Syrma SGS zooms 8% on buying 51% stake in Johari Digital Healthcare

Shares of Syrma SGS Technologies Limited climbed over 8 percent to Rs 585 on September 6 after the company acquired 51 percent stake in Johari Digital Healthcare Limited (JDHL).

More than 10 lakh shares changed hands in today’s session as against the 9 lakh monthly average.

The total acquisition is worth Rs 229 crore, the company said in an exchange filing on September 5. JDHL is a global electronic medical device manufacturer.

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“This acquisition will enhance Syrma SGS’s capabilities and offerings in the electro-medical devices segment and create business synergies across multiple areas. Syrma SGS expects the acquisition to be accretive to its earnings and cash flow,” Syrma said in a press statement.

In late August, broking firm Nuvama Institutional Equities said that Syrma’s acquisition of Johari Digital should help. Johari Digital is a 100 percent original design manufacturer (ODM) and has a margin of more than 35 percent. Nuvama has a buy rating on the stock and has assigned a target price of Rs 760.

The report added that Syrma is striving for a revenue of $1 billion, a 25 percent return on capital employed (RoCE), and a margin in the double digits. Margin will depend on various client sectors but, importantly on greater contribution from the higher-margin Original Design Manufacturing (ODM) segment.

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