Syrma SGS Technology Limited (SYRMA) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Sirma SGS Technology Limited's Q4FY26 earnings conference call hosted by ICICI Securities. As a reminder, all participant lines 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities. Thank you and over to you, Mr. Joshi.

Thanks, Michelle. ICICI Securities is pleased to invite you all to Q4-FI26 and FI26 Results Conference Call of SIRMA SJS Technology. We have with us today's Senior Management Team to attend the call. I congratulate the management for posting strong set of numbers, and now I hand over the call to Mr. Nikhil Gupta, Head of Investor Relations, to introduce the management and take the call forward. Thanks, and over to you, Nikhil.

Thank you, Anirudh. Hi, very good morning to all. On behalf of SILMA SGS family, we welcome you all to SILMA SGS Quarter 4 and Fiscal Year 2026 Earnings Call. We have with us today Mr. J.S. Gujaral, Managing Director, Mr. Jayesh Doshi, Director, Mr. Sathendra Singh, Chief Executive Officer, and Mr. Vijay Agarwal, Chief Financial Officer, Sirma SGS, to discuss the performance of the company during the fourth quarter and fiscal year 2026, followed by detailed question and answer sessions. 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. All forward-looking statements made alien are based on the information presently available to the management and to the company, and the company does not undertake to update any forward-looking statements that may be made during this call. In this regard, I will kindly review the disclaimer statements in the earnings release and all the other factors that can cause a difference. With this, I will now hand over the call to Mr. J.S. Gujaral, Managing Director, Sirma SGS. Thank you.

A very warm welcome, ladies and gentlemen, to the FY26 earning call of Sirma SGS Technology Limited. When we sit back and sort of reflect on what has happened in the year gone by, it gives us a great sense of satisfaction that we have achieved almost all the parameters or exceeded them, what we had said for ourselves at the start of the year. Just to recollect, we had started of the year with the guidance of about 400 plus crores of EBITDA figures, a revenue growth of about 30 to 35 percent, and a positive cash flow targeted to cross the 1100 crore mark. So these were the four, five sort of set of parameters which we had set for ourselves. And when we look at the figures for the year gone by, it gives a great sort of sense of satisfaction that we have achieved a beta of 545 growth. Even if we exclude the LCOM beta, it still stands at 490 plus growth. So, it's the original start guidance of 400 to 490 crores of operating EBITDA. Exports, we have targeted 1,100 crores. We are at 1,200 plus crores. Working capital cycle, we have said that we'll endeavor to bring it down, and we have brought it down from 69 days to 63 days. Ex-ELCOM, the sticker is at 58 days. All this has enabled us to generate a positive cash flow, operating cash flow, of 290 plus crore, which is almost at 53% of the operating EBITDA. So all these four parameters, we have sort of exceeded what we had guided the market. If I was to sort of exclude consumer business from our portfolio, because consumer is a low-margin business and there's a conscious effort of the management to sustain it at a certain level, my revenues have grown by a healthy 38%. Ex-ELCOM, they have grown by 31%. Drivers of superior margin, automotive, industrial, healthcare, export, and ODM, they have all fired in the right direction. Automotive has grown 39%, industrial 30%, healthcare 36%, exports 41%, and ODN has also gone up significantly to approximately 17%, which is almost like an 80% jump from 453 to 825 crore. Now, this gives us a good platform to grow in the coming year. We achieved 1,477 crores of revenue in the last quarter, which is a run rate of approximately 500 crores a month, which translates into 6,000 crores revenue at the same pace without a growth coming in in the second half of the year. My exports at 3.72 crores give a good run rate of 125 crores, which is again equivalent to the next year's target of about 1,500 crores. So we are well set to capitalize on this consolidation which we have done in the current year. And going forward, we are very confident that on the three critical parameters which we measure ourselves, primarily the EBITDA, operating cash flow, and the revenue growth, on all these three, we would be able to exceed the performance of this year or sustain the performance of this year. Thank you very much.

Yeah, so now I hand over the call to Sridhar Agarwal, Chief Financial Officer.

