Avendus Spark Initiating Coverages On EMS Industry Kaynes Technology

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CONSUMER DURABLES
Initiating Coverage | 27 June 2023
EMS INDUSTRY | INITIATING COVERAGE

Initiating Coverages on:
▪ Kaynes Technology India (Rating: ADD, TP: Rs. 1,637)
▪ Syrma SGS Technology (Rating: BUY, TP: Rs. 598)
▪ Avalon Technologies (Rating: BUY, TP: Rs. 679)
RESEARCH ANALYTS
Ravi Swaminathan
 ravi.s@avendusspark.com
 +91 44 4344 0058
Uttham Kumar R
 uttham.k@avendusspark.com
 +91 44 4344 0023
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investment decision making and performance.
EMS INDUSTRY| INITIATING COVERAGE
Indian Electronic Manufacturing Wave
We expect the EMS industry to register a strong growth in the foreseeable future driven by the following: (1) Currently, ~80% of PCB/PCBA and Box INITIATING COVERAGE
build products are imported from China. However, there is a growing trend towards import substitution, which presents opportunities for domestic 27 JUNE 2023
EMS players to cater to the local market (2) Recent government schemes, including the PLI, have accelerated the process of local manufacturing. This CONSUMER
has led to increased sourcing from domestic EMS players (3) Global firms (esp. US and European) are shifting their sourcing from China to other Industry
DURABLES
countries; this would benefit Indian EMS players in the form of increased opportunities for exports (4) Rising share of electronic content across major Key Stock Data
Bloomberg KAYNES IN
end-user sectors like automobiles, consumer durables and industrial is translating into higher addressable market for EMS players.
Shares o/s 58mn
Driven by the above-mentioned factors, we believe the EMS industry would grow at above 25% CAGR over the next few years. Also, we expect the Market Cap Rs. 87bn ($1,063mn)
leading industry players to grow at a similar rate. 52-wk High-Low Rs. 1,627-625
Among the 3 listed EMS players, namely, Kaynes, Syrma SGS, and Avalon, we believe that Syrma SGS & Kaynes would report a faster growth of 28% / Bloomberg SYRMA IN
25% CAGR respectively over FY23-27E. This growth is likely to be on the back of their stronger presence in domestic market, expanded operations in Shares o/s 177mn
Market Cap Rs. 77bn ($937mn)
high-volume categories such as automobile and consumer durables, as well as their successful application to benefit from the PLI scheme (in white
52-wk High-Low Rs. 461-248
goods/ telecom sectors). Avalon technologies, which has a higher export/international presence (~60% of revenue is from exports, esp. to US), should
grow its revenue at ~20% CAGR over FY23-FY27E. Bloomberg AVALON IN
Shares o/s 65mn
Considering the robust growth prospects, favorable return metrics, and attractive valuations, we initiate coverage on all three players with a positive Market Cap Rs. 34bn ($410mn)
outlook. We assign ADD rating to Kaynes (assigning 55x on FY25E EPS - TP: Rs.1,637) and BUY rating to Syrma SGS (assigning 45x on FY25E EPS - TP: 52-wk High-Low Rs. 582-347
Rs.598) & Avalon (assigning 35x on FY25E EPS TP: Rs.679).
Stock Performance (%)
▪ Large addressable import substitution opportunity for domestic EMS players –The non-mobile domestic EMS market is estimated to be ~Rs. 400-
CMP
500bn in size, with the current revenue contribution from the well-known large players(both listed/unlisted) in India amounting to only ~Rs. 100bn. The 1m 3m
(Rs.)
remaining ~80% of the market demand is being met through imports, either in the form of direct PCB/PCBA or indirectly as complete box-build or KAYNES 13.4 58.9 1,500
equipment. The Indian government's initiatives, such as PLI and EMC/SPECS, aimed at promoting domestic manufacturing in the electronics industry SYRMA 18.7 66.9 435
and end-user sectors like telecom equipment, air conditioners, are resulting in a reduction in imports, an increase in domestic sourcing, and an
AVALON 22.1 0.0 515
expansion of the addressable market for EMS players. We expect the domestic EMS market to grow at over 25% CAGR in the next few years.
▪ Global firms shifting sourcing from China to benefit EMS players – In an effort to reduce the risk of dependence on China, global firms (especially US & RESEARCH ANALYSTS
European) have started to source electronics/electronic products from other countries including India. The higher labour costs in China compared to Ravi Swaminathan
India, coupled with the recent govt. incentives aimed at encouraging Indian companies to establish manufacturing operations and achieve scale, are ravi.s#@avendusspark.com
creating greater export opportunities for EMS players in India. In the past few years, exports for these companies have grown at 25% CAGR (excluding +91 44 4344 0058
Avalon - ~12% CAGR) and they are likely to maintain similar growth in the future. Uttham Kumar R
uttham.k@avendusspark.com
P.T.O +91 44 4344 0023
find AVENDUS SPARK RESEARCH on Bloomberg [RESP SPAK <go>] | FACTSET | REFINITIV EIKON Page 2
Indian Electronic Manufacturing Wave
▪ Higher electronic content to expand addressable market –There is a marked rise in electronic content across end-user categories such as automobiles, consumer durables, industrial,
and telecom, among others. In automobile, electronic content per vehicle is likely to treble due to transition towards electric vehicles. In consumer durables, growth of inverter air
conditioners, BLDC fans, etc. is driving the demand for PCB/PCBA. In industrials, the shift from analog to smart meters and the adoption of digital displays in capital goods equipment
are contributing to growth of electronic components.
▪ Comparison among the three players – We believe strong revenue growth potential (>20% CAGR) exists for all three players. We expect Syrma SGS and Kaynes to grow at 28%/ 25%
CAGR respectively over FY23-FY27E due to higher domestic presence, increased market share in fast-growing categories like automobiles & consumer durables and participation in
PLIs in telecom/white goods. Avalon has a higher share of export/international presence (especially in US) and should see revenue growing at ~20% CAGR over FY23-FY27. Avalon,
Kaynes, & Syrma SGS have an average post tax RoIC of 24%, 22% and 16% respectively over the same period.
Financial Summary
KAYNES Sales (Rs. mn) EBITDA Margin (%) PAT (Rs. mn) EPS (Rs.) P/E (x) EV/EBITDA (x) RoE (%)
FY23 11,261 14.9% 952 16.4 91.6 49.7 16.4%
FY24E 14,421 15.3% 1,413 24.3 61.7 38.5 13.8%
FY25E 17,724 15.7% 1,730 29.8 50.4 30.2 14.7%
FY26E 21,921 16.2% 2,280 39.2 38.3 23.4 16.7%
SYRMA SGS Sales (Rs. mn) EBITDA Margin (%) PAT (Rs. mn) EPS (Rs.) P/E (x) EV/EBITDA (x) RoE (%)
FY23 20,484 9.2% 1,193 6.8 64.4 38.3 11.2%
FY24E 26,784 9.8% 1,907 10.8 40.3 28.1 11.7%
FY25E 34,658 9.9% 2,348 13.3 32.7 21.5 13.0%
FY26E 43,702 9.9% 2,900 16.4 26.5 17.1 14.3%
AVALON Sales (Rs. mn) EBITDA Margin (%) PAT (Rs. mn) EPS (Rs.) P/E (x) EV/EBITDA (x) RoE (%)
FY23 9,447 11.9% 525 9.1 56.8 28.4 16.8%
FY24E 11,502 12.0% 944 16.3 31.6 22.9 16.3%
FY25E 13,706 12.0% 1,124 19.4 26.5 19.2 16.7%
FY26E 16,118 11.9% 1,311 22.6 22.8 16.3 16.7%
find AVENDUS SPARK RESEARCH on Bloomberg [RESP SPAK <go>] | FACTSET | REFINITIV EIKON Page 3
EMS industry in likely to witness strong growth
Global Electronics System Design & Manufacturing (ESDM) Indian Electronics System Design & Manufacturing (ESDM) Market Size (Rs.bn)
India
7% 5,995
India
2%
ROW 32% CAGR EMS Market
33% Size (Others
ROW excl. mobile
35% phones), EMS Market
Market Size ~400 Size (FY22) –
Market Size
China CY26E (USD Rs.bn
CY21 (USD
47% 1,145bn)
880bn) China 1,469
44%
USA EMS Market

14% Size (Mobile
USA Phones),
16% 1,069
FY22 FY27E
Source: Frost & Sullivan report, Avendus Spark Research Source: Frost & Sullivan report, Avendus Spark Research
EMS Market Size Split across Non-Mobile End-Industries Market Size In Rs.bn
Clean Energy FY22 FY26E CAGR
2% 89%
Medical Devices Mobility (Automotive
6% including EV, Railways
and Aerospace)
Industrial 28%
16% 252
42%
190 191
(FY22) -
111 121
~Rs.400bn 94 95
62
94 76
23%
19% 19% 18% 23 6
Telecom and
Communication
24% Mobility (Automotive Consumer Appliances Telecom and Industrial Medical Devices Clean Energy
Consumer Appliances including EV, Railways Communication
24% and Aerospace)
Source: Frost & Sullivan report, Avendus Spark Research Page 4

Multiple drivers in place that are likely to sustain the growth of the industry
Factors driving growth in Indian EMS market
Government Incentives such China +1 Import Investments by Local

as PLI, EMC and SPECS Strategy Substitution and Global Players
PLI licenses for Telecom and Companies and governments Imports expected to reduce from Make in India and Digital India
Networking Products and White world over increasingly reducing 21% to 13% of the Indian programs boosting investments in
Goods dependence on China electronics market manufacturing sector in India
Source: Avendus Spark Research
Future opportunities in EMS market in India
Electric
Telecom/5G Smart Devices/IoT Consumer Appliance Energy Products
Mobility/Automotive
Government incentives,
EMS Infrastructure, Rising income Govt. initiatives,
Key Drivers reducing carbon emission 4G/5G. Duty, capex
government policies and urbanization infrastructure development
income levels
Charging infrastructure, Controller module for solar

Smart toothbrush, door and RAC, water purifier, washing
Key Products batteries, telematics and Routers. GPONs and modems
light controllers, RFID tags etc machine etc
panel, IoT based smart meters.
onboard diagnostic RF Modules
Source: Avendus Spark Research Page 5

EMS INDUSTRY| INITIATING COVERAGE Government Incentives such
as PLI, MEIS and EMC
Schemes like PLI, EMC, and SPECS are incentivising domestic manufacturing
Production Linked Incentive Scheme
Telecom | 42 beneficiaries | Committed Incentive Outlay Rs.163bn White Goods PLI (ACs & LED Lights) | 61 beneficiaries | Committed Incentive Outlay Rs.66bn
Bharti Airtel awards 5G network deals to Ericsson, Nokia Yearly
Products to be
and also Samsung. Samsung is planning to invest Rs.4bn in Category Proposed
Few of the approved EMS players: Few of the approved EMS players: manufactured
its manufacturing facility in Kanchipuram, Tamil Nadu, Investment
India to make 4G and 5G telecommunications Telecom and
Routers -
infrastructure equipment (Source: Link) Networking Products
Kaynes
Control assemblies for IDU or ODU or
White Goods remotes, plastic moulding comp., display Rs.500 mn
European telecom gear makers Nokia and Ericsson have panels (LCD/LED)
inked multi-year supply contracts with Reliance Jio for IT Plans to apply
supplying 5G network equipment (Source: Link) Telecom and
Servers and 5G devices Rs.210 mn
Networking Products
Syrma
SGS
Control Assemblies for IDU or ODU or
White Goods Rs. 510mn
Ericsson to ramp up production via Jabil in India to Remotes
IT Plans to apply
serve 5G deployments (Source: Link)
Avalon
No participation till date
Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)
Approved Greenfield Electronics Manufacturing Clusters
Objective Benefits: Rajasthan Odisha
ELCINA Electronics Manufacturing Cluster Odisha Industrial Development Corpn.
This scheme has been notified with an aim to strengthen the value chain Under the scheme, financial incentives of 25% will be
for the manufacturing of electronic products in India. The target segment provided on capital expenditure (on a reimbursement Gujarat Chhattisgarh
comprises of the downstream value chain of electronic products, i.e., basis) in new units and expansion/ modernization/ Mundra Solar Techno Park Chhattisgarh State Industrial Development Corpn.
electronic components, semiconductor/ display fabrication units, ATMP diversification of existing units. All investments made Andhra Pradesh (Sri City)
Madhya Pradesh
units, specialized sub-assemblies and capital goods for the manufacture within 5 years from the date of acknowledgement will be Madhya Pradesh State Electronics Development
ELCINA RAAGA MAYURI Electronics Park
of aforesaid goods. The scheme will lead to higher domestic value eligible for receiving incentives under SPECS which has Andhra Pradesh Industrial Infra Corp.
addition and strengthen the existing ecosystem of ESDM in India. an outlay of about USD 440 Mn. Telangana
Telangana State Industrial Infrastructure Corp
Electronics Manufacturing Clusters (EMC) Goa

Department of Information Technology
Objective Benefits: Kerala

To provide support for creation of world class The scheme would provide grant assistance for setting up of both Greenfield Kerala Industrial Infrastructure Development
infrastructure for attracting investments in the and Brownfield EMCs across the country. For projects in Greenfield Electronics Jharkhand
Electronics systems Design and Manufacturing Manufacturing Clusters, assistance is provided to the extent of 50% of the Adityapur Industrial Area Development Authority
(ESDM) sector. Under the scheme, 20 Greenfield project cost subject to a ceiling of Rs.500mn for every 100 acres of land. For
EMCs and 3 Common Facility Centres (CFCs) have Brownfield EMCs, 75% of the cost of infrastructure is provided, subject to a West Bengal
West Bengal Electronics Industry Development Corpn.
been approved in 15 states across the country. ceiling of Rs.500mn.
Source: Make In India, MEITY, Avendus Spark Research Page 6
EMS INDUSTRY| INITIATING COVERAGE China +1 Strategy Import Substitution
Manufacturing shifting out of China to other countries, including India, leading to increased EMS opportunity
Threat on EMS industry in China Rising labour cost in China

