Syrma SGS Technology Limited (SYRMA) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to SIRMA SDS Technology Q3 FY26 Earnings Conference Call hosted by Access Capital Limiter. As a reminder, all participant clients will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded and I hand the conference over Mr. Nikhil Kandhoye from Access Capital Limited. Thank you and over to you, sir.

Thank you, Ikhra. Good morning, everyone. On behalf of Access, I welcome you all to Q3 F526 Earnings Conquer of Sirma ACH Technology Limited. We have with us the entire management of the company. At this point, I will hand over the Protonikhil Gupta, Head of Iron Investor Relation of Sirma. We'll take that proceeding forward. Thank you.

Yeah. Thank you, Nikhil. A very good morning to everyone. Welcome to Sirma SGS third quarter financial year 2026 earnings call. We have with us today Mr. J.S. Kujral, managing director, Mr. Jayesh Toshi, director, Mr. Sathendra Singh, chief executive officer, and Mr. Vijay Agrawal, chief financial officer, Sirma SGS, to discuss the performance of the company during the third quarter of the financial year 2026, Followed by a detailed question and answer session. Kindly note, during this call, certain statements that will be made are forward-looking, which involves several risks, uncertainties, assumptions, and other factors that can cause results to differ materially from those in such forward-looking statements. We request you to kindly refer to the disclaimer statements as presented in the earnings release for the same. With this, I now hand over the call to Mr. J.S. Pichal, Managing Director, for his opening remarks on the performance. Thank you.

Thank you, Nikhil. Ladies and gentlemen, a very good morning, and welcome to SIRMA-SGS Q3-FI26 running call. The last three months have been good and exciting, and I'm happy to share that the company has posted robust performance on all parameters. If we look at the sale, my Q3 sales have gone up by 45% compared to last Q3 of FY25. EBITDA has shown a very healthy growth of 101%, up from 79% to 159%. PBT and FAT have also registered corresponding good growth of about 108%. One of the redeeming features of this quarter was a 66% growth in my exports, up from 202 crores to 335 crores between Q3, F525 and Q3, F526. Now, if I sort of scan the nine-month performance, again, we find that the performance is in line with what we have guided and, in fact, better on some of the parameters. We have achieved in nine months revenue of about 3,350-odd crores, with operating a bit of 370 crores up from 208 crores, a PBT of 295 crores up from 146 crores, a PAT of 227 crores up from 113 crores, and exports up by 45% from 576 to 837 crores. Going into sort of a bit granular detail, what is satisfying and gives us confidence of maintaining this tempo of performance is almost a stackless growth across all verticals. All the sort of four cylinders are firing. The auto has grown by a robust margin of sort of growth of 30 percent, MedTech by 31 percent, Industrial by 29 percent, IT railways. Because the base was very low, it has shown a robust performance of 70 percent growth. So this gives us the confidence that going forward, we would be able to achieve the guided figures and maybe exceed on the margin front. When we started off this year, we had guided a margin of 8%, a EBITDA margin of 8%, which was revised to 9%, and now we are confident that we should be able to deliver 500 crores plus of EBITDA, up from 324 crores of last year, which would translate into a 55-57% growth, against a targeted growth of 30%, which we had guided. Going forward, in the coming year, we believe that we are well poised to take sort of capitalized on the emerging opportunities and grow healthy growth rate across all verticals, such that we would be able to deliver a 30% growth rate in the coming year or so. So, one of the factors which we should keep in mind is that this performance has been under sort of the so-called cloud of terrorist uncertainties from USA. We have been hoping for the last quarter or four or five months that it would settle. We are still very hopeful that in this quarter, this sort of thing, that the tariff uncertainty should be out of our way. When I say over, it also applies to the entire industry. One very positive thing which has happened a couple of days back is the signing of the EU FTA with the EU union, not in the short run, not maybe in 26, 27, but in the long run, I think it bodes very well for the electronic industry in two ways. A, some of the end equipments which were attracting duties, they have been rationalized or brought down to zero or very low duties, which won't enable export of end products from India. Automobile is the case. Now, if automobiles are exported, the electronics which go into the automobiles, we are there to service that. And plus, it creates a broad ecosystem and an environment, a positive environment, that going forward, the trade with EU would see an uprise, 45% over nine months. And I expect that we should be able to cross 1,000 crores, maybe close to 1,100 crores in the coming year. We're already sitting at 837 crores of export. On the domestic front, we, for the industrial industry service, are seeing robust growth, and I expect the growth to continue in the coming year also. As far as the new verticals of projects are concerned, our PCB project is on track. The construction has started, and we expect the construction to be completed by about June, July. Parallel, the equipments are being ordered, and we are on track to start the trial production by December 26th, January, March 27th quarter, so that we have a first one year of sales from the capacity which we are creating this year. Further capacities will be created based on the demand, which we believe would be very good, and that we believe that the additional capacities which we have planned should come in sooner than later. We are sort of expanding our footprint in Pune, expansion of capacity in Pune. We have acquired Elcom. The deal has been closed, and we expect that going forward, the defense vertical would contribute to the bottom line more and to the top line as a proportionate figure a little lower because it will be about 5-6% of overall revenue. On the whole, I think it's been a very satisfying nine months on the financial parameters, performance, delivery, everything. One soft thing which we believe is of very great significance for our company and the country is that we have got the gold rating from EcoVide, which is the ESG complies, and we are now rated among the top 5-person companies globally. Last year, it was a bronze rating, so we have qualified from bronze to gold. Some of our customers are in platinum, so I think the journey is on, and we'll endeavor to do that. With that, I hand over to Vijay to run you through with the detail number crunching. But overall, I think the team has done very well, and we are happy that we are on track and are delivering what we have guided this week. Thank you.

