Kaynes Technology Vs Syrma SGS Technology – Financials, Future Plans And More
Kaynes Technology Vs Syrma SGS Technology: Picture a world where circuits hum with vitality, and innovation sparks life into every electronic device we touch. This is the realm of Electronics Manufacturing Services (EMS), a behind-the-scenes orchestrator of the tech symphony. Two such companies that work in this sector are Kaynes Technology and Syrma SGS Technology. […] The post Kaynes Technology Vs Syrma SGS Technology – Financials, Future Plans And More appeared first on Trade Brains.
Kaynes Technology Vs Syrma SGS Technology: Picture a world where circuits hum with vitality, and innovation sparks life into every electronic device we touch. This is the realm of Electronics Manufacturing Services (EMS), a behind-the-scenes orchestrator of the tech symphony. Two such companies that work in this sector are Kaynes Technology and Syrma SGS Technology.
In this article, we shall conduct a detailed comparison of Kaynes Technology vs Syrma SGS Technology and find out which of the two companies has a better outlook for the future.
Kaynes Technology Vs Syrma SGS Technology
Industry Overview
India is on track to become a global leader in electronics manufacturing, contributing significantly to the country’s goals of becoming a USD 10 trillion economy.
The EMS industry in India is anticipated to achieve a market size of US$80 billion in the next five years, with a significant portion of this growth being driven by mobiles and consumer electronics and appliances. Other sectors, such as lighting, auto, and others, are also expected to contribute to this growth.
Over the next decade, India is expected to emerge as a major player in the electronics manufacturing industry, due to the growing domestic demand and enhanced export competitiveness. The country has witnessed a nearly twofold increase in domestic production between FY17 and FY22, and this trend is expected to continue with a CAGR of 24% between FY22 and FY27.
Kaynes Technology Vs Syrma SGS Technology – Company Overview
We learned a little bit about the industry in which the firms operate in the preceding part. Let us now get a bit of background of both companies.
Kaynes Technology
Established in 2008, Kaynes Technology is India’s leading integrated electronics manufacturer, specializing in end-to-end solutions and IoT-enabled services, with over three decades of experience. The company’s comprehensive Electronics System Design and Manufacturing (ESDM) services cover conceptual design, process engineering, integrated manufacturing, and life cycle support.
Spanning 250,000 square feet across 7 Indian cities, Kaynes boasts a robust infrastructure comprising 9 manufacturing plants and 2 service centers. Its global footprint is evident, with a client base exceeding 250 satisfied customers across three continents.
The company’s infrastructure spans 250,000 square feet across seven Indian cities and includes nine production plants and two service centers. Furthermore, it has established its global presence with over 250 customers across three continents.
With 34 years of manufacturing expertise, the company is a trusted partner for major players in diverse industries, including automotive, industrial, aerospace and defense, outer space, nuclear, medical, railways, IoT, IT, and more.
The Company operates as 4 business segments: Original Equipment Manufacturing (OEM) Box-build as well as PCBA, Original Design Manufacturing, and Product Engineering & IoT Solutions. OEM Printed Circuit Board alone contributes to 62% of the Company’s revenue.
Syrma SGS Technology
Syrma SGS is a design-driven manufacturing company with extensive experience in mobility, Hi-Tech, healthcare, consumer, industrial, and other solutions. It is based in Chennai and provides turnkey Electronic Manufacturing Services (EMS).
The Company’s comprehensive EMS offering includes everything from product design to quick prototyping, PCB assembly, and box build. In addition, it provides customized end-to-end solutions for RFID tags and inlays, high-frequency magnetic components, repair, rework, and automatic tester services.
The company has operated in the EMS field for over four decades, serving over 270 customers in 20 countries. Syrma operates 12 manufacturing facilities and 3 R&D labs, with a total plant area of 8.25 lakh square feet.
Some of the major clients are from the consumer, Industrial, Healthcare, Automotive, and the IT segment. The Company earns 70% of its revenue from the Domestically, while exports contribute to 30%.
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Kaynes Technology Vs Syrma SGS Technology – Financials
Revenue Growth:
If we look at the revenues, we can see that both Company’s revenue growth has been rather spectacular, both in the short term as well as the long term. Upon close analysis, we see that in the short term, Syrma has increased its revenue by 62% from Rs. 1284 crores in FY22 to Rs. 2092 crores in FY23.