Few companies who have moved/planning to move from China Manufacturing Labor Cost, $ per hour
Over the past few years, China has Company Industry Moved to (or planning) The aspiration level of Chinese workers
realized its stake of challenges, and Harley Davidson Automotive Thailand
has increased, and they are focusing on
what some individuals recognize as the Hasbro Toys Vietnam and India
high-tech jobs, leaving gaps in the low end
potential threats to China’s current Kayamatics Consumer Robotics Malaysia
of manufacturing value chain. This has led
position as the world’s biggest EMS Merry electronics Electronics Thailand
to scarcity of the labour and a higher cost
host country. Trade tensions, Nintendo Video Games Vietnam
due to lack of availability of the
allegations of currency manipulation, Panasonic Electronics Malaysia
manpower. The average cost of
Procon Pacific Packaging India
and a resurrection of economic manufacturing labour per day is USD 5.3 in
patriotism in the US, UK and some Samsung Electronics Vietnam
India and USD 36 in China, which make
other western nations have all formed Skechers Footwear India or Vietnam
manufacturers to move out of China.
a new level of emphasis and scrutiny Steve Madden Footwear Cambodia
on the China’s EMS business. OEMs'
Apple suppliers
need to diversify their supply chain to
Compal electronics Electronics Taiwan
reduce risk has fueled the expansion of Import Substitution
Delta electronics Electronics Thailand
the EMS industry in countries like
Foxconn Electronics Vietnam and /or India
India, Vietnam, and Mexico.
Goertek Technology Hardware Vietnam India’s import of electronics products systematically declined between FY’15 and FY’20
Pegatron Electronics India and Indonesia however increased sharply in FY’22 owing to a slowdown in domestic production due to a
shortage of semiconductors globally. The long-run mission of the Govt. is to reduce
Key Government Incentives, Policy/Schemes and programs by Select Countries, Global 2020 dependency on imported electronics products and services through ‘Atmanirbhar Bharat’
and develop a local electronics manufacturing ecosystem.
India ▪ PLI Scheme, SPECS, EMC 2.0, MEIS, DLI, Scheme for ATMP/OSAT units
China ▪ China Standards 2035 ;Made in China 2025

Import of Electronics Goods from China (In USD bn) 30.3
27.6
United States ▪ National Defense Authorization Act of 2021 (NDAA)
20.6 20.3
Europe ▪ Industry 4.0 Policies; Digital Single Market Strategy; Industry Policy Strategy 19.1
Vietnam ▪ National Industry Development policy through 2030
Thailand ▪ Thailand 4,0 strategy
Indonesia ▪ National Industry Policy

FY19 FY20 FY21 FY22 FY23
Singapore ▪ Electronics Industry Transformation Map (ITM)
Page 7
Source: Make in India, News Articles, Haver Analytics, Thailand Board of Investment Avendus Spark Research
EMS INDUSTRY| INITIATING COVERAGE Investments by Local
and Global Players
Global and local players are increasing domestic manufacturing footprint
Electronics Telecom & Networking Products
Vedanta inks pact with 20 Korean firms to set up Taiwanese electronics giant, Foxconn will
Ericsson vows commitment to India's US networking giant Cisco Systems on Wednesday said
electronics manufacturing hub in India establish a manufacturing facility in Telangana
manufacturing prowess for production of it will build a manufacturing plant in India in an
with an investment of ~500mn
5G infrastructure attempt to broaden its global supply chain.
“More than 50 companies have shown their Source: Link Source: Link
interest in partnering with us and we are pleased The investment is one of Foxconn’s biggest
to announce that we have signed MoUs with 20 single outlays to date in India and underscores
Korean companies engaged in the electronics how China’s at risk of losing its status as the
manufacturing value chain," said Akarsh Hebbar, world’s largest producer of consumer Samsung plans to invest ~Rs.4bn to start manufacturing 5G and 4G
global managing director of Vedanta’s electronics. Apple and other US brands are radio equipment at its facility in Tamil Nadu. The company has bagged
semiconductor and display business. leaning on their Chinese-based suppliers to deals from both Jio and Airtel for supplying 5G radios for select circles.
Source: Link explore alternative locations such as India and Source: Link
Vietnam. It’s a rethink of the global supply chain
that’s accelerated during the pandemic and the
war in Ukraine and could reshape the way global
electronics are made.
Source: Link
Automotive & Railways
RIL unit forms JV with US-based Sanmina to set up
electronics manufacturing facility
JV will prioritise high technology infrastructure Renault and Nissan commit Rs.53bn investment for Alstom Inaugurates Asia’s Largest Train-
hardware for industries such as communications production of new vehicles, including EV, in India Sets Component Manufacturing Facility
networking (5G, cloud infrastructure, hyperscale Apple Inc's supplier Pegatron Corp plans to Source: Link in Coimbatore
datacenters), medical and healthcare systems, add a second manufacturing facility in India Source: Link
industrial and cleantech, and defense and aerospace Source: Link
Source: Link
Information & Technology

Ola Electric is set to invest a little over Rs.76bn to set up manufacturing facilities in Tamil Nadu
Amazon Inc’s cloud computing division, Amazon Web Services, became the latest
over the next five years to manufacture electric vehicles (EVs), EV components and batteries
company to invest in India. The company has planned to invest $13 billion (over Rs.1tn)
Source: Link
in India by 2030 to build its cloud infrastructure and create thousands of jobs.
Source: Link
Source: News Articles, Avendus Spark Research Page 8

Services offered by EMS players from design to complete product build

EMS Services Particulars
Services offered by EMS players globally
▪ Design services include multiple associated actions that occur after determining the customer's specific requirements and before
Design services
manufacturing or at the beginning of an assembly. The EMS Company based on inputs from the OEMs creates conceptual design and the
Product Design and solutions
Conceptualizing and design of electronic products
same is shared with the OEMs for inputs and approvals.
▪ The next step is to create a Proof of Concept (POC) to demonstrate that concept of design, functions. Post that, once design for
Electronic Manufacturing
Prototype Prototyping manufacturability, design for testing and design for servicing are established, prototypes are made to make sure that the product will
Prototyping of electronics schematic on a breadboard /another serve its proposed purpose after it is manufactured as a part of a bigger production run.
platform ▪ Testing is an essential element across the entire EMS value chain. EMS companies which can design test solutions for both at PCBA level
Testing services
Product Testing and at the end of line product testing, including functional testers and fixtures are preferred by the OEMs.
Services
Testing the product performance and identifying defects ▪ At the heart of the electronics industry is Printed Circuit Board or PCB. A PCB with components mounted on is called an assembled PCB
PCB Assembly and the manufacturing process is called PCB assembly or PCBA for short. PCB assembly is a major activity and normally outsourced to
Box Assembly EMS companies.
Housing of PCBA in a small enslosure ▪ In the box build system, the OEM outsources the complete product to a third-party EMS firm, and the EMS firms, make the final finished
Box Build product, puts in the OEM logo, and dispatch it to the OEM warehouse to be resold. In this case, the EMS firm takes care of both
System Integration electronic BOM, Mechanical and Electrical BOM and assembles the final product, and does the required testing before it is dispatched.
Bring together the component sub systems into one system ▪ The demand for repair and remanufacture is not high, because majority of electronic products do not necessitate repair or
Aftersales
remanufacturing and are focused more on replacement. Niche verticals like aerospace and defence, railways and high-end electronics
Service (Repair
Repair and Rework Services segment is opening to accept third-party repairs due to high cost of equipment and re-design which provides immense potential for this
and Rework)
Repair and remanufacturing Process segment.
Source: EMS companies DRHP, Avendus Spark Research
Metals &
End-to-end service offering and margin profile of those services
plastics, 10%
Wire and
High Margin Services

Low Margin Services
harness, 15%
Box-build
split by cost
components
PCBA, 60%
Magnetics,
15%
Source: EMS companies DRHP, Avendus Spark Research Page 9

Multiple products supplied to various sectors

Represents PCB/PCBA/Box Build content mix as a % of end-product
End-Industry Verticals and Products Addressed by EMS players
Aerospace, Defence, IoT/IT and Consumer

Automotive Industrial Outerspace & Nuclear
Medical Railways Telecom
Others Appliances
Smart Consumer Electronics &
EDFA MODULE BLDC Systems
CWDM 16 CHANNEL FILTER Water Purification & Cleaning
DWDM AWG 40
CHANNELS FILTER
Personal Healthcare Devices Railway Cab Equipment
~3-5% ~20-30% ~15-25% ~10% ~20% ~40-50% ~30% ~10-15%
Page 10
Kaynes, Syrma and Avalon focus on low-volume and high-margin categories
Product categorization based on volumes and margins Company categorization based on product offerings
High High
Volume Volume
Mobile
Phones
Consumer IoT
Lighting
Low High Low High
Margin Margin Margin Margin
IT Automotive
Telecom Industrial
Medical
devices
Magnetics
Low Low
Volume Volume
Source: Companies DRHP, Avendus Spark Research Page 11

Global and local major EMS players
Service offered and Focus end-user segments of key Global EMS companies
Revenue EBITDA PAT
Global Companies Services offered Focus end user segments
(USD mn) (USD mn)/ Margin% (USD mn)
Precision Injection Molding and Tooling, Radio Frequency Identification
▪ Appliances, Automotive, Defense & Aerospace, Healthcare, Networking &
Jabil Inc. Technology (RFID), Rapid Prototyping Services, Offer Design Services, 33,478 2,461/7% 996
Telecommunication, Others
Sustainable Packaging
Industrial Design, System Architecture, Mechanical Design, Embedded System ▪ Communications, Enterprise and Cloud Consumer Devices, Automotive,
Flex Ltd. 30,346 1,836/6% 793
Design, Others Health Solutions, Industrial
Design & Engineering, New Product Development, Systems Manufacturing, ▪ Communications networks, Computing and storage, Healthcare, Aerospace
Sanmina Corp. 7,890 477/6% 256
Global Services and Logistics, PCB Assembly & SMT & Defence, Industrial & Automotive
Design and engineering, Hardware platform solutions, Aftermarket services,
Celestica Inc. ▪ Health tech, Communication, Aerospace & Defense, Consumer, Robotics 7,250 408/6% 146
Supply chain
Design and development, Supply chain solution, Aftermarket services, New
Plexus Corp. ▪ Industrial, Healthcare & life science A&D 3,811 252/7% 138
product introduction
Team Precision Public
Design & Prototyping, Mass Manufacturing, Logistics & Warehousing services ▪ Industrial, Medical, Communication, Specialty, Consumer 88 11/12% 9
Co. Ltd
Revenue EBITDA PAT

Indian Companies Services offered Focus end user segments
(Rs.mn) (USD mn)/ Margin% (Rs.mn)
▪ Aerospace & Defense, Rail Transport, Energy & Industrial
Cyient DLM Ltd. E2E manufacturing, Re-engineering services Assembly and repair capabilities 7,205 840/12% 398
Medical
Hardware Design Services, Hardware Testing & certification, Software
SFO Technologies ▪ Healthcare/ Medical Diagnostics, Automobile/ Transportation,
services, Software Testing, Manufacturing Services, Testing & Certification, After 18,011 1,671/9% 399
Pvt. Ltd. Communications, Aerospace & Defence, Energy & Industrial
market support
Centum Electronics ▪ Aerospace, Space, Communications, Defense, Medical,
Engineering Services, Manufacturing Services, Aftersales Services 9,230 762/8% 67
Ltd. Transportation, Automotive
Syrma SGS Product Design, Prototyping, Product Assembly, Quality & Testing, Supply & ▪ Industrial, Consumer Electronics, Automotive, Computer
20,484 1,878/9% 1,231
Technology Ltd. Logistics, After market Medical, Railways
PCBA Design & Assembly ,Wire Harnesses, Magnetics, Electro-Mechanical
Avalon Technologies ▪ Transportation , Aerospace, Power and Energy, Communication,
integration (EMI), Sheet Metal Fabrication, Injection Moulded Plastics, Complete 9,447 1,128/12% 525
Ltd. Healthcare, automotive, Industrial
system integration, Product testing
▪ Defense & Aerospace, Railways & other, Transportation, Healthcare,
Kaynes Technology
ODM, OEM Manufacturing, Systems Integration, Product Service Support Automotive, IT & Telecom, Power & Energy & Industrial 11,261 1,683/15% 952
India Ltd.
Automation & Controls
VVDN Technologies Embedded Product Design and Manufacturing, Hardware Design, Software ▪ Communication ( 5G networking and Wi-Fi , VISION, IoT, Clouds and
11,718 1,291/11% 762
Pvt. Ltd Design, Mechanical Design, QA & Testing, Prototyping and Manufacturing apps)
Supplying Cable assemblies/ Harness assemblies and Electro-Mechanical
▪ Defence (Aerospace, Land & Naval Defence Systems, Satellites & Civil
DCX Systems Ltd Assemblies Subsystems, System integrations & Testing, Maintenance -Repair- 12,536 837/7% 717
Aviation)
Overhauling (MRO) & Lifetime product support
Source: Bloomberg, Company website, Avendus Spark Research Page 12

Backward integration scope exists in this space. Incumbents already have high share of exports
Backward Integration Possibilities for EMS players Magnetic

