Syrma SGS Technology IPO: How good is it?

In our previous part of Syrma SGS Technology IPO story, we read about the key details of the IPO. Here we will answer some questions about Syrma SGS and evaluate it on parameters like management, financials, valuations, etc. IPO questions The company/business 1) Are the company's earnings before tax more than Rs 50 crore in the last 12 months? Yes. The company's consolidated earnings before tax for FY22 were Rs 81 crore and Rs 111 crore based on proforma financial statements. 2) Will the company be able to scale up its business? Yes. The recent acquisitions have already helped the company grow its business and the proceeds from IPO will be used to establish new R&D facilities and expand manufacturing capacities. Thus, Syrma SGS will be able to scale up the business comfortably. 3) Does the company have recognisable brands truly valued by its customers? No. The company operates in B2B space and also competes with large players who have a bigger presence in the industry. 4) Does the company have high repeat customer usage? Yes. 16 customers have been associated with the company for more than 10 years. 5) Does the company have a credible moat? No. Even though the company is involved in precision manufacturing and is a leader in high-mix low-volume production, there are other domestic and international players who offer such services. 6) Is the company sufficiently robust to major regulatory or geopolitical risks? No. The company imports 61 per cent of its raw materials and 44 per cent of its revenue are derived from exports in FY22. Thus any major geopolitical risks may affect their operations. 7) Is the business of Syrma SGS immune to easy replication by