Thank you, sir. Good morning, everyone. I will now take you through our brief financial performance for the quarter and nine months into December 2025. I can start with the update on Elcom first. During the quarter, we consummated the deal sometime mid of December. So, for about 15-16 days, we have been able to include or consolidate financials of P&L performance of Elcom also. Considering the same, our overall total consolidated revenue for the quarter is Rs. 1,274 crore, as against 891 crore corresponding quarter previously, last year, registering a 45% growth year-on-year basis. Our total revenue for the 9 month is approximately Rs. 380 crore, which is again a 17% growth on a year-on-year basis. The robust growth for the period is contributed by higher growth in auto, industrial healthcare, and mainly export business. The consumer sector business for the quarter is approximately 31%, which is in line without previous guidance. Our export revenue for the quarter is approximately 335 crore, highest ever per quarter, which has grown by 65% on a year-on-year basis. And for the nine-month, it is around 837 crore rupees, which is again a 45% growth year-on-year basis. Overall export business mix is approximately 25% for the entire nine-month period, which was about 22.5% for last financial year. So we can see overall export has improved by almost 250 bps in the overall revenues. Our OEM revenue for the quarter is approximately 16%. Coming to gross margin, gross margin for the quarter is 27.4%, as against 26% for Q3 of last year. The margin improvement is mainly led by higher export mix, higher ODM, higher industrial and healthcare business, and also lower consumer and IT, which is a relatively lower gross margin business. We again continue to focus our efforts on our operational efficiency improvement, further to improve margin. Our operating EBITDA for the quarter stood at healthy 159 crores with a year-on-year growth of 100% and an operating EBITDA margin of 12.6%. The current quarter consolidated EBITDA also includes 12 crore rupee from Elcom consolidation. So, excluding Apple-to-Apple basis, it is 147 crore rupees. Our nine-month operating EBITDA is approximately 370 crore rupees, which has grown by 78% year-on-year basis, and nine-month operating EBITDA margin is approximately 11%. PVT for the quarter is of 138 crore, and for the 9 month it is 295 crore, which has grown again by 105 percent on a year-on-year basis. PVT margin for the 9 month period is 8.7 percent. Coming to PAT performance, PAT for the quarter is 110 crore, which has again grown by 108 percent year-on-year. PAT margin is 8.7 percent for the quarter. Similarly, for the 9 month That is 227 crore rupees with 100% growth on a 505 basis. Overall, net working capital days investment, as on December end, we are running the business after down 76 days of net working capital days investments. These numbers also include consolidation of Elcom. So if we remove it to make it Apple to Apple, my net working capital days investment is 68 days, which is 5 days lower than the previous quarter. So that much of efficiency we were We are not able to bring in during the quarter. And considering the same overall operating cash flow for the entire 9-1 period is now positive for the company. We again continue to focus on the reduction of networking capital days by another maybe three to five days over the next two to three quarters. Moving to our tech position, we have a total gross debt of 529 crore, as on December end. And as again saying, we are carrying a healthy treasury balance of 933 crore rupees. With this, we have a net cash position of 404 crore, as on December end. Coming to capex spend, it is all on track. We have been able to spend around 55 crore during the quarter, and for the entire nine months, it is approximately 115 crore rupees. Coming to ROC performance, ROC for the quarter is approximately 16% on adjusted basis when we adjusted for the goodwill and unutilized IPO money. We expect this to improve further up for the year when we are able to take the full P&L benefit, full period related full benefit of income because as of now income is already included into the capital employed but return should also include it further going forward. Our order book visibility as on December end is approximately 6,400 crores, which includes auto sector related approximately 31 percent, consumer business about 25 percent, industrial business 27 percent, and balance is healthcare, IT rainway. Just an update on the merger. We have already concluded the merger. Sirma AGS merger is all done, and now we are reporting AGS is already in the merger to Sirma, so there is nothing pending on that side. Once again, we continue to focus on high margin verticals, operational efficiencies improvement, improving the overall working capital investment, and thereby improving the overall operating cash flows. That is all, and thank you very much. I will hand it over to Sat Indra, please, our CEO.