Future growth areas Solar
component Hydrogen
Integrated Circuits
Electric Vehicles
Railways
Diodes
Aerospace and Defence
Resistors Medical Electronics
LEDs
Telecom
Transistors
Capacitors Source: Avendus Spark Research
EMS players global exposure– Kaynes and Syrma have higher exports vs DIXON and AMBER
Exports Mix As a % of Total Revenue (FY23)
60%
55%
Electrical capacitors fixed, variable/ adjustable Electrical resistors (incl rheostats and potentiometers)
(pre-set) imports (Rs.bn) other than heating resistors imports (Rs.bn)
28
25
76 21
64 18 20
48 48 49 13
21 25 8 8 8 9 10 15%
12 19 16 17 17 20 5 6
<1% <1%
FY18
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY19
FY20
FY21
FY22
FY23
FY20
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY21
FY22
FY23
Avalon Syrma SGS Kaynes Amber Dixon
Source: Ministry of Commerce, Avendus Spark Research Source: Companies DRHP, Avendus Spark Research Page 13
Increasing electronic content across product categories leading to expanding addressable opportunity
Automotive
Railways
In Vande Bharat train, ~18 PCBs are fitted
Electronic component mix% EV Sales Integrated Circuits (IC) - In No's per coach to control various devices such
Volumes FY21 FY22 FY23
(In Units) ~ 15,000 as AC control, automatic doors, sensors,
50% GPS-based passenger information
2-Wheeler 47,754 1,80,559 7,11,873 system, CCTV, and infotainment system
besides those used in propulsion, braking
YoY growth % - 278% 294%
system and train control management
3-Wheeler - 1,77,882 3,90,177 system(TCMS).
15%
YoY growth % - - 119% ~ 2,000 ~400 such trains are expected to be
manufactured over the next few years
4-Wheeler - 18,583 45,377 and presents significant opportunity for
Traditional - 2 Wheeler Electric - 2 Wheeler Regular Trains Vande Bharat Train
EMS players.
YoY growth % - - 144%
Source: SIAM, Avendus Spark Research Source: News Article, Avendus Spark Research
Consumer appliances Industrial
Air-Conditioner Component Mix – Value-wise Air-Conditioner Market

Volume Mix
Copper Other, 6%
Market Size (~8.4mn units)
Tubing, 7%
Compressor,
30% 77%
Motor, 7%
Plastics &
sheet metal,
10%
23%
Electronic content in BLDC fans would be Smart meters have higher electronic content than
~20%. The mandatory BEE rating in ceiling fans analog meters and rapid adoption of these smart
Printed Heate will make larger institutions and government meters by various states in India presents
circuit exchanger, bodies turn to energy-efficient technologies. significant opportunity for EMS players
board, 18% 22% Inverter Non-inverter
Source: Industry, News Article, Avendus Spark Research Source: Avendus Spark Research Page 14
Kaynes Technology India Limited
Kaynes Technology CMP Target Price Rating
Rs. 1,500 Rs. 1,637 ADD
Company Factsheet
Kaynes Technology is a leading end-to-end and IoT solutions-enabled integrated electronics manufacturer in India. We have capabilities across the entire spectrum of ESDM services. Kaynes has
Company Background over three decades of experience in providing Conceptual Design, Process Engineering, Integrated Manufacturing and Life Cycle Support for major players in the Automotive, Industrial,
Aerospace and Defense, Outer-space, Nuclear, Medical, Railways, Internet of Things (“IoT”), Information Technology (“IT”) and other segments.
Presence Kaynes caters to both Indian and international market. Majority of the revenue (~85%) is from domestic market.
Mrs. Savitha Ramesh- Chairperson

She is the Promoter and Chairperson of our Company. She has been a part of our Company since 1996. She holds a bachelor’s degree in commerce from the University of Madras. She has
approx. 25 years of experience in electronic manufacturing services industry.
Mr. Ramesh Kunhikannan- Managing Director

Management depth
He is the Promoter and Managing Director. He has been a part of our Company since its inception in 1988. He holds a bachelor’s degree in electrical engineering from National Institute of
Engineering, Mysore. He has 33 years of experience in electronic manufacturing services industry
Mr. Rajesh Sharma- Chief Executive Officer

He is the Chief Executive Officer of our Company. He is an associate member of The Institute of Chartered Accountants of India and holds a graduate degree in commerce from Bangalore
University. He has over 15 years of experience in accounting and finance.
Their business includes OEM- Box build, OEM-Printed Circuit Board Assemblies (PCBAs), and ODM services in smart metering technology, smart street lighting, brush less DC (“BLDC”) technology,
Business
inverter technology, gallium nitride based charging technology and providing IoT solutions for making smart consumer appliances or devices IoT connected.
Its subsidiaries include Kanyes Technologies Private Limited, Kaynes Embedded Systems Private Limited, Kaynes International Design & Manufacturing Private Limited, Kaynes Technology Europe
Corporate structure
GMBH; and Kaynes Electronics Manufacturing Private Limited.
Revenue model The OEM-PCBA accounts for 62% of the revenue , OEM-Box build for 30% of the revenue, Product Engineering and IoT solutions for 5% of revenue and ODM for 3% of revenue.
Capacity As of Dec-21 Kaynes has installed a capacity of producing ~600 million SMT Components per annum and ~31.5 million PCB Assemblies per Annum.
Key clients Marquee customer base includes Siemens, Frauscher, Hitachi, IJL, Agappe, Beat, Tonbo imaging, Canyon, iskraemeco and leading players in BLDC Fans.
Key success factors China + 1 strategy, Make in India strategy, Domestic cost competitiveness in manufacturing, Import substitution, and schemes like the production linked incentive scheme.
Credit rating Long-term Fund-based – Cash Credit and Long-term Fund-based – Packing Credit – both have been rated [ICRA]BBB(Stable) as of January 2023
Corporate bankers Canara Bank, HDFC Bank Ltd, Saraswat Co-operative Bank Ltd and State Bank of India.
Auditors K P Rao & Co, Chartered Accountants

Source: Company DRHP, Avendus Spark Research Page 16
Kaynes Technology
About the Company and its Business Verticals
KAYNES is an end-to-end and IoT solutions-enabled integrated electronics manufacturing company. The company provides conceptual design, process engineering, integrated
manufacturing and life-cycle support for major players in the automotive, industrial, aerospace and defence, outer-space, nuclear, medical, railways, IoT, IT/ITES and other segments.
The company's operations are classified under the following business verticals:
▪ OEM - Turnkey Solutions - Box Build, under which the company offers complete 'Build To Print' or 'Build to Specifications' of complex Box Builds, subsystems and products in the
defence and aerospace, transportation, healthcare, IT and industrial verticals.
▪ OEM - Turnkey Solutions - Printed Circuit Board Assemblies, under which the company provides end-to-end turnkey solutions in the manufacturing of PCB assemblies.
▪ ODM - Under which the company ODM services smart metering technology, smart street lighting, and brushless DC technology.
▪ Product Engineering and IoT Solutions - Under which the company offers conceptual design and product engineering services in industrial and consumer segments.
Product
Kaynes Revenue Trend (Rs.bn) engineering and North South East
IOT solutions America Asia Others
11.3
ODM 5% 3% 1% 2%
3% Europe
OEM - Box
5 Year CAGR - Build 9%
24% 30%
7.1
Revenue mix - Revenue mix -

Segment wise Geography wise
4.2 (FY23) (FY23)
3.8 3.6 3.7
India
85%
OEM - PCBA
62%
FY18 FY19 FY20 FY21 FY22 FY23
Source: Company Annual Report, Avendus Spark Research Page 17

Kaynes Technology
Key Milestones
1988 1995 2000 2004 2008 2009
Established as a
manufacturing enterprise Obtained ISO Got approval for New unit in Established ▪ Expanded
9001-200 setting up Himachal Kaynes customer base in
certification for hardware Pradesh for Technology Europe
PCBA and export-oriented resale of PCBA Europe GmbH ▪ Established unit
electronic unit of in Chennai
manufacturing populated PCB
services
2022 2021 2020 2016 2012 2010
▪ Received ▪ Started exporting Impetus towards ▪ Established Established ▪ Established

approval under sensor electric embedded manufacturing manufacturing unit in
the Production assembly to Phoenix, system, IoT facility at Manesar facility at Mysore Bengaluru
Linked Incentive Arizona solutions and ▪ Collaboration with ▪ Received
Scheme for ▪ Growth in aerospace, designs skills Qualcomm IVSQM
White Goods defense power enhancement Technologies Inc Certifications
▪ Listed on BSE & electronics, expansion for design and
NSE into consumer manufacturing
electronics

Kaynes Technology
Kaynes’ Service offerings across the entire customer value chain
Design Services Industrialization Services Manufacturing Services Product Maintenance Services End-of-life Services
Concept to Design Realization Prototype Manufacturing Repair & Refurbish

Supply Chain Design
Turnkey Electronic
Product Development Manufacturing
Value Steam Mapping Fare Lifts Spare Part Handling
DFM/DFA - Analysis Parts Development Services
Value Engineering / Value

Quality Assurance Material Obsolescence
Analysts
Rapid Prototyping OEM Manufacturing
Weak Point Analysis Distribution Services Product Maintenance

Box Building
Test Development
Regulatory and Compliance Ramp up Planning PCB Assembly Order Fulfilment LTB - Services
Bluetooth Modules Smart Lighting Smart Meters Wireless Gateways Streetlight Controller
ODM BLDC Motor Controllers GaN Chargers Biometric Add-ons Industrial Sensors ECUs - Steering Control
Kaynes Technology
Product Portfolio
Aerospace, IoT/IT and

Automotive Industrial Medical Railways Consumer
Defense Others
Revenue Mix - Industry wise (FY23)

38% 27% 2% 6% 12% 6% 9%
Source: Company Website and Annual Report, Avendus Spark Research Page 20
Kaynes Technology
Manufacturing facility pan-India

Capacity Expansion Plans
Facility location Particulars
▪ 1,20,000 built up space taken
Manesar (Haryana)
▪ Planned operationalization by 1QFY24
▪ Leased place
Pune (Maharashtra)
▪ To be operationalized by 2QFY24
Parwanoo
▪ New facility construction work in progress
Chamrajanagar (Karnataka)
Manesar ▪ Phase 1 to be operationalize by 2QFY24
▪ Upgradation of existing facilities:
― Mysore Unit 1 & 2
Existing facilities ― Manesar
― Bangalore
― Chennai
▪ 11 SMT Lines
Navi Mumbai ▪ 57 THD Lines
▪ 11 Cable Harness Lines
▪ 15 Plastic Moulding machines
▪ 1 Class 10,000 clean room
Bengaluru
Mysuru Unit I & II Bengaluru Unit I & II ▪ Most manufacturing at low-cost locations
Chennai
Chamarajanagar ▪ Dedicated Humidity Controlled Stores
▪ Flexible Infrastructure
Kochi
▪ 2 Exclusive RoHS Compliant Lines for Green Manufacturing
▪ FDA Approved

Kaynes Technology
Kaynes’ customer base and revenue concentration profile
Industry Key Customers Client relationship with Kaynes - Industry wise (Data in years) *
11
Leading global manufacturing of electronic 10 10
Industrial
instruments and electromechanical devices
8
7 7 7
Railways
Automotive
Railways Industrial Medical Automotive A&D + Others IoT/IT Consumer

Medical
* Data represents average period of business relationship is determined based on the length of relationship of top 10 customers in each vertical
Revenue split customer wise (FY23)

A&D + Others
60%
IoT/IT 44%
and Others
Leading players in BLDC fans.

Consumer
Consumer Appliances
14%
Non-Auto Leading provider of global digital infrastructure

Top 1 Top 5 Top 10
Source: Company Presentation and DRHP, Avendus Spark Research Page 22
Kaynes Technology
Kaynes has a higher share of domestic revenue and relatively more diversified; its foray into telecom sector is a positive
Kaynes has higher focus towards domestic market Box build revenue mix is relatively higher compared to peers Foray into new segment - Telecom
Domestic Revenue Mix % (FY23) Share of Box Build Revenue % (FY23) So, I can speak from the perspective of our Company. So,
85% some of the underrepresented verticals in our business
44% portfolio. One is of course the glaring omission is telecom
70% and then the other is something like it and the third one is
33% something like your medical we are comparatively smaller
in size compared to the other. So, we see that there is a lot
40% of growth in the infrastructure for 5G not only in India
18% across the world. I think with the new global realignments
happening we see next big demands coming up there. Of
course, that demand will be fulfilled by different types of
companies. Some of it will come to companies like us. So,
telecom is one strong growth segment.
Kaynes Syrma SGS Avalon Kaynes Syrma SGS Avalon Source: FY23 Kaynes Concall Transcript
Kaynes participation in PLI across few verticals to benefit the
Kaynes has a diversified exposure across verticals Renewed traction in certain segments for Kaynes
company over time
(FY23 - Revenue Mix %)
Earlier opportunity/ Current opportunity/ Proposed
Segments Kaynes Syrma SGS Avalon Segments Products to be
services offered services offered Category Investment
manufactured
Industrial 27% 31% 29% (Rs.mn)
Automotive 38% 20% - Automotive ▪ PCB Assembly ▪ Box Build
Telecom and
Medical 6% 8% 13% ▪ PCBA & Box build ▪ PCBA & Box build (large Networking Router -
Industrial Products
Telecom/Communication - - 11% (Smaller box build) box build)
Consumer 9% 32% - ▪ Traction witnessed in this Control assemblies for IDU or ODU or
Clean energy - - 25% ▪ Revenue contributor segment and could White Goods remotes, plastic moulding components, 500
Aerospace and Defence 2% - - was 26% in FY19 and become a major revenue display panels (LCD/LED)
Railway
fell to 12% in FY23 due contributing segment
Mobility/Transportation - - 21%
to lower orders which carries better
IT/Railway 18% 9% - IT Plans to apply
margins
Total 100% 100% 100%
Source: Companies Annual Report, Avendus Spark Research Source: Company DRHP, Avendus Spark Research Page 23
Kaynes Technology
Kaynes’ gross margins have been more consistent; Capex to ensure growth for next 3-4 years
Gross margin of Kaynes has been more consistent as compared to peers Kaynes EBITDA and Margin Trend (%)
Companies Gross Margins Trend (%) 3.0 18%

15.3% 15.7%
43% 14.9%
45% 16%
2.5 13.3%
14%
40% 38% 11.2%
36% 36% 36% 2.0 9.7% 12%
35% 35% 9.6%
34% 10%
35% 1.5
34% 31% 30% 30% 2.8 8%
34% 34% 31%
30% 2.2
32% 1.0 6%
1.7
30% 4%
25% 27% 27% 0.5 0.9
2%
23% 25% 0.4 0.4 0.4
20% 0.0 0%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY19 FY20 FY21 FY22 FY23 FY24E FY25E
EBITDA (Rs.bn) EBITDA Margin % - RHS