Hi, good morning, everyone, and welcome to SIRMA SGS earnings call for quarter four and full financial year 2026. I am pleased to report that this has been a landmark year for us, defined by strong execution, meaningful margin expansion, and significantly strengthened balance sheet. Let me begin with quarterly numbers first, and then I will take you to the annual performance. Quarter 4, 2026 was our strongest quarter yet. Consolidated total revenue for the quarter was 1477 crores, up by 56% on a year-on-year basis and 16% sequentially, an auctioning off coming away. On business mix size, industrial vertical contributed maximum as a 31% of our revenue, followed by consumer vertical 26%, auto vertical 24%. While all verticals showed a solid double-digit growth on a year-on-year basis, ITM Railway was a standout segment this quarter, growing 182% year-on-year basis. Our operating EBITDA for the quarter came in 174 crores, up by 51% year-on-year at a 11.9% EBITDA margin. CVT grew 61% in YOY to 150 crores, and PAD rose 67% to 119 crores, with PAD margin of 8.1%, up by 60 basis points over last year. On a sequential basis, margin moderated slightly. Operating EBITDA margin was 11.9% versus 12.6% in quarter 3, primarily due to higher mix of IT business during this quarter. Moving to our annual performance, our total revenue for FI26 came in at 4857 crores, reflecting 27% year-on-year growth. When we see, as we have previously calculated, that we will keep consumer business vertical below 35%, which is actually 31% for FI26. And when we calculate our growth extra consumer business, my revenue growth is actually 38% on a year-on-year basis. More importantly, this revenue was, this growth was highly profitable. Operating EBITDA extended 68% year-on-year basis to 545 crores, with operating EBITDA margin improving 270 basis points to 11.3%. So that 582 crores had a 12% EBITDA margin. The profitability story is even stronger at the bottom line. PBT grew at 88% year-on-year basis to 445 crores, with a PBT margin expanding 300 basis points to 9.2%. That is about 346 crore rupees for the year, up by 87% on a year-on-year basis, with a PAD margin of 7.1%. We can see this kind of leverage where bottom line growth nearly doubles the top line growth, reflecting a structural improvement on a business model, reflecting our operating leverage benefit, reflecting it into the business model. On revenue mix side, export business constitute 24-25% of my operating revenue and grew 41% year-on-year basis, highlighting our increasing global relevance. Across vertical, IT and revenues are fastest growth, segment 74% year-on-year, followed by auto 39% and healthcare at 36% growth on a year-on-year basis. Our podium revenue for the year is about 17%, substantially increased on 12% last year. Coming to customer concentration, our top 5 customers contribute around 34% of revenue, top 10 around 47%, On the order book visibility, as on March end, we have about 6,600 crores of total order book visibility together, of which auto is about 29%, consumer is about 30%, industrial vertical is about 24%, healthcare is about 5%, and IT and railways together is about 11% of my revenue. Coming to balance sheet and capital allocation, we moved from a net debt position of 264 crores as on F525 into now a net cash position of 467 crores this year-end. Total debt reduced sharply from 611 crores to 353 crores, and while cash-in equivalents increased to 820 crores at the year-end. Debt to equity is now 0.1x, and ROC improved from 12.4% to 16.9% this year. When we calculate ROC on a goodwill-adjusted basis, my actual ROC is 20.1%, the threshold number which we have been tracking always. Coming to working capital performance, our working capital days improved from 69 days to 63 days on a year-on-year basis, reflecting better operational efficiency. Networking capital days, when we calculate on an X-off outcome, which we have recently acquired, it is actually 58 days. So on a like-to-like basis versus last year, the overall improvement due to the networking capital days is about 11 days. For the year, we generated a healthy operating cash flow of 290 crore rupees, which is around 53% of my operating EBITDA. And this outcome is based on disciplined working capital management and strong profitability delivery here. The capex investment for the year is about 140 crore rupees, and we expect another 100 to 150 crore rupees of capex investment into the current year, which is F527. We want to update regarding one of our previously announced JV with Premier Energy, wherein we were planning to acquire a company called K-Solar through that JV. We want to update that there were certain conditions precedent which we agreed with the sellers for the acquisition and which the seller was not able to fulfill as per the timelines. Hence, we decided to drop the same acquisition or JV transaction. To summarize, FY26 has been a strong execution across revenue profitability cash flows. We enter FY27 with a net cash position, improving ROC, a diversified and growth revenue base, and capacity investments that position us well on the next force of the growth. We also want to update to the market on our long-term rating upgrade from AA- to AA now, showing a strong confidence of all the stakeholders in the market in our credibility. We remain committed to our aspirations of sustained revenue growth of 35% with a sustainable operating EBITDA margin of at least 10% to 10.5%, targeting 700 crores of total EBITDA for the next year at 527. The demand environment across all key verticals, auto, industrial, healthcare, and the emerging IT railways and the defense maritime business remains encouraging. With that, I'll hand it over to Mr. Satinder Singh, our CEO.

