Syrma SGS Technology , a leading electronics system design and manufacturing (ESDM) company, has reported robust financial results for the first half of the fiscal year while simultaneously announcing a strategic acquisition in the defence and maritime electronics sector.

Financial Highlights

For the half-year ended September 30, Syrma SGS Technology posted impressive financial results:

The company's EBITDA margin improved significantly to 10.70% in H1 FY26, up from 7.00% in the same period last year. The profit before tax (PBT) margin also saw a substantial increase, rising to 7.40% from 4.00% year-on-year.

Segment Performance

Syrma SGS Technology reported growth across several key industry segments:

• Auto segment revenue increased by 24.00% year-on-year
• IT and Railways segment saw a remarkable 73.00% year-on-year growth
• Industrials segment grew by 20.00% year-on-year
• Healthcare segment revenue rose by 21.00% year-on-year

However, the Consumer segment experienced a 23.00% year-on-year decline in revenue.

Strategic Acquisition

In a significant move to expand its presence in the defence and maritime electronics sector, Syrma SGS Technology announced the acquisition of a majority stake in Elcome Integrated Systems Private Limited (Elcome). The acquisition details include:

• Syrma SGS will acquire 60.00% of Elcome's total paid-up share capital for approximately ₹235.00 crore
• The acquisition will be completed in four tranches, with the first tranche expected to be finalized by January 31, 2026
• Elcome will also acquire Navicom Technology International Private Limited, making it a wholly-owned subsidiary

This strategic move aligns with India's Aatmanirbhar Bharat objectives and aims to strengthen self-reliance in advanced electronic systems for the defence sector.

Management Commentary

Sandeep Tandon, Chairman of Syrma SGS, stated, "This marks a meaningful milestone in Syrma SGS's long-term strategic roadmap. India's defence sector is undergoing a strong indigenization and capability expansion phase. Together, we aim to create a scaled, innovation-driven domestic platform in defence electronics, aligned with India's national priorities."

J. S. Gujral, Managing Director of Syrma SGS, added, "Elcome's extensive engineering and field service experience, combined with our industrial scale and supply chain, creates an ideal base to pursue larger integrated defence programs."

Future Outlook

The company remains confident in its growth prospects, citing strong industry tailwinds across various sectors. With the strategic acquisition of Elcome and the robust financial performance, Syrma SGS Technology is well-positioned to capitalize on opportunities in both its core electronics manufacturing business and the emerging defence electronics sector.

Investors and industry observers will be keenly watching how Syrma SGS integrates Elcome's capabilities and leverages this acquisition to drive future growth in the high-potential defence and maritime electronics market.

Syrma SGS Technology Limited , a prominent player in the electronics manufacturing services (EMS) industry, has announced a significant move to expand its presence in the defence and maritime sectors. The company's Board of Directors has approved the acquisition of two key players in these industries: Elcome Integrated Systems Private Limited and Navicom Technology International Private Limited.

Acquisition Details

The acquisitions will be executed through a carefully structured deal:

Strategic Rationale

Syrma SGS Tech's decision to acquire these companies aligns with its long-term strategy to capitalize on emerging opportunities in the defence and maritime sectors. By integrating Elcome and Navicom into its portfolio, Syrma SGS aims to:

1. Diversify its product offerings
2. Tap into the growing defence and maritime equipment market
3. Leverage the expertise and established presence of both acquired companies

Transaction Structure

The acquisition of Elcome will be completed in four tranches:

• First Tranche: Syrma SGS will acquire 60% of Elcome's paid-up share capital
• Subsequent Tranches: The remaining stake will be acquired based on Elcome's performance milestones in FY 2025-26, 2026-27, and 2027-28

Concurrently, Elcome will acquire 100% of Navicom's paid-up share capital, making Navicom a wholly-owned subsidiary of Elcome.

Governance and Management

Post-acquisition, Syrma SGS will have significant control over both Elcome and Navicom:

• Board Composition: Syrma SGS can appoint up to 5 directors, while Elcome's promoters can appoint up to 2 directors on each company's board
• Key Decisions: Certain actions will require affirmative consent from both Syrma SGS and Jimmy Grewal (representing Elcome's promoters)

Financial Implications

The acquisitions are expected to bolster Syrma SGS's financial position:

• Elcome's turnover has grown from ₹109.00 crore in FY 2022-23 to ₹155.00 crore in FY 2024-25
• Navicom's turnover has increased from ₹26.00 crore in FY 2022-23 to ₹52.00 crore in FY 2024-25

This growth trajectory suggests potential synergies and expanded market opportunities for Syrma SGS in the coming years.

Conclusion

Syrma SGS Technology's strategic acquisitions of Elcome Integrated Systems and Navicom Technology International mark a significant step in its expansion into the defence and maritime sectors. As the company integrates these new entities, stakeholders will be watching closely to see how this move enhances Syrma SGS's market position and drives future growth in these promising industries.