Kaynes Syrma SGS Avalon
Source: Avendus Spark Research Source: Avendus Spark Research
Capital expenditure to be higher over the next 1-2 years Du-Pont Analysis
Working capital (Days) Trend
165 165 Capex (Rs.mn) 2,200 FY19 FY20 FY21 FY22 FY23 FY24E FY25E
156 149
124 130 125
NP margin
2.7% 2.5% 2.4% 5.9% 8.5% 9.8% 9.8%
(%)
581 500 Total assets

312
422 1.5 1.3 1.4 1.8 1.4 1.2 1.4
250 turnover
105
FY19 FY20 FY21 FY22 FY23 FY24E FY25E Leverage

FY19 FY20 FY21 FY22 FY23 FY24E FY25E 2.7 2.8 2.5 2.3 1.4 1.2 1.1
multiplier
Easing of supply chain is expected to result in lower
inventory holding and thereby resulting in working capital Companies' capex plans in FY24 is expected to help
achieve revenues of ~Rs.30bn ROE (%) 11.0% 9.4% 8.3% 24.4% 16.4% 13.8% 14.8%
for the company
Source: Avendus Spark Research Source: Avendus Spark Research Source: Avendus Spark Research Page 24
Kaynes Technology
Kaynes’ Strategy Going Forward
Kaynes Application Specific Road Map

Continue to diversify product Continue expanding customer
Focus on full product /
portfolio and base to focus on large customers
box build capabilities
expand across verticals Medical Devices Aerospace & Defense
▪ Cater to OEMs through inhouse 4-pronged customer acquisition Diagnostic, lab, surgical & other
build of test fixtures, provide ▪ Leverage on its experience and strategy – equipment
Avionics, Communications LRUs
product reliability, faster turn- capabilities of its inhouse design ▪ Additional sales and BD
around time, delivering complex and R&D team to further ODM representatives to expand
prototypes, set-up product or box capabilities geographical footprint
build manufacturing with zero ▪ Continual process of up skilling and ▪ Utilize content-based marketing Space
defects will ensure customers with adding infrastructure by investing Industrial
through content articles to Components of Space Vehicles & Sub
High-Capacity UPS
larger revenue share. in newer licenses, testing generate brand awareness system
▪ To deploy funds from net proceeds equipment and application
▪ S&M teams across US, Japan and
to upgrade and add manufacturing software
Europe to grow exports
facilities to build high value-added ▪ Use different strategies for each
▪ Enhance and expand
consumer portfolio and expand vertical to capitalize of industry
Consumer TFT Displays
manufacturing facilities to better Car Navigation & Entertainment
business with customers for full box opportunity Household Consumer Electronic Devices
serve customer Systems
build
Expand and set up Improve operational efficiency and IoT Solutions & Others BLDCM Controllers
manufacturing facilities pursue inorganic growth Streetlight Controllers, Interior lamps,
DC Motor Across Segments
Fans
▪ Improve operational efficacy through
▪ Support the growth strategy across India, backwards integration measures to reduce
Kaynes is in the process of setting up dependence on third parties, lead times for
additional manufacturing facility at faster utilization
Chamarajnagar, Karnataka and also is Information Technology Green Energy
▪ Inorganic growth through selective High Density Boards & Other Products Solar Energy Inverters LED Lights etc
undertaking significant expansion at its
strategic acquisitions investments and
current facility at Mysore and near its
strategic alliances within the sector to aid
existing facility at Manesar.
in foray to newer geographies and expand
capabilities
Hand-held Computers
Warehouse Management
Source: Company DRHP and Presentation, Avendus Spark Research Page 25

Kaynes Technology
Key risks to investment thesis
Entry barrier to
this industry is not
too high. Future
competition might
Higher volumes come in
might lead to lower
margin as few Slowdown in demand
customers might have in few verticals
higher bargaining
power
Delay in onboarding new

Delays in customers/challenges in
implementation of increasing market share
PLI schemes from existing customers

Kaynes Technology
Subsidiaries
Entities Holding % DOI Nature of business FY22 Revenue (Rs.mn) FY22 PAT (Rs.mn)
▪ Currently, there are no business operations. It was incorporated for

Kaynes Embedded dealing in embedded computer software technology (incl. CAD/CAM
60% 16-Dec-09 - -
Systems Private Limited design, manufacturing and telecom) and to install allied equipment
to conduct bureau of computer service.
Kaynes International ▪ It’s an Exports Only Unit (EOU), with an Objective to provide State of
Design & Manufacturing 95% 21-Nov-18 Art Infrastructure in Electronics Design and Contract Manufacturing 335 21
Private Limited services for overseas customers more so in the European Union.
▪ It is engaged in consultancy and sales of manufacturing services and

Kaynes Technology
60% - related technical services for the electronic manufacturing services 16 (FY21) No data
Europe GMBH
industry.
▪ It provides IoT solutions such as sensors and IO, edge processing,

Kemsys Technologies
100% 20-Oct-09 connectivity and monitoring solutions through device engineering, 48 -24
Private Limited
digital engineering, manufacturing and firmware engineering.
Source: Subsidiaries Annual Report, Probe42, Avendus Spark Research Page 27

Kaynes Technology
Board of Directors and Key Management Team
Mr. Ramesh Kunhikannan ▪ Has 33 years of experience in the EMS industry. He was associated with the company since its inception. He obtained his B.Tech from National
Managing Director & Promoter Institute of Engineering, Mysore.
Mrs. Savitha Ramesh

▪ Has 25 years of experience in the EMS industry. She was associated with the company since it’s inception. She obtained her B.Com from University of
Chairperson, Promoter & Whole-time
Madras
director
Mr. Jairam Paravastu Sampath ▪ Has over 5 years of experience across various roles. He is associated with company since the year 2011. He obtained his B.Tech from IIT Madras and
Board of Directors
Whole time director and CFO did his PGDM at IIM Ahmedabad
Mrs. Poornima Ranganath

▪ Was the current Managing Partner of Law Assist. She graduated from the National Law School of India University, Bangalore
Non-Executive Independent Director
Mr. Anup Kumar Bhat

▪ Has several years of experience. He was formerly. VP at Ashok Leyland (subsidiary support). He obtained his B.Tech from Banaras Hindu University.
Independent Director
Mr. Vivekanandah Ramasamy

▪ Has over 30 years of experience. He is an Ex. Titan Engineering and Automation Limited. He received his B.Tech from University of Madras.
Mr. Koshy Alexander ▪ Has34 years of experience in finance. He was formerly the Director of Bharat Electronics Limited. He did his B.Com in Bangalore University and is a
Independent Director member of ICA.
Mr. Murali S G ▪ Has 34 years of experience in finance. He was formerly the Group CFO of TVS Group. He obtained his B.Com from Bangalore University and is an ICAI
Independent Director member.
Mr. Rajesh Sharma

▪ Has 27+ years of experience in accounting, finance & management. He obtained his B.Com from Bangalore University and is a member of ICAI .
CEO
KMPs
Mr. Ramchandran Kunnath

▪ Has 29+ years of experience. He is fellow member of ICAI & Cost accountant of India.
CSO, CS & CO
Mr. Sajan Anandaraman

Head of commercial and corporate ▪ Has 20+ years of experience in Kaynes across verticals. He obtained his B.Tech in E&E, University of Calicut.
affairs
Source: Company, Avendus Spark Research Page 28
Kaynes Technology
Financial Summary
Financial Statements
Rs mn FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY27E
Profit & Loss
Revenue 3,642 3,682 4,206 7,062 11,261 14,421 17,724 21,921 27,392
Gross profit 1,226 1,266 1,345 2,168 3,460 4,496 5,578 6,971 8,822
EBITDA 350 413 409 937 1,683 2,201 2,784 3,557 4,622
Depreciation 51 84 101 132 187 354 516 576 636
EBIT 299 330 308 805 1,496 1,847 2,268 2,980 3,985
Other Income 24 19 40 41 114 243 245 268 337
Interest expense 187 236 240 256 349 200 200 200 200
Exceptional items
PBT 136 113 109 590 1,260 1,890 2,313 3,048 4,122
Reported PAT (after minority interest) 98 92 101 417 952 1,413 1,730 2,280 3,083
Adj PAT 98 92 101 417 952 1,413 1,730 2,280 3,083
EPS (Rs.) 14.3 13.6 14.8 9.0 16.4 24.3 29.8 39.2 53.0
Balance Sheet
Net Worth 938 1,032 1,396 2,037 9,603 10,930 12,543 14,707 17,674
Total debt 1,483 1,438 1,395 1,695 1,359 0 0 0 0
Other liabilities and provisions 301 390 449 851 996 1,088 1,189 1,300 1,422
Total Net worth and liabilities 2,721 2,860 3,239 4,583 11,958 12,017 13,732 16,007 19,096
Gross Fixed assets 808 916 1,141 1,473 1,854 4,054 4,554 5,054 5,554
Net fixed assets 503 547 697 929 1,123 2,968 2,952 2,875 2,739
Capital work-in-progress 45 119 126 83 293 293 293 293 293
Intangible Assets 0 110 102 204 194 194 194 194 194
Investments 20 16 17 15 33 33 33 33 33
Cash and bank balances 324 123 143 216 4,860 2,449 3,153 3,963 5,201
Loans & advances and other assets 298 418 252 535 1,282 1,400 1,540 1,694 1,863
Net working capital 1,532 1,527 1,902 2,600 4,174 4,679 5,567 6,954 8,773
Total assets 2,721 2,860 3,239 4,583 11,958 12,017 13,732 16,007 19,096
Capital Employed 2,499 2,550 2,843 3,800 11,039 11,006 12,620 14,784 17,751
Invested Capital (CE - cash - CWIP) 2,130 2,307 2,574 3,501 5,886 8,264 9,174 10,527 12,256
Net debt 1,159 1,315 1,252 1,479 -3,501 -2,449 -3,153 -3,963 -5,201
Cash Flow
Cash flows from Operations (Pre-tax) -11 471 305 233 83 1,906 2,096 2,387 3,085
Cash flows from Operations (post-tax) -76 452 277 211 -420 1,436 1,520 1,626 2,054
Capex -105 -312 -250 -422 -581 -2,200 -500 -500 -500
Free cashflows -181 140 27 -211 -1,001 -764 1,020 1,126 1,554
Free cashflows (post interest costs) -368 -96 -212 -467 -1,350 -964 820 926 1,354
Cash flows from Investing -409 -99 -241 -445 -4,933 -2,200 -500 -500 -500
Cash flows from Financing 486 -354 -13 272 5,543 -1,646 -316 -316 -316
Total cash & liquid investments 324 123 143 216 4,860 2,449 3,153 3,963 5,201
Kaynes Technology
Financial Summary
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY27E
Growth ratios (%)
Revenue -4.0 1.1 14.2 67.9 59.5 28.1 22.9 23.7 25.0
EBITDA -7.4 17.9 -1.1 129.1 79.7 30.8 26.5 27.7 29.9
Adj PAT -38.4 -5.3 9.2 313.1 128.4 48.5 22.4 31.8 35.2
Margin ratios (%)
Gross 33.7 34.4 32.0 30.7 30.7 31.2 31.5 31.8 32.2
EBITDA 9.6 11.2 9.7 13.3 14.9 15.3 15.7 16.2 16.9
Adj PAT 2.7 2.5 2.4 5.9 8.5 9.8 9.8 10.4 11.3
Performance ratios
Pre-tax OCF/EBITDA (%) -3 114 75 25 5 87 75 67 67
OCF/IC (%) -4 20 11 6 -7 17 17 15 17
RoE (%) 11 9 8 24 16 14 15 17 19
RoCE (%) 11 11 12 18 16 14 16 18 20
RoCE (Pre-tax) (%) 15 14 13 25 22 19 21 24 27
Fixed asset turnover (x) 9.0 4.3 4.1 5.4 6.8 4.9 4.1 4.6 5.2
Total asset turnover (x) 1.5 1.3 1.4 1.8 1.4 1.2 1.4 1.5 1.6
Financial stability ratios
Net Debt to Equity (x) 1.2 1.3 0.9 0.7 -0.4 -0.2 -0.3 -0.3 -0.3
Net Debt to EBITDA (x) 3.3 3.2 3.1 1.6 -2.1 -1.1 -1.1 -1.1 -1.1
Interest cover (x) -0 2 1 1 -1 7 8 8 10
Cash conversion days 153 151 165 134 135 118 115 116 117
Total Working capital days 161 162 153 122 147 128 123 124 124
Valuation metrics
Fully Diluted Shares (mn) 7 7 7 46 58 58 58 58 58
Market cap (Rs.mn) 87,214
P/E (x) 894 944 864 209 92 62 50 38 28
P/Sales (x) 23.9 23.7 20.7 12.3 7.7 6.0 4.9 4.0 3.2
EV (Rs.mn) (ex-CWIP) 88,327 88,410 88,340 88,610 83,419 84,471 83,767 82,957 81,719
EV/ EBITDA (x) 252 214 216 95 50 38 30 23 18
EV/ OCF(x) -1,165 195 319 420 -199 59 55 51 40
FCF Yield (%) -0.2 0.2 0.0 -0.2 -1.1 -0.9 1.2 1.3 1.8
Price to BV (x) 93.0 84.5 62.5 43.1 9.1 8.0 7.0 5.9 4.9
Dividend yield (%) 0 0 0 0 0 0.1 0.1 0.1 0.1
Dividend pay-out (%) 0 0 0 0 0 6 7 5 4
Kaynes Technology
Shareholding Pattern and IPO fund utilisation
Shareholding Pattern As on March 2023 Details of IPO funds utilization up to March 2023 end
Others
15.4% Amount to be
Utilization Utilization %
Objects of the Issue as per Prospectus (Rs.mn) Utilized as per
Alternate up to FY23 up to FY23
Prospectus
Investment Funds
4.2%
Foreign Portfolio Repayment/ prepayment, in full or part, of certain
Investors 1,300 1,300 100%
borrowings availed by the company
8.2%
Promoter &
Mutual Funds Funding capital expenditure towards expansion of our
Promoter Group
8.7% existing manufacturing facility at Mysuru, Karnataka, and
63.6% 989 - 0%
near our existing manufacturing facility at Manesar,
Haryana
Major shareholders Investment in our wholly owned Subsidiary, Kaynes

