Syrma SGS Technology faced a significant setback in early trading on November 2, with its shares plummeting by approximately 10 percent.
The decline was triggered by a substantial erosion in the company’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin during the second quarter.
During July-September, the company experienced a noteworthy contraction in its EBITDA margin, dropping by 320 basis points to 6.9 percent.
This sharp decline was a stark contrast to the 10 percent margin recorded in the same period the previous year. The erosion in margins was primarily attributed to a sudden increase in raw material costs and finance expenses, adversely affecting the company’s operational performance.
Despite a significant 52 percent surge in consolidated revenue, reaching Rs 711.70 crore, Syrma’s consolidated net profit for the quarter remained nearly flat year-on-year, standing at Rs 28.30 crore.
This performance was in stark contrast to the consolidated net profit of Rs 28.2 crore reported in the corresponding quarter of the previous fiscal year.
As of 2:27 pm, Syrma SGS Technology shares continued to face downward pressure, trading 10.44 percent lower at ₹535.25. The market’s reaction underscores the challenges faced by the company, especially concerning its profit margins, which have been severely impacted by rising costs. Investors remain cautious as they monitor the company’s efforts to address these challenges and restore profitability.