Well, thanks, Vijay, and good morning from my side. I think we had an excellent quarter, as already summed up by Mr. Gujarat and Vijay in their remarks with numbers. I couldn't be happier. I think this is a culmination of all the efforts made by our team across the clients, across all support functions, and most importantly, the customers. We have a very healthy, strong pipeline, and we are looking forward to exciting times ahead. Our factories are getting busier, as Mr. Gujral alluded to in his remarks. We have seen a utilization improvement between quarter two to quarter three, almost five percent up. And that would mean that we are very closely watching for expansion of capacities. Last quarter, I had commented that we are building a factory in Bangalore. That's on track, and we are looking forward to more capacity enhancements in this year, which will obviously be required and the right step to do to meet the exciting growth ahead. Strategy-wise, we remain very focused. We are working basis of what we always believed in and what we continue to execute on. First things first, customer. We're listening to the customers very, very carefully, working with them, walking the walk, and ensuring that we are ready as and when they want us to be ready with the capacities, with the systems, with the competencies needed to support their business. We have continued focus on the segments which we always talk about, auto-industrial, medical, railways. We are continuing to build our capabilities. I think last week also brought in interesting news to the trade and manufacturing ecosystem, which is the Europe-India deal. I think that's, as the newspapers call it, mother of all deals. I would kind of believe that this is going to be a significant impact on the way businesses are growing. It definitely will bring strong tailwinds to Indian electronics companies. And we, as SIRMA, as you have, have been in the European market for more than two decades. And we have been physically present for almost a decade via our factory and engineering presence in Stuttgart. We are looking forward to building on that to ensure that our export growth, which already we just said we grew almost 45% year on year. We are looking forward to using our position there, our knowledge of the market, to ensure that we have solid growth. Last but not least, I think we continue to be a business which is doing all the right things required for the planet, and that's reflected in our eco-what is rating moving from bronze to gold. There is clearly way ahead. Our endeavor would be to get to platinum, but the good part is that we are on the right track. With this, I'll turn it back to Nikhil, and thank you very much. Looking forward to exciting times together. Nikhil, over to you. Thank you, Satinder.

Thank you, Satinder. Over to you, Ikra, for getting into the Q&A session.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Samant Kumar from Motilal Oswal Financial Services Limited. Please go ahead.

Hi. Good morning. So, my question is for consumers, we have seen a swing of 116 crore in this quarter, and also in industrial, 120 crore. So, I understand industrial is majorly driven by the smart meter, but can you talk on consumer side, what is leading this kind of growth, because we have focused on high value, high margin business for consumer, what we have discussed earlier, that is number one. Number two, what other sub-segment is driving industry?

So, we have done approximately 390 crores in this quarter, while it was 365 crores in the previous quarter. So, there is a growth of approximately 23-24 crore rupees over the last quarter. And this is again mainly largely driven by telecom business, which we are doing the set-up boxes, GP, G-PONS, IDU, ODIU. That is one large thing. Additionally, the consumer sector-driven OEM business, what we are doing is like water purification and maybe some bit of RFID tax going for consumer end use. Those are the products which we are doing in the consumer segment.

You see, end of the day, when we started off this year, we had said that we would like our consumer sort of basket to be about 31%, 30-31% of our revenue. And for this quarter, it is at about 30. And even if I say for the full year, it is at about 32% of the total sales. So I think we are on track. The industrial is driven by across the sort of applications, including exports. It's not purely driven by the energy metering, which is a domestic business, but by growth in my exports. My exports predominantly are in mid-tech and industrial with a component of automotive also, which is touching around 100 crores. So it's the business growth across verticals and within verticals across applications. That's what is, I think, the strength and satisfaction which we derive when we see it, the quality of growth, that it is not driven by one leg, all the cylinders are firing, and within them, within each vertical, the different applications are also growing secularly with marginal variations. Some will grow faster, some will be at a slightly lower flip than the fastest one.