Thank you, Vijay. Thank you, Gujarati, and everyone on the call. Thank you for joining today. As always, I'll start my comments with thanking all my 10,000-plus colleagues in our factories, in our offices, who work day in and day out to ensure that our customers stay delighted and that they help us in the growth story which Gujaralji and Vijay shared with you. Financial Year 26 has been a defining year for Sirma. It's the one where we didn't just grow the top line, but we strengthen every pillar of our business, our people, customers, operations, and supply chain. On profitability, margin expanded meaningfully across the year. A gross margin improved from 22.6 to 25.6 year-on-year, and margins improved significantly, as Vijay shared, and profit after tax doubled almost year-on-year, and margin passing 7.1%. This clearly reflects operating leverage of scale. We continue to make improvements in our customer acquisition. We acquired several customers, and those customers will help us fuel the growth in financial year 27 and onwards. Most importantly, we continue to deepen our engagement with the customers, which is reflecting in larger wallet share with many of our customers and maturity of the programs which we execute with them. This year, operationally, we have made several improvements. The utilization of our people resources, utilization of our machines have gone up significantly over FY25. All the improvements and all the efforts across the operations and across our businesses clearly have been noticed by our customers and by industry alike. We got nine customer awards and 19 industrial competitions during the year. As we know, the supply chains are going through certain anxieties, and our supply chain team and procurement teams across the plant have worked hand-in-hand with our customers to ensure continuity of supply chain and ensuring that we stay competitive. On people, our engagement continues to improve, and our last great place to work score rose from 83 to 86 days a year. We continue to upgrade our processes across all the areas of our business. Looking ahead, FY27 reflects strong condition in our pipeline, our new customer additions, and our operational readiness. And our balance sheet, or rather strong balance, gives us the flexibility to invest in this growth while delivering consistent returns. We remain committed to our long-term vision of being India's leading integrated electronics manufacturing partner. And this year, the FY26 has brought us meaningfully closer to that goal. Thank you, everyone, on this call. And once again, to our customers, to our colleagues across the factories, for great support. And we look forward to similar support in the years ahead. Thank you once again, and I'll hand it over to Nikhil.

Thank you, Sudhinder. Over to Michelle, if we can go ahead on the Q&A session. Thank you.

Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask questions may please press star and 1 on the touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use only hands-up while asking our questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Indrajit Agarwal from CLSA. Please go ahead.

Hi, congratulations on a good set of numbers and thank you for the chance. Two questions from my side. If you can highlight the pending CAPEX on key projects, not just for FY27, but also over the medium term, PCB and any other projects that you're undertaking right now.

Sure. I'll take this one. So, overall, the last project which we are taking over right now is the PCB-related business. So, PCP-related, we said that we are planning to spend approximately $90 million, which is 800 crores of capex, over the year for this multilayer line kind of a PCP setup. And this capex, we are spreading across two phases. Initial phase is 400 crores, which is going on, and of which about 50 crores is already spent till last year. This year, we are expecting we will be spending around 250 odd crores against the same process. Balance 100 can go in the next year. And the second phase can be spent over the next year and will be made of FI29 also. That's what we are spreading that multi-layer business related to 800 crores of capex. Apart from that, organic capex within the system, normally in a business, we are expecting 100 to 150 crores of capex this year.

Okay, so 100 to 150 is only the organic and then add to that the 250 crores. So broadly, overall, it affects something around 350 to 400. And when do we expect the incentives or the benefits to come from the government post-FI28, right?

We are expecting the commissioning of the projects towards the end of this year, maybe start up next financial year, FI28. Then we will be eligible to claim for the incentives in a part basis. And generally, I expect at least a year will take to get that incentive, finally.

That's helpful. And second, while you touched upon it in the opening remarks, if you can get more granular details on the impact of the current geopolitical tension site, is there an issue in availability of raw materials? What kind of inflation are you seeing, and are we passing that on with what lead lag?

See, the supply chain issues are, again, global in nature and not specific to one company or one industry. So, it is a phenomenon where the basic metal prices have gone up, the Middle Eastern crisis has sort of disrupted the supply chain routes, the logistic costs have gone up. Now, these things are a part and parcel of the business, and when all the companies are impacted, sort of, it's not unique to us. Having said that, we are in constant touch and we have contract arrangements with the customer where there is a pass-through mechanism of variation in prices. Now, does it happen on day zero? The answer is no. It is negotiated and then taken into account. We believe that in the current year, these things would continue to play out till the situation comes back to normal. We believe that this partial increase in these costs could be offset by better price. The volumes go up, you get a better negotiation path, operational efficiency, and then sharing these costs among the four stakeholders in the entire supply chain. In our case, it is our vendor, Sirma SGS, the customers of Sirma, and the ultimate consumer. Now, once the situation sort of stabilizes, then the cost impact will be borne by all the four stakeholders. What is the impact of that? We are not very clear right now, but having delivered a beta margin of 12 odd percent this year, Next year, we are guiding 10.5% to 11%, keeping this turmoil into account. Now, if the situation stabilizes and we come back to normal situations, if it warrants an upward revision beyond that, we will guide the market accordingly.

Thank you.

The next question is from the line of Sumanth Kumar from Motilal Oswal. Please go ahead.

So, can you talk on the IT and railway? We have seen a 182% growth. So, can you talk on more sub-segment, how the other sub-segment, and what are the key drivers for the segment?

Thank you. This is, as we said, that the railways, we were in touch with the customers, and IT is essentially the laptop-related and the motherboard-related business and the memory-related business, which we do. So going forward, we expect this momentum of 80% or 90% not to continue, but it will continue to deliver healthy 30%, 40% growth rates over the coming years.

Okay.

Thank you so much.

Thank you.

