Can SKS Technologies Group (ASX:SKS) Shares Justify A Premium P/E?

SKS Technologies Group shares have barely moved over the past week, despite the company delivering one of the punchiest earnings headlines on the local market. Profit for the year nearly doubled, while revenue pushed above A$350m and net profit margin sat at 7.7%.

The stock now trades on a P/E of 36.8x, a premium to peers. This suggests investors were already paying up for growth. The key question is whether this earnings step change and the swelling data centre pipeline justify that premium, or if the market is underpricing how much firepower SKS Technologies Group now carries into FY27.

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FY 2026 Earnings Summary

• Revenue (FY 2026 vs FY 2025 PCP): A$350.3m vs A$261.7m (up 33.9%)
• Net Income (Excl. Extra Items, FY 2026 vs FY 2025 PCP): A$26.9m vs A$14.0m (up 91.7%)
• Basic EPS (Earnings Per Share, FY 2026 vs FY 2025 PCP): A$0.2345 vs A$0.1249 (up 87.8%)
• Net Profit Margin (FY 2026 vs FY 2025 PCP): 7.7% vs 5.4% (improved profitability)

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SKS Technologies pipeline and margin story on track

The bullish view is that SKS Technologies can turn a swelling data centre pipeline into higher, more stable profits as it scales. FY26 results support part of that story. Revenue grew to about A$348m with H2 growth of 64%, while EBITDA, PBT and NPAT each rose at a faster pace than the top line. That points to early operating leverage and margin progress, not just one off contract noise. Data centre work is now the dominant engine, with data centre revenue rising 47.6% and major wins including a A$210m contract and about 107 MW delivered. Work in hand of A$312m and a pipeline near A$1.5b, mostly from existing customers, show that contract conversion is not a one quarter event. Management’s FY27 targets of A$500m revenue and A$60m PBT are framed off this base and a fixed cost structure already built for that scale.

Concentration, cost and contract risks still front of mind

The bear case focuses on contract concentration, labour intensity and execution risk outpacing SKS Technologies’ controls. FY26 results give bears real talking points. Around 78% of work in hand and 87% of the pipeline sit in data centres, with Victoria still the main hub. That leaves earnings sensitive to any delay or pause in a small number of customers or campuses. Headcount rose 22.7% to about 1,300 people, which is necessary to deliver, but also anchors higher fixed labour costs in a tight skills market. Bank guarantees sit at A$52m and contract liabilities are higher, so mis priced work or timing slippage would fall straight onto cash and profit. Management talks about a stepped approach into larger projects and disciplined M&A, which sounds prudent, but does not remove the underlying concentration and delivery risks.

Compare the internal progress at SKS Technologies Group with how the street is reacting to that A$8.57 share price and fresh earnings print. See the consensus price target analysis for SKS Technologies Group to check whether analyst targets are keeping pace with the new pipeline and profit profile.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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