So, can you talk on the industrial side, what is the smart meter contribution of overall industrial in Q3, and also in IT and railways, what is the mix of railway in IT and railway in this quarter?

In this IT and railways, during the quarter, we have done approximately 82 crore rupees. Office railway is only 17, 18 crore rupees, and balance And similarly in the industrial breakup, smart metering is less than 50 crore rupees for the quarter year. How much? Around 50 crore rupees. Smart metering?

Yes. So in industrial, we have a higher proportion of telecom. In industrial, exports.

Other applications.

Industrial has power supplies, it has exports, it has the metering.

Okay. Thank you so much.

Thank you. The next question is from the line of Samit Sinha from MacWire Capital. Please go ahead.

Yes, thank you. So, good performance here. So, if I'm looking at your full-year guidance, 30-35% year-over-year growth requires. So, fourth quarter, you're assuming what it implies, about 300 to 500 crores sequential growth. Can you help us get there? Because that's a pretty strong year-over-year acceleration that's required. Of course, LCOM will contribute. How much is LMASter closing, you know, included in guidance? And then I have a follow-up question.

Now, if you see the quarter-on-quarter performance, Q1, we had a negative revenue growth of 19%. Q2, we did a 37-odd percent positive growth. So, from a negative 1980-19 to 37, it implies whatever the growth is. And in Q3, this 37 has grown up to 44 or 45 percent. Q4 going forward, we are confident that we should be able to grow sequential or a sequential target, which we did about 1,264 crore. We should be able to grow this figure by about 1,600 plus, such that we should be sitting at anything between 4,850, 4,900 to 5,000. That's the wage. But to me, the revenue figures are very important, but more important is the EBITDA. I think we started off the year with a guidance of 400 crores of EBITDA. We're already sitting at 370 crores in nine months. Even if I exclude the 12 crores of EBITDA, which has been consolidated, it means 358 crores. I'm very confident that we should be able to cross the 500 crore mark of EBITDA for the full year. If 500, we do that, it's almost like 58 odd percent increase over previous year. And it would have a similar positive increase in the PACT. Once the PACT goes up, it will have a similar positive impact on my ETS. So, I think on the final points of performance, I think we are delivering on exceeding what we have committed to the street.

Just to add here, we are not expecting any revenue from Elimaster JG in the fourth quarter, and also Elcom-related, we are expecting 100 to 120 crores of revenue in the quarter four. That would be included there.

Got it. Okay.

I was also expecting healthcare higher number in the next quarter as it is always a much more rear-rooted business in any year.

Got it. Okay. Thank you. Thank you for that clarification. So it seems like you're pretty high visibility into 27 as well. Can you help us think about some of these segments and what the key drivers are and if you can bracket sort of growth rates for each of these segments, that would be helpful.

As I just shared that, if I see my nine-month performance or my three-month performance, all my major verticals are growing at a pace of 30-plus percent. Railways and IT, because of a lower base, grows at about 70-odd percent. I expect this secular growth among verticals to continue. Some may grow mild, some may grow at 35, some may grow at 28, but on an overall basis, we believe that we are in a position to deliver a 30% growth on top line and on EBITDA. Got it. In the coming.

Okay, that makes sense. Thank you very much.

Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit your questions to one per participant. Should you have a follow-up question, please rejoin the queue. The next question is from the line of Sonali S. from Jeffries. Please go ahead.

So, thank you for the opportunity and many congratulations for such a wonderful result to you, Gujaralji, Vijayji, and the team. So, my first question is, margin trajectory has been really strong this quarter. Vijayji did talk about the levers for that, but just wanted to get in a little more detail. Because if I look at the product mix in Q3FI26 versus Q3FI25, I mean, consumer autos were broadly in and around the same, you know, percentage of sales as they are right now. So keen to understand what led to this excellent margin and the sustainability of the same.

See, we don't, as we have all the time been saying, we don't concentrate or point on quarter-on-quarter margins. So even if you recall, my Q4 of last year was, I think it was about a 12% a bit margin, Q4 of last year. And this time it is in Q3. So let's not say that Q3 becomes the base for future projections. What we are saying is that we guide a 30% growth in absolute EBITDA, which translates into 10% EBITDA margin going forward. What grows the margins in Q3 is my export performance. See, export is a very high-margin business, and it has grown by 66% compared to Q3 of last year. So in exports, we have up from $202 to $335 crores. This $135 crores additional sales results in a comparatively very high contribution towards EBITDA. Similarly, if I see my performance on industrial, my industrial is 31% in quarter three, grown 46% over the corresponding period of last year. So these high margin verticals where the growth has come this quarter has resulted in 12 odd percent of a vector. Going forward, we guide that we should be able to deliver a blended EBITDA margin of 10% for the next year.