Congratulations for excellent performance. I'm just curious, sir, what you have indicated on the margin front. I'm just trying to dig a little deeper on this aspect. You know, you have touched 12% margin for last two quarters, 12.5% and 12%. And if we are talking about a similar growth across vertical, why the margin guidance, you know, that 10.5% to 11% despite having, you know, improvement on the, on account of the export, See,

as I just said in the preceding question, we would like to err on the side of caution. The current volatility in the global trade, in the shipping routes, in the geopolitical, the basic metal prices going up would cause a stress on the economy on a macro level, which is beyond our control. Hence, we would like to err on the side of caution, and we have guided 10 and a half to 11% margin, despite having delivered 12% margin, to be very honest. Now, if three months down the line, when we meet you again for the Q1 earning call of February 27, if the situation has stabilized and we have a better picture, we'll revise our guidance. But we'd like, again, at the expense of repetition, err on the side of caution. And the pass-throughs are there, but it doesn't happen on day zero. It takes time. So, keeping all the things into account, we have guided that thing. But the more critical thing which we have guided is that we'll deliver a 30% absolute increase in EBITDA.

I understand. And if you could, you know, comment on each of the segments, what is the outlook on the growth path, you know, when you have given a broad guidance, if you could give on each of the segments, the few segments?

Which segment your voice was? There's an echo in your voice. Which segment you were affected? You have to come closer to the mic. Voice is not clear.

Sorry for that. If you could talk a little bit on each of the segments like auto, consumer, healthcare, you know, if the underlying industry growth is as much, if this growth is driven by domestic or exports and stuff like that, you know, give a little bit more detailing on each of these four, five key segments.

If we go back to 25, 26, what do we see? We see a 39-odd percent growth in automotive, 30 percent in industrial, 36 percent in healthcare, 38 percent in only consumers, and 41 percent growth in exports. My current order mix, which we have, order book, has the same level of component of each, with the automotive accounting from about 30%, industrial about 25%, healthcare about 5%. So, based on this, I think we are in a position to deliver a blended growth of about 30-35% for the current year. Individual verticals or annualized basis, some would be at 35%, some would be at 28%. The industrial growth would primarily be driven by exports and new products which will be manufacturing for the power management units and other things. Automotive would primarily be driven by domestic, though for the first time last year we have crossed 125 crores in automotive exports. There would register some increase over there also. MedTech has grown significantly, the healthcare business has grown significantly from 291 to 395 this year, And we expect this continuous growth to happen, which means the next year my medtech business should cross the 500 crore mark. Consumer, we are cautiously pegging it down at about 30% of our revenue, and this year it's about 1,452 crores, and 8-10% growth, it should be about 1,600, 1,500, 1,600 crore rupees. So, the blended growth would come in from the dominant sectors of automotive, industrial, healthcare, which is medtech. IT and railways are a small portion of our revenue. So, they would grow.

Great. Thank you. I'll talk back in the future. Thank you.

Thank you. The next question is from the line of Bhavya Gandhi from Bajaj Alternate Investment Management Limited. Please go ahead.

Yeah, thanks for the opportunity. My first question is regarding the total order book. Between December and March, our order book has grown by almost 3% versus our historical run rate of 7% to 10%. If you can explain, is there any slowdown in terms of order intake or what is the reason for this or better execution or any other factors it can provide?

I'll request Vijay to take this answer.

Right. Based on the current order book and run rate, the overall revenue growth for the next year comes to 24%, whereas we are guiding for 35%. So, are we seeing any order pipeline that we are expecting order intake in coming quarters?

So, we are guiding actually about 35% of our growth for FI27, and this order book is indicating whatever is there in hand today, but this order book has to be over the period, over the next few quarters, has to be completely, continuously upgraded based on the new order edition, and all these orders are not for one year. In this order booth, there will be many customers who will be giving you orders for a very shorter period, maybe three months, six months, five months, four months, that way. So that's how this operates, in a way.

Just to add on, we have achieved a run rate of about 1,465 crores in the current quarter, which is a tag less than 500 crores a month. And that's the starting point. Now, if the starting point is 500 crores or 495 crores a month, the run rate, and going forward, historically, the second half is much better than the first half. We are very confident of delivering the figures which Vijay just pointed out. Got it. And my exports are currently at 125 crores run rate, and we are talking 1,500 crores plus. So, we are already at a 6,000-plus crore revenue level at the current front line. And the second half typically is a superior half in terms of top line and the resultant figures on the bottom line.

Right. In terms of – yeah. Right. Sir, just in terms of cash, we are around 470 crores of net cash at this point in time. And this is your CAPEX that you announced for the PCB. If I'm not wrong, we have to spend around 1,400 crores. So, after a year, we will be short of cash in terms of, if we assume another 200-300 crores of operating cash flows also next year, still will be short of cash. So, how do we plan to fund this? Because we only spent 50 crores for the PCB thing.

