Syrma SGS Technology surges 142%; commits ₹235 Cr for 60% defense acquisition after 37% Q2 revenue jump

Syrma SGS at 52-Week High: Can Defense Bet Justify the Rally?

Syrma SGS Technology surged to ₹909.90 on November 13, just 1.7% shy of its all-time high, after posting record quarterly revenue and announcing a strategic defense acquisition. The stock has ripped 142% from its April low of ₹370, yet most analyst targets sit below current levels, creating a tension between momentum and valuation that traders need to resolve quickly.

What Happened

Syrma delivered a Q2FY26 revenue bomb, reporting ₹1,146 crore in consolidated revenue, up 37% year-on-year, while EBITDA margins expanded 150 basis points to 10.1%. Net profit jumped 67% to ₹64 crore, but management highlighted rising receivables and working capital pressure. In parallel, the company announced a 60% stake acquisition in defense electronics firm Elcome Integrated Systems for ₹235 crore, to be completed in four tranches by December 2028. Syrma also secured ECMS approval for its $91 million PCB manufacturing project, with trial production targeted for December 2026.

Stock Performance & Analyst View

At ₹894.35, Syrma trades just 1.7% below its 52-week high of ₹909.90 and 11.9% above its weekly open, signaling explosive near-term momentum. The stock locked in a 20% upper circuit after its Q3FY25 results in January, and history appears to be repeating.

According to Jefferies (November 12, 2025), the Q2 performance was an “all-round beat,” maintaining a Buy rating with ₹800 target price. Kotak (November 11, 2025) also rates it Buy with ₹870 target. However, both targets imply downside of 10.6% and 2.7% respectively from current levels. The broader consensus from 24 analysts points to a Buy rating with an average target of ₹836.54, representing 6.5% downside. Motilal Oswal’s ₹630 target and ICICI’s ₹515 target from earlier in 2025 appear stale and don’t reflect the recent margin expansion.

What This Means for Traders

This rally isn’t retail noise, it’s institutional re-rating. Volume spiked to 15.2 million shares on November 12, five times the two-week average, indicating smart money is repositioning. The Elcome acquisition positions Syrma directly in India’s defense indigenization wave, where the government has earmarked ₹111,544 crore for domestic procurement in FY26 alone. This isn’t a consumer electronics story anymore, it’s a strategic defense play.

For aggressive traders: Buying above ₹900 with a stop-loss at ₹850 makes sense if the stock breaks ₹910 on high volume. The defense catalyst could drive momentum through Q3 results.

For conservative traders: Wait for a pullback to ₹820-840 support, which was previous resistance. The 52-week low of ₹370 is irrelevant now, but the gap between current price and analyst targets suggests profit-taking is likely.

Risk factors can’t be ignored. Working capital days are rising due to increased receivables, and management admits they need to “reduce this pressure.” The Elcome deal won’t close until January 2026, and PCB revenue won’t materialize until FY28. If Q3FY26 shows margin compression or further working capital deterioration, expect swift reversal to ₹800. Also note that defense contract cycles are long and lumpy, quarter-to-quarter volatility could spike.

The Bigger Picture

India’s EMS sector is firing on all cylinders, with JPMorgan projecting 32% CAGR through FY30. Syrma’s pivot mirrors Kaynes Technology’s defense expansion and Dixon Technologies’ telecom infrastructure push, all beneficiaries of the ₹76,000 crore India Semiconductor Mission. The defense electronics market is growing even faster, with Elcome posting 41% revenue growth to ₹155 crore in FY25 and 26% EBITDA margins. The difference: Syrma is betting early-stage, while competitors are already delivering. If the integration succeeds, Syrma trades at just 15x FY27 earnings vs. sector average of 22x.

Next Moves

Watch the ₹909.90 resistance level like a hawk. A decisive breakout above ₹920 on volume above 5 million shares opens a path to ₹1,000 psychological level. Downside, ₹850 is your first support, then ₹800 (Jefferies target). The next catalyst is Q3FY26 results in January, where management must show working capital improvement and defense order inflows. Until then, this is a momentum trade, not a value play. If you’re holding, trail stops at ₹850. If you’re buying, size small and let the defense story prove itself first.

Disclaimer: This blog has been written exclusively for educational purposes and does not constitute investment advice or personal recommendations. The author is not SEBI-registered as an investment advisor. Recipients should conduct their own research and consult a qualified, SEBI-registered investment advisor before making any investment decisions. Investments in the securities market are subject to market risks; read all related documents carefully before investing.