Promoter & Promoter Group Electronics Manufacturing Private Limited, for setting up a 1,493 - 0%
Mr. Ramesh Kunhikannan 63.5% new facility at Chamarajanagar, Karnataka
Mutual Funds
Nippon Life India Trustee Ltd-A/C Nippon Power & Infra Fund 3.1%
Funding working capital requirements of the company 1,147 873 76%
Mahindra Manulife Multi Cap Fund 1.6%
Axis Mutual Fund Trustee Limited A/C Axis Mutual Fund A/C Axis Small Cap Fund 1.5%
Alternate Investment Funds

General Corporate Purpose 1,327 110 8%
Volrado Venture Partners Fund II 1.6%
Foreign Portfolio Investors

Government Pension Fund Global 2.9%
Total 6,256 2,283 36%
The Nomura Trust And Banking Co., Ltd
1.3%
(As The Trustee Of Nomura India Stock Mother Fund)
Source: Company DRHP and presentation, BSE, Avendus Spark Research Page 31
Syrma SGS Technology Limited
Syrma SGS CMP Target Price Rating
Rs. 435 Rs. 598 BUY
Company Factsheet
SGS Syrma is technology-focused engineering and design company engaged in turnkey electronics manufacturing services (EMS), specializing in precision manufacturing for diverse end-use
Company Background
industries, including industrial appliances, automotive, healthcare, consumer products and IT industries. The company provides high-mix, flexible volume, precision OEM manufacturing.
Presence It caters to both Indian and international market (with presence in over 24 countries, including the USA, Germany, Austria, and UK). Domestic business accounts for ~70% of revenue.
Mr. Sandeep Tandon- Executive Chairman

Sandeep Tandon is the Executive Chairman of Syrma SGS. He holds a Bachelor of Science in Electrical Engineering from the Andrew and Erna Viterbi School of Engineering, University of
Southern California. He has 18+ years of experience in the electronics manufacturing sector.
Mr. Jasbir Singh Gujral- Managing Director

Management depth A fellow member of the Institute of Chartered Accountants of India, he has over 39 years of experience in the electronics manufacturing sector. He is one of the Founding promoters of SGS
Tekniks Manufacturing Pvt Ltd, a wholly owned subsidiary of SYRMA SGS.
Dr. Sreeram Srinivasan- CEO, SETS

He is responsible for Design and Technical Services for the Company. Academically well accomplished, he holds a B.Tech in Metallurgical Engineering from IIT, Madras and an MS and PhD from
North Carolina State University.
The products offered include Printed circuit board assemblies (“PCBA”), Radio frequency identification (“RFID”) products, Electromagnetic and electromechanical parts and other products,
Business
which include motherboards, DRAM modules, solid state drives, USB drives and other memory products
As on March FY23, SGS Syrma has 5 subsidiaries, which are SGS Tekniks Manufacturing Private Limited, Perfect ID India Private Limited, Syrma Technology Inc, SGS Infosystems Private Limited
Corporate structure
and SGS Solutions GmBH.
Revenue model PCB assembly accounts for 66% of the revenue, Box build accounts for 18% of the revenue and RFID accounts for 16% of the revenue.
As of FY22 SGS Syrma has installed capacity to manufacture 10,120 Million CPA of PCBA, 300 M tags RFID, 6 M Coils of magnetics, 7.2 M modules of IT products, 180M CPA for zone of
Capacity
autonomous creation and 1,500,000 RFID label tags per month
Some of the customers they cater to include TVS Motor Company Limited, A. O. Smith India Water Products Pvt. Ltd., Robert Bosch Engineering and Business Solution Pvt Ltd, Eureka Forbes Ltd
Key clients
Limited, CyanConnode Limited, Atomberg Technologies Private Limited, Hindustan Unilever Limited and Total Power Europe B.V.
Technological advancements, China + 1 Strategy, System Automation and Analytics, Schemes like Production Linked Incentive (PLI) Scheme and Scheme for Promotion of Manufacturing of
Key success factors
Electronic Components and Semiconductors and Import Substitution.
Credit rating Long-term bank facilities - “CARE A+; Positive”, Long-term / Short-term bank facilities – “CARE A+; Positive / CARE A1+”, Short-term bank facilities - CARE A1+
Corporate bankers Citibank NA, DBS Bank, HDFC Bank Ltd, Hongkong & Shanghai Banking Corporation Ltd and State Bank of India
Auditors Deloitte Haskins & Sells LLP, Chartered Accountants
Syrma SGS
About the company and its business verticals
Srma SGS is a technology-focussed engineering and design company engaged in turnkey electronics manufacturing services (“EMS”). The company is specialising in precision
manufacturing for diverse end-user industries, including industrial appliances, automotive, healthcare, consumer products and IT industries. It is a one-stop-solution electronics
manufacturing services (EMS) which includes product design, quick prototyping, PCB assembly, Box build, repair & rework and automatic tester development services. The
company provides integrated services and solutions to OEMs, from the initial product concept stage to volume production through concept of co-creation and product realization.
▪ Printed circuit board assemblies (“PCBA”): Our PCBAs are used in products manufactured in the automotive, medical,
industrial, IT and consumer products industries, and shall include box-build products.
▪ Radio frequency identification (“RFID”) products: Our RFID products are used in products manufactured in the shipping,
healthcare, manufacturing, retail and fintech industries.
▪ Electromagnetic and electromechanical parts: which include magnetic products like chokes, inductors, magnetic filters,
transformer as well as high volume manufacturing assemblies. Company’s electromagnetic and electromechanical parts are
used in products manufactured in the automotive, industrial appliances, consumer appliances and healthcare industries,
among others.
▪ Other products: which include motherboards, DRAM modules, solid state drives, USB drives and other memory products.
Syrma SGS Revenue Trend (Rs.bn) * Data of Syrma + SGS RFID, 16%
5 Year CAGR - 20.5 Exports, 31%

56%
Revenue mix
Revenue mix
Box build, - Segment
10.2 18% - Geography
wise
wise (FY23)
(FY23)
3.5 4.0 4.4 PCBA, 66%
2.2 Domestic,
69%
FY18 FY19 FY20 FY21* FY22* FY23*

Source: Company Annual Report and DRHP, Avendus Spark Research Page 34
Syrma SGS
Key Milestones
2006 2010 2012 2014 2016 2018
Set up its Set up its Commenced Set up its first Commenced ▪ Set up its manufacturing
manufacturing manufacturing manufacturing research & manufacturing facility in Bawal
unit in the facility in beacons for development RFID tags ▪ Set up its ‘zone of
MEPZ-SEZ, Bargur vehicles department in autonomous creation’ to
Chennai India support the provision of
rapid prototyping services
▪ Set up another
manufacturing unit in the
MEPZ-SEZ, Chennai
2022 2021 2020 2019
IPO and listing on stock ▪ Acquired SGS Tekniks ▪ Commenced the manufacture of Commenced
exchange Manufacturing Private controllers of the EV battery offering repair
Limited management systems and rework
▪ Acquired 75% stake in ▪ Investment in its company by services
Perfect ID India Private South Asia Growth Fund II
Limited Holdings LLC and South Asia EBT
Trust

Syrma SGS
Syrma + SGS merger to result in synergies
▪ Started in 2005. ▪ Started in 1990. ▪ Merged in September 2021

▪ Syrma’s manufacturing locations in India ▪ Engaged in the business of providing Synergies:
(two units inside Chennai's MEPZ, one unit electronic manufacturing goods and related
in Bawal near New Delhi, one in Bargur (TN) ▪ No overlap in end-user industries catered to
services
and another in Uthiramerur (TN). ▪ Increased exposure to both domestic and
▪ Four manufacturing locations in India
▪ ~80% of business was exports export markets
(Gurgaon, Manesar, Baddi and Bangalore)
▪ Domestic market focus was predominantly along with design and development center ▪ ~11 manufacturing facilities across India
South India at Stuttgart, Germany and Gurgaon, India
▪ Industries catered were healthcare, ▪ ~80% of business was domestic

railways, IT, and industrials. ▪ Domestic market focus was predominantly
North India
▪ Industries catered were auto, industrials
and consumer
Source: Companies website, Avendus Spark Research Page 36

Syrma SGS
Radio Frequency Identification (RFID) – A relatively high-margin business
RFID, RFID products EBITDA margin is higher than company levels margin profile
~20%
14%
Phillips,
40% 12% Higher by
200-300bps
10%
RFID revenue 8%
RFID Revenue
mix as a % 6%
Mix
total revenue
4%
Others, 2%
60%
0%
Others, Company EBITDA margin RFID EBITDA margin
~80%
Various RFID Product Offering Sectors Catered
RFID Antenna Manufacturing FinTech

Shipping
RAIN RFID UHF TAGS NFC Tags
Healthcare Retail
BLE BEACONS & GATEWAYS
Source: Industry, Company Website, Avendus Spark Research Page 37

Syrma SGS
Syrma SGS’s service offerings and its presence across verticals
High Volume
End to End
Capabilities –
One Stop Low High
Margin Margin
Solution
Sample Batch
Low Volume

Syrma SGS
Product Portfolio
Automotive & EV Consumer Industrials Healthcare Railways and IT
Healthcare,
8%
IT & Railway,
9% Consumer,
32%
Revenue mix
- Industry
Automotive,
20% wise (FY23)
Industrial, 31%
Source: Company Presentation, Avendus Spark Research Page 39

Syrma SGS
Syrma’s customer base, and revenue concentration profile
Industry Top Customers Manufacturing Facility
2 Facilities
Automotive & EV
3 Facilities
Himachal
Consumer
Haryana
Ghaziabad
Industrials
Healthcare
2 Facilities
Revenue split customer wise (FY23)
~45%
2 Facilities
~25% Bengaluru
❖ 11 manufacturing
Chennai ❖ 840k+ sq. ft Manufacturing Space
<10% ❖ 7,500 Workforce
Tamil Nadu
❖ ~50% Women Workforce
❖ 120+ Vendors across 12+ Countries
❖ Capacity utilization levels is ~90% (FY23)
Top 1 Top 5 Top 10

Syrma SGS
Segmental Revenue and Gross Margin Profile

Industrials
FY22 FY23
Revenue (Rs.bn) 4.4 6.4
Revenue Mix (% of total) 35% 31%
Gross Margin Profile 31.4% 29.9%
Automotive PCBA : Box Build mix 50:50 Railways
& EV Domestic/Exports 35:65 (Exports to US & Europe) and IT
FY22 FY23 FY22 FY23

Revenue (Rs.bn) 2.5 4.0 Revenue (Rs.bn) 1.5 1.8
Revenue Mix (% of total) 20% 20% Revenue Mix (% of total) 12% 9%
Gross Margin Profile 20.4% 22.1% Gross Margin Profile 5.3% 9.8%
PCBA : Box Build mix Higher PCBA mix

PCBA : Box Build mix Higher Box Build
Domestic/Exports Higher Domestic Mix Domestic/Exports Higher Domestic Mix
FY22 FY23 FY22 FY23

Revenue (Rs.bn) 2.6 6.6 Revenue (Rs.bn) 1.6 1.6
Revenue Mix (% of total) 20% 32% Revenue Mix (% of total) 13% 8%

Consumer Gross Margin Profile 48.5% 53.9% Healthcare
Gross Margin Profile 38.1% 17.1%
Domestic/Exports Higher domestic mix Domestic/Exports Higher Exports mix
Source: Company, Industry, Avendus Spark Research Page 41
Syrma SGS
Financial Summary
Revenue Trend (Rs.bn)

EBITDA and Margin Trend
40.0 132.7% 140%
4.0 17.0% 18%
34.7
35.0 3.4
120% 3.5 16%
100.9%
30.0 26.8 3.0 14%
100% 11.0% 2.6
10.7% 12%
25.0 2.5 9.9%
20.5 80% 9.3%
20.0 58.4% 1.9 10%
2.0
60% 9.8% 8%
15.0 1.5 9.2%
12.2% 10.2 30.8% 29.4% 0.9 6%
10.4% 40%
10.0 1.0 0.7
4.4 0.5 4%
3.5 4.0 20% 0.4
5.0 0.5 2%
0.0 0% 0.0 0%
Revenue (Rs.bn) YoY Growth % - RHS EBITDA (Rs.bn) EBITDA Margin % - RHS
Working capital (Days) Trend Syrma SGS Capex Trend (Rs.bn) Du-Pont Analysis
120 2.5 2.3

109
FY19 FY20 FY21 FY22 FY23 FY24E FY25E
100 2.0
83 84 85 85 1.7
80 NP margin (%) 6.1% 12.5% 6.5% 5.4% 5.8% 7.1% 6.8%
63 62 1.5
60 1.0 Total assets
1.0 0.8 2.1 1.8 1.5 1.6 1.4 1.4 1.7
turnover
40
20
0.5 0.3 0.3 Leverage
3.0 2.6 1.7 1.5 1.4 1.2 1.1
0.1 multiplier
0 0.0
ROE (%) 38.4% 58.5% 16.7% 13.5% 11.2% 11.8% 13.0%
Syrma SGS
Syrma SGS Business Strategies
Syrma SGS future focus areas
Solidify and strengthen our core

competitiveness of technology Pursue inorganic growth through
innovation strategic acquisitions
▪ Continue to invest in technological

infrastructure.
▪ Pursue strategic acquisitions that: Medical Electronics
▪ Enhance scale and market position.
▪ Investment in new infrastructure
▪ Strengthen range of products
▪ Build a new dedicated design service facility.
▪ Enable access to new clients.
▪ Reduce costs of operation while ensuring
quality. ▪ Enter strategic business / capture new market.
Expand customer base, geographic Cater to new age products/industries

reach and increase wallet share
▪ Focus on high margin flexible volume businesses
in Electric vehicles, Medical equipment, Smart
▪ Widen customer base through addition of devices Aerospace and
New products and Acquisitions Lighting
▪ Market existing products and services to
▪ Evolve product and service offerings which defence
utilize.
new customers
▪ In-house R&D - Existing manufacturing
▪ Continue R&D endeavors. capacities
▪ Capitalize on cross-sell and upsell
opportunities.