So, this year for the PCB business, we will be spending around 250 crores rupees. And for the same, it will be partly funded through debt and partly through internal accruals. And there is a JV partner also, 25% of this capital has to be funded by the JV partner also, together. So that's how this has to be funded. Against the current cash, net cash position is 470, but actual cash on the balance sheet is about 820 crore rupees. We are confident of using this cash on the balance sheet for the growth purpose going forward. And cash flow side, we don't see any challenge over here.

I just wanted to understand on the PCB capex, we will not fall short of cash, right? That is what I wanted to understand.

We will not fall short of cash. You see, what we spend, we have projected about $40 million, which is about 400 crores or whatever, 360, 400 crores for the current year. And next year, we will get a 50-60% subsidy of that. So this will be a sort of circular thing that you spend in one year, you get back a subsidy in the next year, Then you again invest partly from that subsidy, partly from your cash flows and borrowing, and you get back. So we have a plan of our cash flow that we will not fall short of cash for this project over its execution life cycle.

Perfect. Really helpful. Really helpful. Wonderful. That's it from my end. Thank you so much.

Thank you. A request to all the participants to kindly use your handsets while asking the questions and also self-mute yourself when the management is speaking for an optimum audio quality in the conference. Thank you. We'll take the next question from the line of Bhavik Mehta from JP Morgan. Please go ahead.

Hi, thank you. So, my first question is, you recently received ECMS approval for flexible PCB and copper clad laminate. So, any color you can provide in terms of the CAPEX, which will go into this, and over what time frame we should expect?

So, we got approvals for PCL copper clad laminate plus HDI and Flex PCV. That's another one. So, both put together, we will be sending another 800 crores for those projects. But that project cap X may get executed somewhere between FI 28 to FI 30, this entire 800 crores.

Okay, got it. This second question is on working capital and cash flows. How should we think about working capital for next year? Will it keep on coming down and hence the OCR will keep on going up?

See, with the defense business coming in our portfolio, and we have reached a 63-day working capital cycle, the endeavor would be to say if we can bring it down further. How much? By three days, five days? I really can't say, but I think we should be all rest assured that working capital management and capital allocation is one of the prime focus of the management. We are willing to sacrifice top-line growth if the working capital cycle is elongated. We are not chasing growth at the expense of working capital cycles. We'll be selective in our customers. We'll be selective in the verticals. Selecting is that we do our due diligence to ensure that each vertical has its own typical working capital cycle. We would like to have the best working capital cycle in that vertical. And that is reflected in the way we have brought down the working capital cycle over the last four years. I think when we started off, it was 90 odd days. And from 90 days last year, we came down to 69 days. This year, if 69 was to compare Apple to Apple, if I was to exclude Elcom, both from the revenue and the working capital, My days have come down from 69 to 58, which is an 11-day reduction. 11 days on 69 is almost like a 16% reduction efficiency improvement in my working capital cycle. So that would remain the focus of the management, and I think everyone should be rest assured that we'll not let this slip out on an annualized basis. Quarter-on-quarter, there could be some variation.

Okay. Got it. Thank you.

Thank you. The next question is from the line of Renu Bait Bugalia from IIFL Capital. Please go ahead.

Yeah. Hi. Good morning, team. So, if you can throw some more insights in terms of the value-add products and inputs that we're targeting within the industrial segment, and how do we see these applications scaling up in our portfolio over the next two years? Some more insights would be helpful. That's my first question.

See, the value addition, the superior value addition, as I was saying in my opening remarks, comes in from ODM business, from its ports, within each vertical. Each vertical has its own margin profile, and MedTech, and MedTech. Now, what do we see? That we have seen our ODM business growing up from 453 crores to 825 crores. Now, this is almost a growth of about 70% crores. My exports have gone up by 41%. Our effort in the current year is to try and sustain the ODM growth to around 16-17%. I don't see it going up beyond 17% because we are planning, targeting to grow by 35%, 30-35%. I personally don't see that in the current year, my export to the ODM growth would grow. If we are able to sustain it at 17%, it means we have grown the ODM business by another 30%. 17% of the revenue mix? Yeah, yeah, yeah. No, no, no. See, if my overall revenue goes up by 75%, and if the ODM business has to sustain at 17%, this also has to grow by that rate. A 30% growth on 825 is we have to grow the ODM business by another 250 crore rupees next year. In 2627, we'll endeavor to sustain this in the coming year. But the profitability would come in from working capital management, exports, medtech, and ODM. And of all these verticals, we are showing a very healthy growth over the last year. And we expect this growth to continue. My exports grew by 41% last year. I expect them to cross the 1,500 crore mark from the 1,200 crore against the target of 1,100 crore, which we had said. So, a 300 crore in exports, absolute increase in exports adds to the margin.

I'm just wanting to ask what percentage of the ODM business would be housed in the industrial segment? Or how would be the ODM split across key end segments in which you operate?

Oh, what do you mean this?

Got it.

4.30 closes both industrial and consumer. But I don't have the figures of how much of this is among it.

