Shares Rise 19% on Debut; Should You Buy, Sell or Hold?

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Syrma SGS Technology Listing Price: Syrma SGS Technology made its D-street debut today. Shares of the company began trading on the NSE at Rs 260 per share, up 18.18 per cent from the IPO price of Rs 209-220 apiece per share and on the BSE the stock debuted at Rs 262 apiece, rising 19.09 per cent. The company had a market capitalisation of Rs 4,617.20 crore on its market debut. Syrma SGS Technology was the first company in over two months to hit the market with an IPO.

The offer received bids for 931.4 million equity shares as against 28.5 million shares on the offer, according to the data available on exchanges. Syrma SGS Technology’s Rs 840-crore public offer was oversubscribed 32.61 times. The Qualified Institutional Buyers (QIBs) had bid for 87.56 times on the last day, while portion reserved for non-institutional investors was subscribed 17.50 times and Retail Individual Investors (RIIs) category was filled 5.53 times against their respective quotas.

Syrma SGS Technology, incorporated in 2004, is a Chennai-based technology-focused engineering and design company engaged in turnkey Electronics Manufacturing Services (EMS). Its customers include TVS Motor Company, AO Smith India Water Products, Robert Bosch Engineering and Business Solution, Eureka Forbes and Total Power Europe BV. It operates through eleven manufacturing facilities in Himachal Pradesh, Haryana, Uttar Pradesh, Tamil Nadu and Karnataka and has three R&D facilities which are located in Tamil Nadu, Haryana, and Germany.

The company has a large product portfolio, which includes printed circuit boards, RFIDS, electromagnetic, electromechanical parts and other products such as SSDs, USB flash drives, etc.

Should You Buy, Sell or Hold?

Santosh Meena, Head of Research, Swastika Investmart Ltd., said that Syrma SGS Technology Ltd has debuted at Rs. 260 i.e. 18 per cent above its issue price. The company’s good listing can be attributed to positive market sentiments, outstanding prospects, and a good response from the investors.

“With a huge focus on R&D-based innovation and an experienced management team, the company has managed to enter into various growing segments like PCBA, Radio Frequency Identification (RFID), Electromagnetic and electromechanical parts, and other information technology-related products. The company’s geographically diversified manufacturing locations and the business model which starts from product concept design & focuses on every segment of the overall industry value chain give them a competitive advantage over other players.  The issue was priced at a P/E of ~65X (Based on the Restated Consolidated Financial Information, RHP).  However, we believe that the company deserves this premium multiple due to its phenomenal growth prospects. Those who applied for listing gains can maintain a stop loss of Rs. 225. New investors can buy for the long term and existing investors are recommended to stay invested in the company,” Meena added.

Ravi Singhal, CEO, GCL, said: “Long-term investors keep invested while short-term traders can book full profit.”

Avinash Gorakshakar, Head Research, Profitmart Securities, said: “Long-term investors can surely consider investment here with a 2-year time frame as long-term business prospects look strong.”

The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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