Syrma SGS
Entry barrier to
too high. Future
competition might
come in
Shortage of semi- Slowdown in
conductor supply demand in few
from global verticals
market in future
Promoter is engaged
in another sizeable Delay in onboarding new
business – an customers/challenges in
insurance company increasing market share
by the name Infinx from existing customers

Syrma SGS
Subsidiaries
SGS TEKNIKS
▪ It undertakes electronic manufacturing services and primarily assembles printed circuit board for its
MANUFACTURING 100% 27-Apr-11 5,760 338
clients.
PRIVATE LIMITED
PERFECT ID INDIA ▪ It is engaged in the business of manufacturing and developer of RFID tags, UHF rain RFID inlays, and
75% 12-Nov-15 443 119
PRIVATE LIMITED tags.

Syrma SGS
Board of Directors
Mr. Jaideep Tandon • He holds a Master’s degree in Electrical Engineering from Cornell University. He has worked in the technology industry for over 15 years. He previously served as the
Non VP of Strategic Accounts at Celetronix, efficiently managing their primary customer accounts: Apple and Dell. Jaideep’s core skills are his innate ability to understand
Executive Director trends and his customer orientation.
• He is an Investment Director of Tandon Holding Ltd & a Non-Executive Director in Syrma SGS. He also heads the Strategy (including Capital Allocation) and M& A
besides assisting the group to build the organisation. He is a Chartered Accountant and a Law graduate having a total work experience of around 36 years. He was
Mr. Jayesh Doshi
Director & Group CFO of Dalmia BharatLtd, Prior to this he was Group Director – Strategy & Finance with Panchshil Realty Group. He was also associated with
Non - Executive Director
Knowledge Infrastructure Group of Companies . Also worked as Group CFO, DB Group; Executive Director, Ican Investments Advisors Private Limited; CFO, Mercator
Lines Limited and Finance, M&A, Treasury & Investor Relations wit Ambuja Cements.
• He holds a Bachelor of Arts (honours course) in Economics from the University of Delhi. He is enrolled as an advocate with the Bar Council of Delhi. He has 20+ years
Mr. Bharat Anand of experience in Corporate Law, including in relation to Mergers and Acquisitions, Joint Ventures and Private Equity Transactions. He is a Partner at Khaitan & Co.
Independent Director and is responsible for the Corporate and M&A practice of the firm in Delhi. His strong expertise in complex M&A transactions has given him due recognition in Legal
fraternity. He was also ranked by both Chambers Asia Pacific and UK as a “Band 1 Lawyer” for M&A work in Delhi.
Mr. Kunal Shah

• He holds a Bachelor of Arts in Philosophy from Wilson College, University of Mumbai. He is the founder and CEO of CRED.
Ms. Smita Jatia • She holds a bachelor’s degree in Commerce from Sydenham College of Commerce and Economics, University of Bombay. She has completed the YPO-WPO Harvard
Independent Director spouse/partner program at Harvard Business School. She is a Director, Westlife Development Limited and the President of Hardcastle Restaurants Private Limited.
Mr. Sridhar Narayan • He holds a Bachelor of Technology in Mechanical Engineering from the Banaras Hindu University, and a post graduate diploma in Management from the Indian
Non-Executive Director Institute of Management Bangalore. He is a Director of Seraphim Advisors India Private Limited.
• He holds a B.Com from the University of Bombay and is a member of Institute of Chartered Accountants of India. He has approximately 35 years of experience in
Mr. Hetal Gandhi
the financial services and management consultancy sectors. He has previously served as the Head – Financial Services, IL&FS, CEO, ORIX Auto and Business
Solutions, and Director, Chalet Hotels. He is a co-founder of Tano India Advisors.
• He holds a Bachelor of Science in Physics, Chemistry and Mathematics from Bangalore University, and a postgraduate diploma in Management from XIMB,
Mr. Anil Nair
Bhubaneswar. He has completed the ISB-Kellogg Global Advanced Management Programme. He has 20+ years of experience in the IT and Consulting sectors. He
has previously served as the President – Aegis Consulting with Aegis Limited, and the Managing Director & Chief Executive Officer with AGC Networks Ltd.
Source: Company Website, Avendus Spark Research Page 46

Syrma SGS
Senior Management
Mr. Sandeep Tandon • He has 18+ years of experience in electronics manufacturing sector . He has a Bachelor of science in electrical engineering; YPO President’s Program from Harvard
Executive Chairman Business School . He is also an Ex – Celetronix Inc., USA.
Mr. Jasbir S. Gujral

• He has 40+ years of leadership experience in electronics design and manufacturing . He was a Founding member of SGS Tekniks Private Limited.
Managing Director
Mr. Krishna Kumar Pant

Co-founder & Head, Domestic ▪ He has 39+ years of experience in Marketing and Management and is a founding member of SGS Tekniks Private Limited.
Business
Mr. Ranjit Singh

Co-founder & Head, ▪ He has 40+ years of experience in the Electronics Industry and is a founding member of SGS Tekniks Private Limited.
International Business
Mr. Sreeram Srinivasan

▪ He has 30+ years of leading experience in Business Operations. He is an Ex-MD of Saint Gobain and CEO of MTAR.
CEO, SETS
Mr. Bijay Agarwal

▪ He has 16+ years of experience in finance and business strategy . He is an Ex-Motorola India Pvt Ltd., Dalmia Bharat.
Chief Financial Officer
Mr. Nagraj Raghavendra

▪ He has 28+ years of experience in operations in the electronics industry. He is anEx-Jabil, Celetronix .
President – North
Mr. N.G. Sreedharan

• He has 30+ years of experience in the electronics industry and research. He is an Ex–Tata Institute of Fundamental Research, Celetronix
President – South

Syrma SGS
Financial Summary
Rs mn FY19 FY20 FY21* FY22* FY23* FY24E* FY25E* FY26E* FY27E*
Profit & Loss
Revenue 3,540 3,971 4,383 10,197 20,484 26,784 34,658 43,702 55,333
Gross profit 1,351 1,698 1,562 3,012 5,079 6,674 8,695 11,029 14,044
EBITDA 388 677 468 944 1,878 2,618 3,438 4,330 5,484
Depreciation 86 97 121 194 312 415 531 601 671
EBIT 301 580 347 750 1,566 2,203 2,908 3,730 4,813
Other Income 33 78 62 123 437 561 281 197 183
Exceptional items
PBT 285 522 363 809 1,787 2,600 3,189 3,927 4,996
Reported PAT (after minority interest) 217 439 286 555 1,193 1,907 2,348 2,900 3,699
Adj PAT 217 495 286 555 1,193 1,907 2,348 2,900 3,699
EPS (Rs.) 22.4 706.7 382.6 4.0 6.8 10.8 13.3 16.4 20.9
Balance Sheet
Net Worth 673 1,017 2,416 5,829 15,429 17,070 19,065 21,611 24,956
Total debt 784 838 561 1,942 3,468 0 0 0 0
Other liabilities and provisions 492 536 509 1,365 1,633 1,783 1,947 2,128 2,327
Total Networth and liabilities 1,949 2,391 3,486 9,136 20,530 18,853 21,012 23,739 27,283
Gross Fixed assets 1,046 887 957 2,948 4,779 7,079 8,079 9,079 10,079
Net fixed assets 785 803 764 2,355 3,873 5,758 6,228 6,627 6,957
Intangible Assets 0 62 50 1,420 1,450 1,450 1,450 1,450 1,450
Investments 0 0 921 414 840 840 840 840 840
Loans & advances and other assets 273 393 547 940 1,068 1,174 1,292 1,421 1,563
Net working capital 734 777 901 3,231 5,026 6,561 8,625 10,999 14,068
Total assets 1,949 2,391 3,486 9,136 20,530 18,853 21,012 23,739 27,283
Net debt 632 486 259 1,167 -4,957 -3,221 -2,729 -2,554 -2,557
Cash Flow
Cash flows from Operations (Pre-tax) 229 774 339 368 301 1,636 1,651 2,152 2,598
Cash flows from Operations (post-tax) 150 708 239 136 -245 994 862 1,178 1,357
Capex -295 -296 -57 -817 -1,676 -2,300 -1,000 -1,000 -1,000
Free cashflows -145 413 182 -680 -1,921 -1,306 -138 178 357
Free cashflows (post interest costs) -195 333 130 -729 -2,595 -1,471 -138 178 357
Cash flows from Investing -291 -290 -944 -3,936 -9,145 -2,300 -1,000 -1,000 -1,000
Cash flows from Financing 136 -206 680 3,583 9,968 -3,898 -354 -354 -354
Source: Avendus Spark Research *Data pertains to consolidated financials Page 48
Syrma SGS
Financial Summary
FY19 FY20 FY21* FY22* FY23* FY24E* FY25E* FY26E* FY27E*
Growth ratios (%)
Revenue 58.4 12.2 10.4 132.7 100.9 30.8 29.4 26.1 26.6
EBITDA 291.5 74.7 -30.9 101.9 98.9 39.4 31.3 25.9 26.6
Adj PAT 195.9 128.0 -42.1 93.9 115.0 59.8 23.1 23.5 27.6
Margin ratios (%)
Gross 38.2 42.8 35.6 29.5 24.8 24.9 25.1 25.2 25.4
EBITDA 11.0 17.0 10.7 9.3 9.2 9.8 9.9 9.9 9.9
Adj PAT 6.1 12.5 6.5 5.4 5.8 7.1 6.8 6.6 6.7
Performance ratios
Pre-tax OCF/EBITDA (%) 59 114 72 39 16 62 48 50 47
OCF/IC (%) 11 47 9 2 -2 7 5 6 6
RoE (%) 38 59 17 13 11 12 13 14 16
RoCE (%) 20 33 13 11 10 11 13 14 16
RoCE (Pre-tax) (%) 26 39 17 16 15 15 18 19 21
Interest cover (x) 3 9 5 2 -1 6 0 0 0
Valuation metrics
P/E (x) 354 155 268 138 64 40 33 26 21
P/Sales (x) 21.7 19.3 17.5 7.5 3.7 2.9 2.2 1.8 1.4
EV (Rs.mn) (ex-CWIP) 77,437 77,292 77,069 77,569 71,600 73,336 73,828 74,003 74,000
EV/ EBITDA (x) 200 114 165 82 38 28 21 17 13
EV/ OCF(x) 517 109 323 570 -292 74 86 63 55
FCF Yield (%) -0.2 0.5 0.2 -0.9 -2.5 -1.7 -0.2 0.2 0.5
Price to BV (x) 114.1 75.5 31.8 13.4 5.0 4.5 4.0 3.6 3.1
Dividend yield (%) 0 0 0 0 0 0.3 0.5 0.5 0.5
Dividend pay-out (%) 0 0 0 0 0 14 15 12 10
Source: Avendus Spark Research *Data pertains to consolidated financials Page 49

Syrma SGS
Shareholding Pattern and IPO funds utilisation
Shareholding Pattern As on March 2023 Details of IPO funds utilization as on FY2023
Amount to be
Utilization
Others Objects of the Issue as per Prospectus (Rs.mn) Utilized as per Un-utilised fund
up to FY23
39.8% Prospectus
Promoter &
Promoter Group
47.3%
Funding capital expenditure requirements for

Alternate development of a R&D facility and expansion / setting
4,030 800 3,864
Investment Funds up of manufacturing facilities
2.6%
Foreign Portfolio
Investors Mutual Funds
4.5% 5.8%
Major shareholders Funding our working capital requirements

1,316 650 1,098
Promoter & Promoter Group
Jasbir Singh Gujral 7.1%
Others
Tancom Electronics Private Limited 35.8%
Modern Die Casting Llp 3.2%
Mutual Funds
Tata Flexi Cap Fund 1.7% General corporate purposes
1,911 - 1,911
Franklin India Smaller Companies Fund 1.6%
Alternate Investment Funds

Iifl Special Opportunities Fund - Series 9 1.0%
Foreign Portfolio Investors Total

Kuwait Investment Authority Fund 225 1.4% 7,257 1450 5,807
Malabar Select Fund 1.2%
Source: Company DRHP, Spark Research Page 50

Avalon Technologies Limited
Avalon Technologies CMP Target Price Rating
Rs. 515 Rs. 679 BUY
Company Factsheet
Avalon technologies is one of the leading fully integrated Electronic Manufacturing Services (“EMS”) companies with end-to-end capabilities in delivering box build solutions in India with a focus
Company Background on high value precision engineered products. Through a unique global delivery model, Avalon provides a full stack product and solution suite, right from printed circuit board (“PCB”) design and
assembly to the manufacture of complete electronic systems (“Box Build”), to certain global original equipment manufacturers (“OEMs”).
Presence Avalon caters to Indian and international market. International business accounts for ~60% of total revenue
Mr. Kunhamed Bicha- Chairman and Managing Director