Sure. And so, secondly, this follow-up and happening a bit again on the margin side. While I understand you would air it to be slightly more conservative here, But given that the ODM portfolio exports, both are expected to further improve in terms of mix, rupee has been in our favor, which will probably help offset some of the cost headwinds that you're sitting on, this operating leverage. Still, do you think that the quarterly run rate, which you were doing in the second half, from mid of the year of 12%, will see headwinds of about 200 basis point? Or do you think the cushion are very thin here and we may not have beyond a 100-bit margin cushion?

End of the day, the current situation in the market, volatility and everything, I think we expect that we should have the luxury of being conservative. Let's put it that way. There's no point tomorrow I say 12 and I give 11, And you'll skim me down why it is 11. So, we'd like to have the luxury of being conservative. Absolutely.

And so, lastly, just your thoughts on now we are seeing larger players also foray into electronics, EMS, focusing on industrial and other segments. So, how do you see, A, the India EMS market growing? And also, do you feel that competitive intensity in the domestic space may increase, even for experienced veterans like Sirma SGS here, despite newer entrants entering in the space? So, for example, as Larson has recently announced, a significant foray in electronics, 50 billion rupees of CAPEX in the next two years. So, that's why I'm just trying to connect the dots and see how we're looking at the market outlook.

See, okay. Now, we've been in the industry for 40 years. We've been exporting since 1996, when China was at its prime, and our exports have grown. Domestic, there are big players already in the country, whether it was Lech, whether it is Jabril, whether it is Senmina. They were present, not now, they've been present for quite a while. We are competing with the tier two level global EMS companies. Yes. Competition, competitive intensity would increase. Am I afraid of it? No. Am I mindful of it? Yes. And how do we take care of that? I think we can give a far better cost structure than the big corporates within the country. We have to be relentless in our focus on cost control, frugality, efficient buying, and as we get integrated to the global supply chains and our global customers, It gives us the confidence that we are doing something right. Otherwise, my export would not have gone up by 41%. But there are companies all around the world who are competing for the same business. So we are very mindful of the emerging competition, but we welcome it. We can't stop it, so welcome it.

Got it. Understand. All right, sir. Thank you, and best wishes. Thank you.

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

Hi, thank you for the opportunity. I just want to understand when you talk about, you know, 30-35% addressable growth in your business going forward for multiple years. So, this growth is, is industry growing so fast or is it more like you're gaining market share or is it like you're, you know, getting a new product segment? How should we see this growth?

I think you have hit the nail on the head. You have provided all the answers in your question. We are gaining market share. We are expanding our portfolio. MedTech was not there in my portfolio a couple of years back. It is now contributing approximately 7-8% of my revenue. Defense has just been added. So that's an incremental sort of a vertical tour thing. We are now migrating to bigger contracts with bigger customers. So it's not one piece which gives me the confidence of a 30-35% growth rate. It's a mosaic of all the customers put together, global, domestic, vertical, my OBM business, which gives me the confidence of delivering what I'm saying. And this is backed by a very detailed working by our teams, going down to industries, customers, SKU of customers, what are the plans of the customers, how they intend to grow, what is the wallet share which we'll be taking. And to us, growth is just a figure. To me, what is more satisfying is the quality of growth. And the quality of growth comes in when I gain market share from my competition, when I gain wallet share from my competition. And on both these two fronts, I think our teams are doing a phenomenally good job.

Got it. What would be the addressable market growth, you know, as you get to multiple segments, what would be the addressable market growth? And lastly, when you talk about this growth, in FY28, you will be entering PCB manufacturing business. So, possibly this growth would be faster because of entry in that segment?

Yes, the PCB business would kick in somewhere in 27-28. So, whatever growth I am projecting today for the next year is for the businesses in my portfolio. 27-28 would be the first year when my PCB business will kick in. If it gives me a 400 crore, 300 crore, 700 crore, whatever is the figure, that will be incremental to this growth. So, if you are saying we grow by, let's take a round figure of 30% or 35% you'll have to calculate, on 4,800 crores, it will result into some resultant figure. Add another 30-35%, that will be the organic growth in 27-28, add the PCB to that. So, 27-28, logically, the growth should be superior to 30-35% because of the addition of the PCB vertical.

One of my questions was, what would be the addressable market?

So what we are addressing. What we are concentrating is the market is there. We should be able to consistently deliver 30-35% growth over the next 2-5 years. Organic, coupled with inorganic when we grow big.

Maybe if I just quickly could add on. So as a business, we are addressing not only India, we are addressing global. Like if you see our numbers, we are 25% of our revenue comes from exports. And global addressable market for reference is about north of 600 billion. So, and today, what we reported to you is give or take about 500 million plus revenue. So there is huge potential for growth. And that's the market we are looking at addressing overall.

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

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

Thank you for the opportunity and many congratulations for a very good set of numbers. The first question is related to the export. So, as you had guided for 15-year-old growth for 27, and also in the last call, you had highlighted the strong EU market exposure is driving your number. So, if you can give some color on how the EU market and how much is a contribution and how is the growth going there?