Just to add Sonali here, you are right. The overall business mix is exactly the same as it was in Q3 of FI 45. So that is where when you see gross margin level, overall improvement is only 1% because of the better margin controls or maybe some bit of procurement efficiency. And the larger part of saving is coming because of the scale improvement versus Q3 of FI25. There is a 45% of the scale improvement, which is also helping us in the operating leverage improvement. That is where the overall EBITDA margin increase is 3.5% versus Q3 of FI25.

Got it, sir. Very clear. And just one last question. For the PCB manufacturing, we had set out the overall CAPEX estimate to about 15 billion INR. How should we look at the per annum capex guidance, considering that, you know, we'll be doing this capex in phases? So, is about 3 billion per annum a fair number to go by in FI 2627?

Okay. So, in the first phase, which would be completed by December 26, so 2627, we should be spending approximately 360, 370 odd crores, 360 to 400 crores. which would give us a capacity of 720,000 square meters of multi-layer line and 4,80,000 square meters of single-layer PCBs. The facility which is being created is to accommodate two additional multi-layer lines. So the civil and the infrastructure which we are creating, the attendant utilities and all that, They are all geared up for my full three ML and one ML means multi-layer and one single-layer line. I personally believe that the stuffing of the multi-layer lines, the additional multi-layer lines, would be sooner than what we had envisaged. We had emphasized that the second and the third line would come towards end of calendar 27 or beginning of FI 27, 28. I think it would be pre-poned because the traction or the inquiries or the interest which we are receiving from potential customers is very strong. So this year, it is about 360 to 400 crores, and next year, I think, what the PCB for this would be approximately the same amount. And purely dependent on demand. As far as the 1,500 crores you said, that also included CCL and HDI and FLEX. We are yet to receive the approvals of the government because we had also planned the starting of those projects in 27-28.

But overall, the 1,500 crore we want to, we are planning to spend that by FI 30 in Kutabit.

Understood. Got it. Very clear. Thank you and all the best to you.

Thank you. The next question is from the line of Kaveen Sahai from PL Capital. Please go ahead.

Yeah, thank you for the opportunity and many congratulations of a very good set of numbers. My first question is related to the export. Because the last year, I can see that the U.S. contribution for the export were on the higher side. And now again, you know, even after a lot of fluctuation because of a tariff, you are doing very good in the export as well. So, can you give some geographical indication from where you are getting a growth, as you have already highlighted, industrial contribution in the export is of the higher? And also, is that the Elicon contribution in the export is also there?

So, Elkhorn is all a domestic consumption, domestic sales, so it is not included in the exports. The exports, which for the nine months stand at 8.37 crores versus last full year exports are about 8.58 or 6.60 crores. These exports have primarily been driven by my robust growth in the industrial exports and also medtech and healthcare. Three eminently to USA and other are primarily to break-up-wise. Do you have the break-up? Yes.

So break-up-wise, during the quarter, we have done almost 103 crore rupees on the health care side and about 178 crore on the industrial side. Out of the total, 335 crore rupees.

Geographical also, if you can give.

Sorry? Geographical bifurcation, if you can give, for nine months. 5% is U.S. and 35% is Europe, but industrial is largely 90% is Europe.

My medtech business is pre-eminently going to USA. My RFID and EMS business is directed towards EU and maybe Mexico and something to that. Geography-wise, I don't have the figures of time. We'll have to sort of work out. So, but I think it should be maybe 55, 45.

Right, sir. Any number on PLI for a quarter and nine month, if you can share?

PLI analyzed number for any year is near about 30, 32 crore rupees for us that way. That's what is coming in the normal business plan.

And there are no abnormal variations quarter on quarter.

Thank you, sir, and all the best.

Thank you. The next question is from the line of Tanesha from Dam Capital. Please go ahead.

Hi, sir. Good morning. Congratulations on a very good set of numbers. Sir, my first question is if you could possibly spend, you know, just a couple of minutes on all the newer initiatives, especially the defense acquisition since it's, you know, consummated in our numbers. And, you know, if you can just give some direction on where we want to take this business in terms of revenues, You know, how it's going to sort of be accretive to a margin profile, and, you know, what sort of return ratios does it enjoy? So one is on defense, and second is, you know, if you can possibly just for the bare PCB project, indicate what kind of applications, you know, we are sort of aiming at. Will it be more industrial, auto, you know, what are the segments which And what would the indicative margin profile be on basis of current projections for the bare PCB plant? Yeah, thank you.