The major factor for the company’s performance in FY23 was its continued efforts to work with marquee customers across the globe, anchored by the auto and consumer industries. During FY23, the company’s order book has increased to Rs. 3,000 crores from Rs.1,200 crores in the previous fiscal year.
Similarly, the significant increase in the order books of Kayne from Rs. 1,516.6 crores in FY22 to an impressive Rs. 2,648.2 crores in FY23 has factored into the sales growth of the company which increased from Rs. 706 crores in FY22 to Rs. 1126 crores in FY23. However, Kaynes’ growth was comparatively slower at 59%.
However, in the long term, Kaynes leads with its revenue growing at the rate of 45% CAGR since FY20, while Syrma was able to grow by a CAGR of 33%.
The table below showcases the total revenue growth of Kaynes Technologies Vs Syrma SGS for the last 4 financial years.
| Fiscal Year | Kaynes Technology | Syrma Scgs Technology |
|---|---|---|
| 2020 | 368 | 879 |
| 2021 | 420 | 904 |
| 2022 | 706 | 1284 |
| 2023 | 1126 | 2092 |
| 3-year CAGR | 45% | 33.51% |
Net Profit Growth:
Although both Companies were nearly matched in their revenue, that does not remain the case with their Net profits. Looking at the long-term perspective, we can tell that Kaynes Technology has the highest Net Profit growth, which has increased from Rs. 9.4 Crores in FY20 to a massive Rs. 95.2 Crores in FY23, maintaining a CAGR of 116%.
Syrma SGS lags way behind Kaynes Technology in terms of its Net Profits as its profits grew only from Rs. 91 crores in FY20 to Rs. 123 crores in FY23, which is a CAGR growth of just 10.57%.
The table below showcases the net profit growth of Kaynes Technologies Vs Syrma SGS for the last 4 financial years.
| Fiscal Year | Kaynes Technology | Syrma SGS Technology |
|---|---|---|
| 2020 | 9.4 | 91 |
| 2021 | 9.7 | 65 |
| 2022 | 41.7 | 76 |
| 2023 | 95.2 | 123 |
| CAGR growth | 116% | 10.57% |
Profit Margins:
When we compare the operating profits of the companies, we can see that while both companies have increased their revenues and profits, only the Kaynes technology has shown improvements in the operating margins. On the other hand, the operating profit margins of Syrna have declined due to its increasing operating expenses.
The figures below compare the operating profit margins of Kaynes Technology vs Syrma SGS Technology over the last 4 financial years.
| Fiscal Year | Kaynes Technology | Syrma SGS Technology |
|---|---|---|
| 2020 | 11.70% | 16.50% |
| 2021 | 10.60% | 12.90% |
| 2022 | 13.80% | 10.30% |
| 2023 | 15.80% | 11.10% |
The net profit margins of both companies reflect a similar picture as the operating profit margins. While Kaynes technology has shown improvements in net profit margins every year, the margins of Syrma have been cut down to half in the last five years.
The figures below compare the Net profit margins of Kaynes Technology and Syrma SGS Technology over the last 4 financial years.
| Fiscal Year | Kaynes Technology | Syrma SGS Technology |
|---|---|---|
| 2020 | 2.50% | 10.40% |
| 2021 | 2.30% | 7.30% |
| 2022 | 5.90% | 5.30% |
| 2023 | 8.40% | 5.90% |
Return Ratios:
The impact of the margins can seen in the return ratios of both companies. Both the ROE and ROCE of Kaynes have improved year on year indicating that the company is giving good returns to shareholders’ equity and also using its resources efficiently.
On the other hand, the return ratios of Syrma have declined year on year with a slight improvement in FY23. This indicates a decrease in the return the shareholders are earning on their capital and also a decline in the efficiency with which the company is utilizing its resources.