See, Mike, the growth in exports last year has been 41%, and what we are targeting this year is less than 30%. If I do 1560, it will be about 30%. So I'm guiding 15. And these are based on the customers which we have on board, where we have started supplying. Some of the new customers which we have on boarded this year, which means till March 26, would go on stream on a pilot basis in 2627. That gives me the confidence that 27-28, the customers which would have 2, 5, 10, 15, 20 crores of revenue in FY 26-27 would have the potential to cross the 50 crore revenue, 100 crore revenue, 40 crore revenue in 27-28. So we believe that with the existing customers already reaching their what you call regular optic level, the new customers which you have onboarded, which would be doing the prototyping this year, the growth of exports of about 25% minimum over the coming years is a distinct possibility, and we'll be able to achieve that. If some of the major customers which you have onboarded, they have the potential to further accelerate the export growth, but for the time, we are being conservative and putting in a target of 20% to 30%, 25% to 30% export growth for the coming years.

Any contribution from the EU, can you highlight?

Sorry? If we are talking about UFTA, that has a positive impact in a way that there will be a maybe sentimentally, psychologically, there will be larger business opportunities that are available, which we can expand further. In terms of number, yes, in two of the select cases, there was a duty applicable about 1.5%. That is something that is a financial benefit one can look for going forward.

See, these FTA agreements don't typically have an immediate positive or negative impact. You see, it takes time for the negativity to set in. In negativity, it is slightly faster. In case of positivity, it is slightly slower. But long-term impact is very, very positive, and I believe that we are very well positioned to take benefit of the FTA, which the government of India has signed with EU, with America, with New Zealand, with Canada, and other things.

Next question is related to the Sirma and the Premier, which decided to not go with the caseholder requisition. So, is there any expense related to that we have accounted?

See, there was very little expense related to the caseholder acquisition. Whatever has been spent has been charged off to the P&L. There were certain conditions preceded which caseholders had to comply with. When they expressed this inability to comply with, we both decided that it was best to drop the deed. So we have dropped the plans to acquire K-Solar. But I would like to reiterate that we have not dropped the plans to be in the renewable energy space. We have very solid intent of entering the renewable energy space market in the inverter business and the related products. Instead of an inorganic acquisition, we would now be putting up a greenfield project. Right. Currently, we are evaluating various proposals which we have got from the technology partners. I would not be able to give color on that because nothing is formed up. But I think in the coming quarter or something, we should come back to share our plans on that. But renewable energy space is very much in our focus.

Thank you. And anything on the PLI benefit for a full year? Last quarter, you had given an indication of 30 to 32 crore for 26. How much we had done, PLI benefit we had received?

Gross PLI for the full year would be approximately 80 crore rupees. And post-sharing, we are expecting it will be net PLI would be approximately 38 crore rupees for the year FI 26.

Thank you, sir, and all the best.

Thank you. The next question is from the line of Nikhil Kandui from Access Capital.

Thank you for the opportunity and congratulations for a good set of results, sir. Sir, can I help you with the Q4PLI number also?

Q4PLI?

Q4PLI would be approximately, proportionate number would be approximately 10 crore rupees.

I just wanted to understand that the order inflow of 6,200 crores made majority inflow from consumer and IT business, around 44%. And if I include also, that comes down to 70%. We just want to understand that these are your relatively lower margin business, where the audience share from these business are very low. The guidance of 10, 10.5, because of the increasing share of lower margin business, is that right understanding, apart from the supply chain issue which you highlighted?

So, order book is just an indication here, first of all. Order book is not a clear reflection of the same similar way percentage for the full year of the business. So, in order book, you can see current order book for industrial business is 24% only, because in industrial segment, customer generally does not give you full, maybe more than 12 months kind of an order book initially. So, that's how generally it follows. My business mix, mostly we are expecting it should remain same as it was in FY26. Consumer should be around 30-32%. IT business, yes, it is growing. It can be around 10%. And about 25% of auto business and 28-30% of interest. Keeping the same, my margin would be in check. Yes, as Mr. Vidral has already guided, we are expecting because IT business is also slightly growing and maybe some bit of geopolitical factors which are also impacting including raw material prices increase. That's where we are guiding for this margin.

Okay, I understand. So, one last question from myself. Sir, can you show in more light on the smart metering business? How much is it in the order book and how much did we lean in FI26? And a written question to that would be that, sir, can we consider an elicom business to be similar to smart metering business, which is high working capital intensive, but also gives us high margins?

So, smart metering business, we have done in the current year approximately 250 to 60 crores of total business. In the order book, I need to check exactly what the number is, but as Mr. Gujarat has already explained, we are going slightly selective here, keeping the working capital balance in mega year, and that's how we are falling.

And, sir, in the Alicom and smart metering business, are they almost similar because, not in terms of industry, but in terms of high working capital and high margins, which can impact future working capital days for us?