Okay. Now, Elcom, we just acquired it, and this year, we believe that it will account for approximately, maybe about, Elcom as an entity, I'm not talking about what it will be consolidated into because of the previous nine months which were not done. Elkhom should be delivering anything between 280 to 300 crores of revenue. Elkhom as an entity, the entire thing will not get line-wise, it will not get consolidated into our thing. Going forward, we expect that this business has the potential to grow at maybe 10, 15, 20 percent with the present offering of bookies of products which we have got. But obviously, when we have acquired a platform and we have got a foot in the door in defense application, we would like to increase the bookie of offerings. Next year, I think if we are doing about 280 to 300 crores this year in Elkhom, next year we should be taking it anything between a 10 to 15 percent growth rate. Because in defense, the gestation period is pretty long, and the orders could also be lumpy. As far as the margin profile is concerned, this is a high margin business, and the margins are upwards of 20%, 24%, 25%, which we believe we will be able to sustain in the coming years also. So, that's as far as Elcom is concerned. On PCB front, we are in touch with customers in the industrial, automotive, and consumer segment. And industrial is a very wide application. Energy metering is one of them. And broadly, in the PCBA industry, the margin profile is 15 to 17% EBITDA margin profile without the PLI. So I think we would be in line with the industry margins and grow in the industrial and automotive segment. Automotive also is an automotive. There are various categories, the lighting PCBs, the infotainment PCBs. So we'll be accustomed to the entire sort of consumption, what you call the PCB, which goes into the automotive. And subsequently, we would also be targeting the MedTech. They are high-end PCBAs and have a longer approval cycle. So we'll be plucking the low-hanging fruits in the initial phase and finally build up the ecosystem and the pipeline to target the high-end PCBAs, which would also include exploring export markets.

Sorry to interrupt, Taneh.

Can you please speak a little louder?

Yeah. So just to follow up on the PCB business, right, you know, we've spoken about multilayers, but what kind of multilayers are we going to do? Till what amount of...

See, typically, if we analyze the PCB consumption, about 10% to 15% is HDI and other things, And rest is all single and multi-layer. And if we further drill down, bulk of the consumption, which I say if I take the total pi at 100, 75% of that, 70 to 75% of that would be sub 8 layers. Single to sub 8 layers of 8 layers. Then as you go up in the layer profile from 8 to 10 to 15 or whatever, it's like oxygen, it gets very fine. The quantities keep reducing. We are targeting the market which is available, which is bulk market, and not saying that we'll not be targeting the 15 layer or 12 layer. The volumes are very less.

Thank you, sir. Thank you so much for your clarification.

Thank you. The next question is from the line of Narsha Chaudhary from Aditya Birla Mutual Fund. Please go ahead.

Hi, just one clarification, sir. Apologies if I'm repeating. I'm a bit late. Did you share your order book number? Can you re-share it if you have already shared?

Order book?

Yes.

Yes, we have already shared. So, total order book and visibility is approximately 6,400 crore. And out of that, around 31% is from auto segment, about 25% from consumer segment, and approximately 27% from industrial segment. Balance is healthcare, IT, and health groups.

And exports, sir?

Exports are within, say, when I say industrial, it will be exports. Medtech is all exports.

Export is about 24% there in that.

In the volume of that. And the volume, 24-25% of the enhanced value. So, if we are targeting, we are doing about 1100 growth this year. So, next year, we expect this figure to go up further. If we are targeting a 30% growth rate, so we should be having a 25-30% growth rate in exports also.

Thank you, Valdita.

Thank you. The next question is from the line of Manan Goyal from ICICI Securities. Please go ahead. Hello, Manan, your line is, yeah, you are audible. Please go ahead.

Yeah, Anirut Soshi here. Just one question. After all the acquisitions M&A, what is the goodwill on the balance sheet? And how do you see the, in a way, writing off of the, or amortization of the goodwill panning out over the next two, three years? And will it qualify for any tax benefits? Great. And second question, what is the CAPEX that we are looking at for FY27 and FY28? And lastly, what is the current networking capital, inventory days or data days, if you can share. Yeah, that's it from my side. Thanks.