He is one of the Promoters and currently the Chairman and Managing Director of our Company. He holds a bachelor’s degree in mechanical engineering from PSG College of Technology and a
master’s degree in science (industrial engineering) from Wichita State University.
Management depth
Mr. Mike Robinson- Chief Operating Officer US Operation
He is the chief operating officer of Sienna and is responsible for overall operations of the manufacturing business in the USA. He holds a bachelor’s degree in science from Worchester
Polytechnic Institute, Massachusetts, USA. He has several years of experience in managing global operations, design and development
Avalon provides a full stack product and solution suite, right from printed circuit board (“PCB”) design and assembly to the manufacture of complete electronic systems (“Box Build”), to certain
Business
global original equipment manufacturers (“OEMs”), including OEMs located in the United States, China, Netherlands and Japan.
Corporate structure As of FY23, its subsidiaries are Avalon Technology and Services Private Limited , ABV Electronics. Inc. (Sienna Corporation) and Sienna Ecad Technologies Private Limited.
Revenue model As of FY22 PCB accounts for 35% of the revenue, Box build for 44% of the revenue, Cables for 10% and others like design, metal, magnetics and plastic for 11% of the revenue.
As of FY22 Avalon has installed production capacity for the PCBA SMT of 366 million component placements per year, sheet metal fabrication of 2.7 million per year , cable and wire harness
Capacity
assembly of 17.2 million per year, magnetics of 34 thousand and plastics/injection molded plastics production capacity of 1 million parts per year.
Avalon’s marquee client base includes Kyosan India Private Limited, Faiveley Transport Rail Technologies India Private Limited, Wabtec, TransDigm Technologies India Private Limited, Zonar
Key clients
Systems Inc., Collins Aerospace, Caire Inc , e-Infochips Private Limited Haas Automation Inc., TMEIC and Ohmium India Private Limited.
Key success factors Technological advancements, Greater emphasis on vehicle electrification, Adopting digitization, Production Linked Incentive (PLI) Scheme and China + 1 Strategy.
Credit rating As on February 2022 - Long Term Rating- ACUITE BBB- / Outlook: Stable
Corporate bankers Bank of India, HDFC Bank Ltd, Indian Bank and Standard Chartered Bank
Auditors Varma & Varma, Chartered Accountants (Change in auditors as on May 5, 2022 from Karpagam Krishnan and Natarajan due to completion of term)
Avalon Technologies
About the company and its business verticals
Avalon is a fully integrated Electronic Manufacturing Services (“EMS”) company with end-to-end capabilities in delivering box build solutions in India with a focus on high value
precision engineered products. Through its unique global delivery model, it provides a full stack product and solution suite, right from printed circuit board (“PCB”) design and
assembly to the manufacture of complete electronic systems (“Box Build”), to certain global original equipment manufacturers (“OEMs”), including OEMs located in the United
States, China, the Netherlands and Japan. They have a wide range of offerings and are classified as below:
▪ End-to-End Box Build

▪ Printed Circuit Board Design and Assembly
▪ Cable Assembly and Wire Harnesses
▪ Metal/Sheet Metal Fabrication
▪ Magnetics
Avalon Revenue Trend (Rs.bn) Design, 2%

Magnetics, 3% Plastics, 1%
9.4
5 Year CAGR -
Metal, 4%
26% 8.4
Cables, 10%
6.9 Box build,
6.4 India
44%
41%
Revenue mix Revenue mix
- Segment - Geography
3.7 wise (FY22) wise (FY23)
Outside India
3.0
59%
PCBA, 35%
FY18 FY19 FY20* FY21* FY22* FY23*

Avalon Technologies
Key Milestones
1999 2000 2001 2002 2003 2005 2008 2009
Incorporation of Allotment of 301 Export of the first Allotment of Commencement Inauguration of Incorporation of Purchase of
our Company square meter consignment by additional 301 of production of the new facility Avalon equity shares of
factory space by our Company to square meter metal parts, sub- constructed on Technology and Sienna ECAD by
Development Sienna factory space by assemblies and the one-acre plot Services Private Sienna ECAD LLC
Commissioner, Allotment of MEPZ for plastics and allotted to our Limited (“ATSPL”)
Madras Export additional 301 manufacture and other material Company at
Processing Zone square meter export by our for exports at MEPZ-SEZ,
(“MEPZ”) for factory space by Company. MEPZ-SEZ, Chennai
setting up of a MEPZ for setting Chennai by our
unit by our up of an Company
Company additional unit by
our Company
2022 2021 2020 2019 2018 2016 2014 2013
IPO Commencement Commencement Subsidiarisation Transfer of the Expansion of the Commencement Commencement
of the use of of operations at of ATSPL NPI division from metal and aero of the new of operations at
Class 1000 clean the Sienna ECAD, to division at the products the new
room facility for manufacturing enable Sienna newly introduction electronics
assembling high facility ECAD to focus on inaugurated (“NPI”) / proto- manufacturing
resolution established at core design 60,000 square type build services facility
cameras by our Pillaipakkam for function feet facility at division by at Bengaluru
Company fabrication by MEPZ-SEZ, Sienna ECAD
Subsidiarisation our Company Chennai by ATSPL
of Sienna ECAD

Avalon Technologies
Product Portfolio
Injection Molded Plastics End-to-End Box Build Printed Circuit Board Assembly
Communication
11%
Industrials
Medical 29%
and
others
13%
Revenue mix
- Industry
wise (FY23)
Cable Assembly and Wire Harnesses Metal/Sheet Metal Fabrication Magnetics
Mobility/
Transportation Clean
21% energy
25%
Source: Company Presentation and Website, Avendus Spark Research Page 55

Avalon Technologies
Service offering across entire customer value chain
Vertical Integration
NPD (New Product
Design Analysis Engineering
Development)
Rapid Prototyping Life Cycle Eco-System of Design

Volume Production
Capability Management Parneers
Design Smarter
High Mix/Flexible Sheet Metal Aerospace

PCB Assembly Machining
Volume Capabilities Fabrications Metal Parts
Vertically Cable Assembly System

Injection
Integrated and Wire Magnetics Integration / Box
Molded Plastics
Facilities Harness Build
Build Faster
20+ years
Highly Long-term 1900+
Large Integrated Product
Automated Customer Employees
Indian Facilities Realization
US Facilities Relationship Highly Skilled
Experience
Global
500K + sq. ft. of Global Logistics 12 Global Hybrid/Blended
Standards
Built Up Area Footprint Facilities Delivery Model
Quality Systems
Deliver Better
Avalon Technologies
Avalon’s customer base and revenue concentration profile
Segments
Number of customers (End use Industry wise)
38
Mobility/ 26
Transportation
14
11 11 10
8 8
4 5
Industrial Mobility Clean Energy Communication Medical & Others

Medical FY20 FY22
Average length of relationship with customers who Revenue contribution by top few
contribute to top 80% revenue (in number of years) customers (FY22)
65%
Industrial 8.0
7.7 50%
7.2
Clean Energy
FY20 FY21 FY22 Top 5 Top 10

Avalon Technologies
Manufacturing facility; Focus segments and exports dependence across verticals
Avalon has strong presence in aerospace which carries higher margins; It has lesser focus on high
volume sectors like automotive and consumer durables
Avalon’s Strong End-Sector presence Avalon’s Lower Focus End-Sectors
Consumer
Aerospace Automotive
Appliances
Exports continue to be the dominant focus for Avalon across majority of its verticals
Revenue Mix End-Industries Wise
100%
20% 30% 25%
80%
▪ It has 12 manufacturing units located across the United States and India: one unit in Atlanta, 50%
65%
Georgia, one unit in Fremont, California, seven units in Chennai, Tamil Nadu, one unit in 60%
Kanchipuram, Tamil Nadu and two units in Bengaluru, Karnataka.
40% 80% 75%
▪ Each of Avalon’s manufacturing facilities integrates manufacturing, warehousing and logistics. 70%
▪ Its electronic manufacturing facilities comprise an aggregate of 65 production lines, consisting 20% 50%
35%
of ten Surface Mount Technology (“SMT”) lines, 12 Through Hole Technology (“THT”) lines and 0%
43 assembly lines.
Clean Energy Mobility/ Industrials Communication Medical and Others
▪ It also has separate lines for our sheet metal fabrication, machining, cable assembly and wire
Transporation
harnesses, magnetics and plastics
▪ Group’s capacity utilization levels is ~65-70%. Exports Domestic
Source: Company Presentation, Avendus Spark Research Source: Spark Guesstimate, Avendus Spark Research Page 58
Avalon Technologies
Avalon’s strategy going forward
Geography Today’s & Tomorrow’s Industries Proﬁtability & Growth
▪ Cater to world’s fastest growing EMS markets – India and ▪ Established business – Collaborate, grow wallet share via ▪ Focus on profitable growth
US up-selling and cross-selling
▪ Cater to:
▪ Capitalise on India manufacturing and US onboarding ▪ Sunrise sector – Partner with emerging pioneers. Eg: Clean
― Profitable segments (E.g.) Aerospace
energy technology companies
▪ Capitalise on Hybrid manufacturing model
― Complex & mission critical product (e.g.) Big box build
▪ Win using integrated capabilities (e.g.) Start with design
services and reach box build
Robust growth of the clean energy sector creating additional demand for Avalon's Presence in Clean Energy, a Sunrise Sector for the EMS Industry which
electronic products driving the EMS industry is Poised for Robust Growth
Focus areas for Avalon

Avalon Technologies
Financial Summary
Revenue Trend (Rs.bn) EBITDA and Margin Trend

16.0 74.9% 80% 1.8 14%
13.7 11.6% 11.9% 12.0% 12.0%
14.0 70% 1.6 12%
11.5 10.0% 9.6%
1.4 9.4%
12.0 60% 10%
9.4 1.2
10.0 8.4 50% 8%
1.0
8.0 6.4 6.9 40% 0.8 1.6 6%
24.3% 1.4
6.0 21.8% 30% 0.6 1.1
19.2% 1.0 4%
4.0 3.7 12.4% 20% 0.4
0.6 0.7
7.6% 21.8% 0.2 2%
2.0 10% 0.3
0.0 0%
0.0 0% FY19 FY20 FY21 FY22 FY23 FY24E FY25E
FY19 FY20 FY21 FY22 FY23 FY24E FY25E
EBITDA (Rs.bn) EBITDA Margin % - RHS
Revenue (Rs.bn) YoY Growth % - RHS
Working Capital (Days) Trend Capex Trend (Rs.mn) Du-Pont Analysis
120 109 450

107
400 FY19 FY20 FY21 FY22 FY23 FY24E FY25E
100 100
100 400
91 350
350
80 273 NP margin (%) 1.3% 1.9% 3.3% 5.6% 5.6% 8.2% 8.2%
300
59 250
60 192 Total assets
200 170 177 1.1 2.1 2.1 2.1 1.3 1.2 1.5
turnover
40 150
100 Leverage
1.9 3.4 20.5 7.0 2.4 1.6 1.3
20 multiplier
50 23
0 0
ROE (%) 2.8% 13.9% 146.0% 81.2% 16.8% 16.3% 16.7%
FY20 FY21 FY22 FY23 FY24E FY25E FY19 FY20 FY21 FY22 FY23 FY24E FY25E
Avalon Technologies
Entry barrier to
too high. Future
competition might
come in
Shortage of semi-
conductor supply Slowdown in demand
from global in few verticals
market in future
Higher exposure
Delay in onboarding new
to US - ~60% of
customers/challenges in
revenue leads to
increasing market share
demand delays in
from existing customers
case of a US
slowdown

Avalon Technologies
Subsidiaries
▪ ATSPL is engaged in the manufacturing of metals fabrications, Plastics, Electro-Mechanical

Avalon Technology Integration, Magnetics, PCB assemblies, transformers cable harnesses. ATSPL has its
and Services Private 100% 21-Aug-08 production facility in MEPZ, Chennai, India (SEZ), and Bangalore, Karnataka. The Chennai 1,640 132
Limited facility primarily caters to exports and the facility in Bangalore caters to the Indian domestic
market.
▪ The company is engaged in providing solutions to the electronics industry from system
Sienna Ecad definition to manufacturing. It is also involved in PCB analysis and design engineering. SETPL's
Technologies 100% 10-Sep-97 services also include SI Analysis (Time Domain and Frequency Domain analysis), Thermal 188 23
Private Limited EMI/EMC and Reliability Analysis. The company provides services in segments such as
networking, power, transportation, semiconductors, IOT & medical, among others.
▪ Sienna is authorised by its charter documents to engage in any lawful act or activity for which a
ABV Electronics Inc
corporation may be organised under the General Corporation Law of California other than
(D/B/A Sienna 100% 26-Apr-95 5,233 303
banking business, the trust company business or the practice of profession permitted to
Corporation)
incorporated by the California Corporations Code.

Avalon Technologies
Board of Directors and Key Management Team

Mr. Kunhamed Bicha
Chairman & Managing
Mr. Kunhamed Bicha is the promoter of Avalon Technologies Ltd. Recipient of *CII Connect 2017 Award for Entrepreneur of the Year (Manufacturing).
Director
Bachelor's degree in mechanical engineering from PSG College and master's degree in science (industrial engineering) from Wichita State University.
Mr. Bhaskar is the promoter of Avalon Technologies Ltd. He has an MBA from Cochin University of Science &
Mr. Bhaskar Srinivasan
technology, master's degree in science (industrial engineering) from Wichita State University. Prior experience with Applied Materials, Inc.
Non-executive Director
Mr. Luquman Veedu

Mr. Luquman Veedu Ediyanam had a bachelor’s degree in technology from University of Calicut. He is currently , the legal partner and MD at Dhafir Technologies, UAE.
Ediyanam
Non-executive Director
Mr. Sareday Seshu Kumar attended the Osmania University to pursue a bachelor's degree in arts. He participated in accelerated management programme conducted
Mr. Sareday Seshu Kumar
by ISB. He has a prior experience as the founder and CEO of Emantras Interactive Technologies Pt. Ltd.
Non-Executive Director
Mr. Venkataramani
Ananthramakrishnan Mr. Venkataramani Ananthramakrishnan has an MBA from University of Chicago. He currently, serves as the MD of IP Rings Ltd.
Mr. Chandar Pattabhidram has a bachelor's degree in mechanical engineering from PSG College. He currently, serves as the Chief Marketing Officer of Coupa Software
Mr. Chandar Pattabhiram Incorporated. He has a prior experience with Badgeville. Inc. and Marketo, inc.
Mr. Byas Unnikrishnan Mr. Byas Unnikrishnan Nambisan has a master's degree in science (industrial administration) from Carnegie-Mellon University. He currently serves as the CEO &
Nambisan Director on the Board of Ezetap Mobile Solutions Pvt.Ltd.
Mrs. Nandita Abraham has a master’s degree in science from Philadelphia College of Textiles and Science and a diploma in apparel merchandising and merchandising
Mrs. Nandita Abraham
from NIFT, New Delhi. She currently serves on the Board of Cerebrus Consultants Pvt. Ltd.