The smart metering business is not a high margin business. It is a normal industrial. It would come lower in the industrial category. So in terms of margin profile, the two businesses cannot be compared. One is a superior, very high margin business. The smart metering business is not a very high margin business. It's a moderate 15-odd percent gross material margin business, 12 to 15 percent gross margin material business. But it has the same elongated working capital cycle. Hence, the profitability of a smart metering business, if you are not choosy about your customers, if you change revenues, would be suspect. In case of defense, despite its longer working capital, I think, but since it's a very high-margin business, it's only, and you give a solution to the customer, it is offset such that even the higher working capital cycle results in a very superior EBITDA margin business. I just shared that if we were to exclude Elcom business from our working capital for a minute and exclude its revenue, my working capital cycle for my business is down from 69 to 58 days. With Elcom, it is down to 63 days. Elcom on its own would be a defense if the business is notorious for long three to five months, six months working capital cycles. But since it forms a very small portion of our revenue, I don't see it negatively impacting my overall working capital cycle significantly.

Got it. And if I can add one more question, sir, what will be the percentage of order books from Elecom in the total order book?

In the total order book, Elecom's order book would be approximately 5%.

Okay. Thank you. That's all for me, sir. Thank you.

So, this will be the last question for today from the line of Tanesha from Dam Gapati. Please go ahead.

Hi, sir. Good morning and congratulations on a great set of numbers. I have two questions. First one being that while we're on track to grow at around 30-35% for FY27, can you possibly discuss, you know, how are we going to get that growth? Possibly some client additions, which you would have added through FY26. And for what applications would that be across segments, which will sort of help us get that growth? And the second question would be, so I'm assuming that the defense number is coming in the industrial piece right now. And, you know, if we exclude that, we have seen some softness out there, as indicated by you for smart meters. But going forward, X of the defense business, you know, some color on the applications in industrial, which would sort of help us continue the growth profile. Thank you.

Okay. Now, going forward, we are projecting a growth of 30%, 35%, and that's backed by the orders which we have in hand and the visibilities which we have received from the customers. We expect the businesses to grow deeply, sort of at the same pace. Automotive this year has grown by 39%. Healthcare has grown by 36%. Industrial, including Elcom, has grown by 30%. Excluding Elcom, it would be slightly lower. But some of the new customers in the power management sector and the UPS sector and those industrial electronics and controls would give us the revenue in the next year. We have added how many customers last year, Vijay?

So, 32 customers is what we have added, onboarded in the last year, and of which if we talk about industrial, about 7 customers we have onboarded on the industrial segment. In fact, if we talk about applications, it is varying across human industrial systems, Solar trackers, data center applications-related motherboards, liquid processing machines for FMVC applications, so those kind of applications for which we have added these customers here. And when we talk about these 32 customers, they have the potential to add at least 1,000 crore plus in my current year revenue of 526, and full potential may be about 2,500 crore plus in a long-term basis.

Got that, sir. Got that. Thank you. That was helpful. And congratulations and wishing you all the best for the new year. Thank you.

As that was the last question for today, I would now like to hand the conference over to Mr. Gujral for closing comments. Thank you, and over to you, sir.

Thank you. All our bases are very satisfying here, but that's passed. We have to focus on what we are going to do in the future. And as we have all the time being saying that we would like to build a sustainable business which has superior margin profile, which has a decent component of exported ODM quality, but would like to share with you that we are the first company in the country to get efficient security for automotive industry known as DISEX. I didn't know it about six, seven months back. We were informed by one of our overseas customers, which we are starting off the production somewhere towards the end of the year, which will give us a series production in 27, 28 to get the certification. So we are relentlessly focused on building top-notch factories with solid processes to give us operational efficiencies. We are among the first Indian company to have a real-time monitoring system on our SMP lines. It's being inducted in phases over all the plants. And the initial results have been very, very encouraging. We have seen a 5% to 7% improvement in the operational efficiency. So I think broad customer base, solid customers, reputed blue-chip companies, leaders in their verticals, A very strong set of operational parameters in place at the plant, and a hunger for growth and hunger for learning. I think these two, three factors define the DNA of Sirma SGS. I think going forward in a couple of years when we again talk, I think Sirma would be at a different platform level in terms of revenues and product mix, which it is serving. So this is a journey. It's not a 100-meter sprint. It's a marathon, which we are running, but mindful of meeting the state expectations on a quarterly and annual basis. So I think we are well-coiled to be among the top leading companies globally also. Currently, I was told we are ranked somewhere about 65 globally. I was reading in some EMS magazines. So the effort is to that keep graduating that Sirma SGS is the first brand which is recalled in the mind of a potential customer When he's looking for an EMS or ODM business. With this, I thank everyone for the support, all the stakeholders, the vendors, the employees, the bankers, the investors, for the safety post in the management of their ideas. And we, on all part, would ensure that we build our institution, which is far excellent in the country. Thank you.

Thank you, members of the management. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.