Symphony Ltd. share price target

We expects sales to recover from Q2FY21 onwards supported by new models of commercial and industrial coolers, once lockdown is lifted. We reiterate our ACCUMULATE rating on the stock with a target price of Rs. 1,006 based on 33x FY22E adj. EPS. Nation-wide lockdown slows down pace of topline growth In Q4FY20, Symphony reported revenue of Rs. 249cr, a rise of 6.0%YoY with its new product launches (6 commercial coolers, 2 industrial coolers, and 8 household coolers) during 2019 and product mix. On annual basis, the revenue grew to Rs. 1,103cr...

Symphony's Q4FY20 revenues were in line with estimates. During the quarter Jan-Feb witnessed strong sales in anticipation of strong summer season; however the sales were impacted in second half of March due to lockdown.

Low base, inventory push drives domestic performance Despite revenue loss in March 2020, standalone revenue grew 12% YoY to | 154 crore due to low base and dealer stocking before the summer. While the management reiterated a strong summer demand for air coolers in May 2020 (post relaxation from lockdown), dealers managed to liquidate their inventory holding by ~40%. The company also launched a digital campaign to help liquidate channel inventory as well as company level inventory before the end of summer. We believe the H1FY21 would be very...

January & February witnessed reasonable growth due to inventory build-up at the dealer's level. In March, the company is expected to be impacted negatively by the lockdown situation across states. Standalone sales for the last 10 days fell 10% YoY due to shutdown...

Innovative new launches of higher margin products to drive top-line growth; low dependence on supplies from China and already procured components for upcoming season & available alternative sources, co will not be impacted by any potential supply chain disruption from China.

Q3FY20 consol. Revenues grew 21% Y-o-Y at Rs 290 cr Vs Rs 240 cr in Q3FY19 led by higher volumes across segments. The Gross margins stood at 47.9% during the quarter (vs. 46.3% in Q3FY19) on higher sales growth, aided by better product mix.

We expect earnings to grow at a healthy 25.9% CAGR over FY20-22, supported by launch of new models, improved product mix and continued focus on innovation. We upgrade our rating to ACCUMULATE on the stock, with our target price of Rs. 1,480 based on 35x FY22E EPS. Topline grows with new products Symphony reported revenue of Rs. 290cr in Q3FY20, a rise of 20.8% YoY, primarily driven by launch of new models (6 commercial coolers, 2 industrial coolers, and 8 household coolers), and improved product mix. Domestic revenue rose 27.1% YoY...

We believe standalone volume growth in Q3 and 9MFY20 was on a low base and inventory build-up at dealer's level. According to the management, the company witnesses strong demand traction of residential coolers across channel partners in India. The management also reiterated that domestic demand is likely to remain robust with the start of summer in the coming months. Hence, FY20 is likely to close on a strong note. However, on the international subsidiaries, GSK China reported a revenue decline for Q3FY20 and 9MFY20 to 27% and 21% YoY to | 8 crore and | 37 crore, respectively....

Summer 2019 confirms our thesis that Symphony will deliver strong performance if summer is hot. Organised air cooler market (27/35% volume/value mix) will deliver 15% CAGR despite rising affluence towards RAC. Symphony's constant focus on product innovation and superior franchise with distributors will make the company competitive. With low trade inventory, record and buoyed with new launches, Symphony will enjoy stocking in earnest if the summer is strong as expected. Besides, its international performance will improve given the various initiatives undertaken. Symphony posted strong 27/29% domestic rev/EBIT growth at a time when most consumer companies are facing issue is maintaining trade inventory amidst liquidity issue. Co has delivered 48/68% domestic rev/EBIT growth in 9MFY20. Strong franchise with trade, high brand recall, record new launches and favourable base are driving the domestic growth. We remain bullish on Symphony given its sharp recovery in domestic biz and scope to tap new opportunities (industrial and commercial cooling, portable coolers in Aus and US). We value Symphony at 45x Dec-21 EPS. We believe the stock will re-rate owing to consistent outperformance vs. other appliance cos. We maintain BUY with TP of Rs 1,786.

Q2FY20 consol. Revenues grew 13% Y-o-Y at Rs 272 cr Vs Rs 240 cr in Q2FY19 aided by healthy bookings in a seasonally weak quarter and channel replenishment following as strong summer season.