Avalon Technologies
Key Management Team

Mr. Michael Robinson
Mr. Michael Robinson is responsible for the overall manufacturing operations in the US and holds a bachelor’s degree in science from Worcester Polytechnic
Chief Operating Officer
Institute, US.He has a prior experience in Motorola Inc., Wconect LLC. He Co-invented the "Battery Identification Apparatus" & "Weldless Battery Pack" (both US-
patented)..
Mr. RM Subramanian Mr. RM Subramanian is responsible for the financial functions of Avalon Technologies Ltd. and its subsidiaries. He holds a bachelor's degree in civil engineering
Chief Financial Officer from BITS and PGDM from IIM, Bangalore. He has a prior experience with A.F. Ferguson & Co Caim Energy India Pty. Ltd. and Essar Oil Ltd.
Mr. Shamil Bicha is responsible for the sales, business development and marketing functions. .He holds a bachelors in mechanical engineering from University of
Mr. Shamil Bicha
Madras. He has a prior experience at Applied Materials, Inc.
Vice President, Business
Development
Mr. Kesavan P has several years of experience in operations- PCB and cables division. He attended the first year of diploma course in telecommunication from MEI
Mr. Kesavan P
Polytechnic, Bengaluru. He has a prior experience at Quest Smartech Pvt. Ltd., Texmaxo Micro Indo Utama, Sun Fibre Optics Pvt.Ltd, MiniCircuits Ltd.
Vice President, Operations
Mr. Arjun Balakrishnan is responsible for operations of metals, aerospace and plastics division. He holds an MS (engineering) from University of Texas, US and an
Mr. Arjun Balakrishnan
MBA from Harvard University, Boston, US. He has a prior experience: Holm Industries. GE Power Controls India to. Panasonic India Pvt. Ltd
Vice President, Corporate
Strategy
Mr. OJ Sathish is the head of PCB & Semiconductor engineering and heads the Design & Development division. He holds a Bachelors in Engineering from
Annamalai University and PGDM (operations management)o from IGNOU. He has a prior experience at Alpha-Imager Pvt. Ltd.
Mr. OJ Sathish
Vice President
Mrs. Savita R Ganjigatti Savita R Ganjigatti is the head of PCB design and analysis team. She holds a bachelors in engineering and masters in technology from Visvesvaraya Technology
Vice President, Engineering University, Belgaum. She has a prior experience at Karnataka Telecom Ltd, and Alpha-Imager Pvt. Ltd. She is a member of TLP1 of IPC Design, US
Mr. Harold Frederick Schilb

Mr. Harold Frederick Schilb III is responsible for business development & leads the sales team. He holds a bachelors in science electrical engineering from
III
Northeastern university, Massachusetts, US and an MBA from Fairleigh Dickinson University, US. He has a prior experience at Dwfritz Automation LLC, Celestica
Vice President, Business
Corporation, Electri-Cord Manufacturing Co, IEC Electronics Coro. etc..
Development
Avalon Technologies
Financial Summary
Rs mn FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY27E
Profit & Loss
Revenue 3,670 6,419 6,905 8,407 9,447 11,502 13,706 16,118 18,969
Gross profit 860 2,306 2,345 2,866 3,380 4,117 4,877 5,724 6,725
EBITDA 346 645 662 976 1,128 1,386 1,645 1,913 2,232
Depreciation 61 155 157 180 197 151 189 229 269
EBIT 285 490 504 795 931 1,235 1,456 1,685 1,963
Other Income 15 113 54 109 144 211 147 167 205
Exceptional items
PBT 104 153 288 856 727 1,262 1,503 1,752 2,068
Reported PAT (after minority interest) 48 123 231 675 525 944 1,124 1,311 1,547
Adj PAT 48 123 231 475 525 944 1,124 1,311 1,547
EPS (Rs.) 1.9 16.1 29.1 59.7 9.1 16.3 19.4 22.6 26.7
Balance Sheet
Net Worth 1,743 35 282 888 5,370 6,227 7,235 8,430 9,861
Total debt 1,263 2,485 2,953 2,941 3,063 0 0 0 0
Other liabilities and provisions 192 357 382 722 1,822 2,017 2,232 2,468 2,728
Total Networth and liabilities 3,200 2,876 3,617 4,552 10,255 8,244 9,467 10,898 12,589
Gross Fixed assets 912 803 1,013 1,107 1,337 1,687 2,087 2,487 2,887
Net fixed assets 267 727 841 900 933 1,132 1,343 1,515 1,646
Intangible Assets 2 260 200 244 342 342 342 342 342
Investments 0 24 0 0 0 0 0 0 0
Loans & advances and other assets 478 240 239 368 781 859 945 1,039 1,143
Net working capital 2,305 1,333 2,002 2,919 3,823 4,292 5,009 5,795 6,714
Total assets 3,200 2,876 3,617 4,552 10,255 8,244 9,467 10,898 12,589
Net debt 1,131 2,219 2,618 2,433 -1,566 -1,873 -2,081 -2,460 -2,997
Cash Flow
Cash flows from Operations (Pre-tax) 549 704 90 282 55 1,232 1,188 1,421 1,657
Cash flows from Operations (post-tax) 495 657 55 156 -134 927 824 995 1,153
Capex -23 -170 -192 -177 -273 -350 -400 -400 -400
Free cashflows 472 487 -137 -21 -407 577 424 595 753
Free cashflows (post interest costs) 472 61 -354 -210 -690 394 324 495 653
Cash flows from Investing -7 -193 -263 -184 -271 -350 -400 -400 -400
Cash flows from Financing -411 -423 280 -208 4,542 -3,333 -216 -216 -216
Avalon Technologies
Financial Summary
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY27E
Growth ratios (%)
Revenue 24.3 74.9 7.6 21.8 12.4 21.8 19.2 17.6 17.7
EBITDA 8.3 86.6 2.6 47.5 15.6 22.9 18.7 16.3 16.6
Adj PAT -12.2 158.9 87.2 105.5 10.6 79.8 19.1 16.6 18.0
Margin ratios (%)
Gross 23.4 35.9 34.0 34.1 35.8 35.8 35.6 35.5 35.5
EBITDA 9.4 10.0 9.6 11.6 11.9 12.0 12.0 11.9 11.8
Adj PAT 1.3 1.9 3.3 5.6 5.6 8.2 8.2 8.1 8.2
Performance ratios
Pre-tax OCF/EBITDA (%) 159 109 14 29 5 89 72 74 74
OCF/IC (%) 17 33 2 5 -4 23 17 18 18
RoE (%) 3 14 146 81 17 16 17 17 17
RoCE (%) 4 18 17 21 13 15 18 18 18
RoCE (Pre-tax) (%) 10 23 21 27 18 20 24 24 24
Interest cover (x) 3 1 0 1 -0 5 8 10 12
Valuation metrics
P/E (x) 705 272 145 71 64 36 30 26 22
P/Sales (x) 9.2 5.2 4.9 4.0 3.6 2.9 2.5 2.1 1.8
EV (Rs.mn) (ex-CWIP) 34,721 35,798 36,224 36,019 31,887 31,581 31,373 30,993 30,456
EV/ EBITDA (x) 100 56 55 37 28 23 19 16 14
EV/ OCF(x) 70 54 657 230 -239 34 38 31 26
FCF Yield (%) 1.4 1.4 -0.4 -0.1 -1.2 1.7 1.3 1.8 2.2
Price to BV (x) 19.3 974.1 119.2 37.9 6.3 5.4 4.6 4.0 3.4
Dividend yield (%) 0 0 0 0 0 0.3 0.3 0.3 0.3
Dividend pay-out (%) 0 0 0 0 0 9 10 9 7
Avalon Technologies
Shareholding Pattern and IPO fund utilisation
Shareholding Pattern As of April 2023 Details of IPO funds utilization up to March 2023 end
Shareholding Pattern As on April 2023

Amount to be
Utilization
Objects of the Issue as per Prospectus (Rs.mn) Utilized as per Un-utilised fund
up to FY23
19.0% Prospectus
Promoter & Promoter Group

Debt repayment 1,450 1,450 -
Domestic Institutional Investors
51.0%
15.0% Foreign Portfolio Investors
Others
Working Capital funding 900 770 130

15.0%
General Corporate Purposes (Less: IPO Expenses) 630 370 260
Total 2,980 2,590 390

Comparison between EMS players – Kaynes, Syrma SGS and Avalon
Parameters
Year of commencement 1988 2005 1999
OEM-PCBA (62%), OEM-Box build (30%), Product PCB (35%), Box build (44%), Cables (10%) and others
Segment revenue mix PCBA (66%), Box build (18%) and RFID (16%)
Engineering and IoT solutions (5%) and ODM (3%) like design, metal, magnetics and plastic (11%)
Geographical mix Domestic (85%) and Exports/International (15%) Domestic (69%) and Exports/International (31%) Domestic (41%) and Exports/International (59%)
Automotive (38%), Industrial (27%), IOT/IT and others

Automotive & EV (20%), Consumer (32%), Industrials Industrials Healthcare (29%), Clean Energy (25%),
key segment presence & revenue mix (15%), Railways (12%), Medical (6%), Aerospace &
(31%), Railways and IT (9%), Healthcare (8%) Mobility (21%), Medical (13%), Communication (11%)
Defense (2%)
Revenue growth FY20-23 CAGR 45% 36% 14%
Revenue growth FY23-27E CAGR 25% 28% 19%
EBITDA margin (%) - FY23/ past 5 years average 14.9% / 11.8% 9.2% / 10.7% 11.9% / 10.5%
Fixed asset turn next 3 years average 5.4x 5.1x 7.8x
Post tax RoIC FY20-23 average 18.0% 12.1% 19.7%
Post tax RoIC FY23-27E average 21.9% 15.4% 24.1%
IPO capital raise (Rs.bn) 6.3 5.4 3.0
Capex FY24-27E (Rs.bn) 3,700 5,300 1,550
Promoters, FII and DII holding % 63.6%/ 8.2% / 12.9% 47.3%/ 4.6% / 8.6% 51%/ 15% / 15%

Glossary
EMS Electronic Manufacturing Services
PCB Printed Circuit Board
PCBA Printed Circuit Board Assembly
PLI Production Linked Incentive
SPECS Promotion of Manufacturing of Electronic Components and Semiconductors
EMC Electronics Manufacturing Cluster
IT Information Technology
Mn Million
Bn Billion
Tn Trillion
CAGR Compounded Annual Growth Rate
MT Metric Tonnes
CAPEX Capital Expenditure
CMP Current Market Price
EBIT Earning Before Interest and Tax
EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation
EPS Earnings Per Share
EV Enterprise Value
FCF Free Cash Flow
P/E Price to Earnings
P/ Sales Price to Sales
PAT Profit After Tax
PBT Profit Before Tax
RoE Return on Equity
RoCE Return on Capital Employed
RoIC Return on Invested Capital
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Avendus Spark Initiating Coverages On EMS Industry Kaynes Technology

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Avendus Spark Initiating Coverages On EMS Industry Kaynes Technology

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SPARK INSTITUTIONAL EQUITIES PRIVATE LIMITED

EMS INDUSTRY | INITIATING COVERAGE

EMS industry in likely to witness strong growth

USA EMS Market

Source: Frost & Sullivan report, Avendus Spark Research Page 4

Factors driving growth in Indian EMS market

Government Incentives such China +1 Import Investments by Local

Source: Avendus Spark Research

Future opportunities in EMS market in India

Charging infrastructure, Controller module for solar

Source: Avendus Spark Research Page 5

Production Linked Incentive Scheme

Electronics Manufacturing Clusters (EMC) Goa

Objective Benefits: Kerala

Threat on EMS industry in China Rising labour cost in China

China ▪ China Standards 2035 ;Made in China 2025

Vietnam ▪ National Industry Development policy through 2030

Thailand ▪ Thailand 4,0 strategy

Indonesia ▪ National Industry Policy

Electronics Telecom & Networking Products

Information & Technology

Source: News Articles, Avendus Spark Research Page 8

Services offered by EMS players from design to complete product build

Source: EMS companies DRHP, Avendus Spark Research

High Margin Services

Source: EMS companies DRHP, Avendus Spark Research Page 9

Multiple products supplied to various sectors

Aerospace, Defence, IoT/IT and Consumer

CWDM 16 CHANNEL FILTER Water Purification & Cleaning

Personal Healthcare Devices Railway Cab Equipment

~3-5% ~20-30% ~15-25% ~10% ~20% ~40-50% ~30% ~10-15%

Kaynes, Syrma and Avalon focus on low-volume and high-margin categories

Source: Companies DRHP, Avendus Spark Research Page 11

Global and local major EMS players

Revenue EBITDA PAT

Source: Bloomberg, Company website, Avendus Spark Research Page 12

Backward Integration Possibilities for EMS players Magnetic

Avalon Syrma SGS Kaynes Amber Dixon

Consumer appliances Industrial

Air-Conditioner Component Mix – Value-wise Air-Conditioner Market

Mrs. Savitha Ramesh- Chairperson

Mr. Ramesh Kunhikannan- Managing Director

Mr. Rajesh Sharma- Chief Executive Officer

Auditors K P Rao & Co, Chartered Accountants

About the Company and its Business Verticals

Revenue mix - Revenue mix -

Source: Company Annual Report, Avendus Spark Research Page 17

1988 1995 2000 2004 2008 2009

2022 2021 2020 2016 2012 2010

▪ Received ▪ Started exporting Impetus towards ▪ Established Established ▪ Established

Source: Company DRHP, Avendus Spark Research Page 18

Kaynes’ Service offerings across the entire customer value chain

Concept to Design Realization Prototype Manufacturing Repair & Refurbish

DFM/DFA - Analysis Parts Development Services

Value Engineering / Value

Weak Point Analysis Distribution Services Product Maintenance

Aerospace, IoT/IT and

Revenue Mix - Industry wise (FY23)

Manufacturing facility pan-India

Source: Company DRHP, Avendus Spark Research Page 21

Kaynes’ customer base and revenue concentration profile

Railways Industrial Medical Automotive A&D + Others IoT/IT Consumer

Revenue split customer wise (FY23)