So, to answer your first one on the goodwill and intangibles and the tax benefit and the amortization of the same, that is something we are working out along with our valuers and the auditors together, and probably in the next quarter, we will be able to disclose it completely that way. Whatever intangibles is coming out of that PPA valuation, purchase price allocations, that intangibles will be eligible for a tax benefit. Amortization and tax benefit. Goodwill is something we will not be able to amortize it, so there will not be any tax benefit or penal impact of the same thing. But that is something we will be able to disclose properly in the next quarter results. Coming to your capex requirement, normal organic related capex requirement would be 80 to 100 crore rupees on a year on year basis. Apart from that, special project just like PCB business related near about 300 to 350 crore is what we will be spending over the next year. And beyond that, if we furthermore announce any other new special project, that will be over and above actually additionally. Coming to net working capital trade requirements, we are already at 76 days of working capital days. We are still, that is also including ELCOM related working capital number so far. We are still working on it and trying to reduce it further. Over the next two to three quarters, we should be able to bring in an efficiency of around five to six days. And we have already disclosed that this 76 days, if we exclude ELCOM on the current year number, if we exclude Welcome, this is about 68 days. That's where we are currently.

So, which is a five days or six days reduction from September 23 and a four days increase from last year, corresponding returns.

And even after considering all these things, my overall nine-month operating cash flow is positive right now, which we are trying to furthermore improve for the entire full year.

No, sir, this is really great. Many thanks for the details.

Thank you. The next question is from the line of Keshav Vijayaratan Lahoti from HDFC Securities. Please go ahead.

Hi, thank you for the opportunity. Sir, I remember your smart meter revenue, which was 50 crore each quarter, which was coming, And this quarter also you highlighted it is 50 crore, so totaling 150, 160 crore in nine months. But your guidance for this year was 300 crore. Here you indicated possibly H2 would be better on smart meter front. So what's the update on that side?

See, on the smart meters, one thing is it is a very sticky business in terms of working capital cycle. And we don't want to land into a situation where we have the sales but not the recovery, to be very honest. So the growth is driven by choice. As long as I am confident of delivering on the overall business, and we are selective about customers in the, what you call, energy metering business, and hence this sort of slight softness in growth, the numbers of the value of the energy meters. In terms of quantities, we are growing well, and because of the working capital cycle, we at times ask our customers to give us the key dedicated controllers free of cost. So while my quantitative numbers may go up, then since the material is being sort of procured by the customer, it does have an impact on the value of sales. So there are two, three factors. A, the working capital cycle, we are choosy about the customer we service. If I'm not going to be choosy, the sales, the business is available. I can grow several times what I'm doing today in the energy metering business, but I don't want to land in a situation where the sales cycle does not result into a shorter cash flow cycle.

Got it. So what is the revised guidance of smart meter revenue for this year next year?

Next year, I think if we are doing about 200 crores this year, we should be going about 20, 25, 30 percent next year. Again, what I am sort of focused on, the company is focused on, is overall growth with profitable margins and positive cash flow. So these are the three parameters. Yes. So, growth is not coming. Then go into the sort of sticky business, sort of a sticky thing where the cash flow cycles are long. But if you are able to manage the growth without the longest working capital cycle business, I think we'll prefer that.

And one last question from my side, the guidance of 30% revenue growth, this is including everything Elcom and whatever inorganic you do or it's purely organic you are talking?

See, we had guided last year also and this year also, we are saying that we'll be growing at around 30%. Now, this year when we say we are growing at this rate from whatever we We did last year, 324 crore a bit, 3,700 odd crores of revenue. So it will be apple to apple, and ELCOM will be in addition. Next year, since ELCOM comes into a fold, we would share the defense vertical separately, but then the growth overall would be blended of all the things. So, if you are able to do about 5,000 crores, 4,900 crores of revenue this year, a 30% growth will be what would result into, and more importantly, if we deliver a 500 crores of beta, of which I am very confident it's not it, we'll deliver a 500 crores of beta this year. Next year, a 30% growth rate is 650 crores of beta.

Got it. That is very helpful. Thank you so much.

Also, just to add on the previous question, the breakup of export, during the 9-month, we did total export of approximately 835 crore rupees, of which near about 255 is to US, and balance 580 crore rupees is for other than other markets other than US, which includes Belgium, Germany, Mexico, Canada, and China and Singapore together.

Thank you. The next question is from the line of Drumeel Vani from Great Capitan. Please go ahead. Yeah, hi.

Thank you for the opportunity. Great performance, and good luck for the future. Sir, my only question is regarding the good drop in the finance cost, quarter to quarter, while the debt number is higher. So, is it some refinancing of the debt, or can you just help us understand?