The figures below highlight the RoE of Kaynes Technology vs Syrma SGS Technology for the last 4 financial years.
| Fiscal Year | Kaynes Technology | Syrma SGS Technology |
|---|---|---|
| 2020 | 10.50% | 21.60% |
| 2021 | 8.10% | 13% |
| 2022 | 24.50% | 9% |
| 2023 | 24.90% | 12% |
The figures below highlight the RoCE of Kaynes Technology vs Syrma SGS Technology for the last 4 financial years.
| Fiscal Year | Kaynes Technology | Syrma SGS Technology |
|---|---|---|
| 2020 | 14.40% | 24% |
| 2021 | 13.50% | 15% |
| 2022 | 24.40% | 12% |
| 2023 | 24.20% | 15% |
Debt to Equity:
The debt-to-equity ratio of both companies during the last 5 years indicates a positive signal. Both the companies have relied less on borrowed capital which means they can retain more of their revenue as they do not have a huge obligation towards the repayment of debt and the interest towards it.
The figures below highlight the debt-to-equity of Kaynes Technology vs Syrma SGS Technology for the last 4 financial years.
| Fiscal Year | Kaynes Technology | Syrma SGS Technology |
|---|---|---|
| 2020 | 1.4 | 0.28 |
| 2021 | 0.9 | 0.22 |
| 2022 | 0.7 | 0.27 |
| 2023 | 0.05 | 0.28 |
Furthermore, Kaynes and Syrma have reported an interest coverage ratio of 4.5 and 7.95, respectively. This indicates that Kaynes and Syrma have earned enough profits to cover their interest payments 4 times and 6 times additionally.
The figures below highlight the interest coverage ratio of Kaynes Technology vs Syrma Scgs Technology for the last 4 financial years.
| Fiscal Year | Kaynes Technology | Syrma Sgs Technology |
|---|---|---|
| 2020 | 1.4 | 8.37 |
| 2021 | 1.4 | 9.99 |
| 2022 | 3.2 | 10.42 |
| 2023 | 4.5 | 7.95 |
Kaynes Technologies Vs Syrma SGS- Future Plans
So far, we studied the financial statements of the company and understood how each company is performing. Let us now look at the futures of both companies to see what the company has on hold;
Kaynes Technologies
- The company aims to achieve its accelerated growth trajectory by steadily expanding its customer base in the ESDM market.
- The Company is looking to move up the value chain and manufacture more sophisticated aerospace electronics.
- The Management has allocated a sum of ₹ 98.9 Crores to enhance their existing facilities located in Mysuru and Manesar. It has also invested Rs. 149 Cr to set up a new electronics Manufacturing unit in Chamarajnagar.
- Kaynes aims to identify and scale new technology applications in consumer appliances, smart technology, IT accessories, and sensor-driven IoT solutions, driving revenue growth and improved margins.
Syrma SGS Technology
- The company presently has an order book worth Rs. 3000, which is about Rs. 1200 crore more than the previous year. Syrma intends to complete at least 70% of its projects in FY24.
- The company has received RDSO approval from Indian Railways. Although the current contribution from trains is minor, the company anticipates increased business from railways.
- The Company’s Capex in FY23 was around Rs. 170 crore. In FY24, it intended to expand greenfield capacity by Rs. 200-260 crore.
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Kaynes Technology Vs Syrma SGS Technology – Key Metrics
We’re nearly done with our Kaynes Technologies Vs Syrma SGS comparison. Let’s have a look at some critical metrics for the stocks.
| Particulars | Kaynes Technology | Syrma SGS Technology |
|---|---|---|
| CMP | ₹ 2924.5 | ₹ 518 |
| Market Cap (Cr.) | ₹ 18007 | ₹ 10131 |
| Stock P/E | 148.67 | 75.97 |
| RoE | 24.90% | 12% |
| RoCE | 24.20% | 15% |
| Price to Book Value | 7.45 | 6.46 |
| Debt to Equity | 0.05 | 0.28 |
| Promoter Holding | 63.57% | 90.00% |
Conclusion
We have come to an end of the comparative study of Kaynes Technology vs Syrma SGS Technology. Both Kaynes Technology and Syrma SGS Technology have demonstrated impressive growth trajectories in India’s booming electronics manufacturing services (EMS) industry. But, Kaynes exhibited better performance in terms of margins and returns when compared to Sryma.
Looking ahead, both companies have ambitious expansion plans, with Kaynes Technology aiming to move up the value chain and diversify into new technology applications, while Syrma SGS is leveraging its strong order book and exploring opportunities in the railway sector.
Written by Aaron Vas
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The post Kaynes Technology Vs Syrma SGS Technology – Financials, Future Plans And More appeared first on Trade Brains.
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