homebusiness Newscompanies NewsSyrma SGS shares rally on the back of Johari Digital Healthcare acquisition
Syrma SGS shares rally on the back of Johari Digital Healthcare acquisition
Back in August 2023, Syrma SGS had initially disclosed its plan to acquire a 51 percent stake in Johari for Rs 230 crore, with an additional Rs 28 crore slated for payment upon the achievement of specific predetermined milestones.
Syrma SGS stock was buzzing in trade on Wednesday (September 6) as the company successfully concluded its acquisition of Johari Digital Healthcare.
Back in August 2023, Syrma SGS had initially disclosed its plan to acquire a 51 percent stake in Johari for Rs 230 crore, with an additional Rs 28 crore slated for payment upon the achievement of specific predetermined milestones.
According to the company's management, Johari boasts a portfolio of 15-18 FDA-approved products, and is expected to contribute an estimated 5-7 percent increase to Syrma SGS's topline in FY24. Notably, Syrma SGS currently maintains a EBITDA margin of 30 percent.
Market analysts anticipate that the healthcare sector, as compared to other consumer segments within the company, will provide a more substantial boost to profit margins.
Nuvama, a prominent brokerage firm, holds the view that the acquisition of Johari will augment the company's share of original design manufacturing (ODM) operations-a sector known for its favourable profit margins. They estimate that the current ODM revenue stands at Rs 160 crore, and with strategic acquisitions like Johari, this figure could potentially surge to Rs 400-500 crore within the next three years.
Nuvama has valued the company at a multiple of 35 times FY27 PE and projects a compounded revenue growth of 40 percent over the next five fiscal years, accompanied by a RoCE (Return on Capital Employed) exceeding 25 percent.
In trading on Wednesday, Syrma SGS's stock closed with gain of approximately 7 percent, reaching Rs 574 per share. Over the course of the past six months, the stock has surged by 102 percent.
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