post listing.
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