Yes, this closing debt was not exactly available for the entire period. So this is something for during the quarter, the debt number was actually lower. And yes, we were able to renegotiate some of the interest costs with the bankers to achieve some efficiency. So it is a result of both the things. Okay, got it.

And Vijay Bhai, the other question is on the, what tax should we assume tax rate for fourth quarter and next year? Plus, you mentioned the total cash outflow from our balance sheet will be around 400 crores for CAPEX, like 300 for the PCBA plus 100 for the, our existing business. Yes. So, then next year, we are planning to meet this entire requirement with our operating cash flow or how it is going to be funded? So, what sort of debt will on 31st March 27th, how the balance sheet will look like?

So, of this CapEx, whatever PCBs related CapEx, we are planning to raise 50% debt, 50% through equity and part of that equity, 25% of that equity requirement will also be funded by my partner also. So, in totality, yes, including debt or equity outflow, whichever way we can say, CAPEX related near about 300 to 350 crores will be the overall outflow here on the CAPEX side. And what was your first question regarding the cash balance?

Yes, so on this CAPEX, so 300 crore, so from our balance sheet, 300 crore will go from, say, my balance sheet. Yes.

See, on the apex for the PCB 350, 400 crores, whatever is the figure by March 27, would be making us eligible for a 50% subsidy from the government of Andhra Pradesh. So, it is sort of a bridge financing for a period of one year. So, whatever I spend till March of 27, I expect to get the money in 27, 28, 50% of that. So, on a full sort of cycle basis, my investment in the PCB project would, for this phase, if it is 400 crores, will be actually 200 crores from Sirma, and out of that 200, whatever is the equity portion, 25% will be funded by my collaborator.

Understood, understood. And my other question was on the tax rate. For the fourth quarter and for the next year, what should we be assuming?

Tax rate for the fourth quarter would be somewhere around 23%, 23-24%. And next year, we can assume over 26%.

26%. Okay. Thank you.

Thank you. Ladies and gentlemen, due to time constraint, that was the last question for today. I now hand the conference over to Mr. J.S. Gurl for closing comments. Over to you, sir.

Thank you, ladies and gentlemen. I think we are well-poised, well-positioned what we had set out to do when we hit the street in 2022 when we got listed. We had guided all the investors in the street that we are making a truly global EMS company, and we are on way, sort of on right track for that. In between, there would be bumps, but on a long-term basis, I think we are very well poised with our customers, with our vendors, with all the stakeholders, and to take benefit of the emerging opportunities in electronic manufacturing. We are building an organization which is now almost there. The capability building is an ongoing exercise which would continue year on year. When I say capability building, it is introducing the best of the software, the best of the tools, Online monitoring of performance of the machine so that we sort of get a better efficiency out of the sort of assets which we have created. We have, as I shared last time, tied up with a Canadian, American company, Arc Systems, which gives us sort of access to online monitoring of my SMT lines across plants. So sitting in the corporate office, my teams who have been given access can, on a real-time basis, monitor the performance. We have started a pilot project, and the results are very, very encouraging. And if we have, say, 40 lines and 500 hours per line, it is 20,000 hours of capacity. If I'm able to get a 5% improvement, it gives me 1,000 hours of capacity, which is equivalent to two lines. So I think we have now embarked on a journey to bring in the operational efficiency, which Vijay also alluded to, that while my gross material margin has improved by 1.7, 1.5%, my EBITDA margins have improved by almost like 3%. The remaining one and a half percent has come in from the operational efficiencies, and we continue relentlessly to work on this. So the motto on the shop floor is relentless improvement of efficiencies. This, increasing the value, increasing the export, increasing the ODM, ODM growth, and other sort of peace parts under the ECMS policy, I think positions SIRMA SGS in a very, very strong position to capitalize on the emerging opportunities within India and outside India. So overall, satisfactory nine months, globally also, macro also, and micro also, and we believe that we are in a good position to keep growing at profitable margins, and which we have said that our objective is to grow, A, 30% growth on EBITDA, positive cash flows, 25%, 30%, 35% growth on top line. So these three are the cornerstones on which we measure our performance, and each one of them has its own importance. And I now hand over to Stenzer to give his view on the overall thing. Stenzer, over to you.

Thank you, Gujaraji. I think this was a great call from all of us. We are very excited about the growth we have reported, and we're looking forward to a great future. Thank you, everyone. Have a good rest of the day.

Thank you very much. On behalf of Excess Capital Limited, that concludes this conference. Thank you all for joining us today, and you may now disconnect your lines.

Thank you.