Symphony Ltd. share price target

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.

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 trade inventory now at low levels, Symphony will enjoy off-season stocking, opportunity to launch tech-rich coolers and benefit from a favorable base. Besides, its international performance will improve given the various initiatives undertaken. Symphony continued its strong momentum in 2Q after a sharp recovery in summer-19. 2Q performance was in-line with expectations and further builds our confidence for a robust 2HFY20 show. 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 maintain estimates and value Symphony at 45x Sep-21 EPS. We believe the stock will re-rate owing to consistent outperformance vs. appliance cos. We maintain BUY with TP of Rs 1,812.

We maintain our HOLD rating on the stock, given limited upside with our target price of Rs. 1,303 based on 40x FY21E adj. EPS. Topline doubled on higher seasonal demand and M&A; effect Symphony (SYML) posted 100.0% YoY growth in revenue to Rs. 304cr, largely driven by higher sales volume growth amid strong summer demand. Also, Q1FY20 marked the last quarter of incremental contribution (Rs. 69cr in Q1FY20) from Climate Technologies acquired in July-2018. Domestic market sales grew 124.2% YoY to Rs 148cr, largely driven by promotional initiatives and series of newly launched products....

Q1FY20 consol. Revenues doubled at Rs 292 cr Vs Rs 146 cr in Q1FY19 due robust demand during a seasonally strong quarter. The Gross margins stood at 45.5% during the quarter (vs. 42.6% in Q1FY19) on higher sales growth, aided by better product mix.

Summer 2019 confirms our thesis that Symphony will always delivered strongly if the season has no disruption. Organised air cooler market will deliver healthy growth despite rising affluence towards RAC. Symphony's constant focus on product innovation and superior franchise with distributors will make the company competitive. With trade inventory now at historical low levels, Symphony will enjoy off-season stocking, opportunity to launch tech-rich coolers and benefit from a favorable base. Besides, its international performance will improve given the various initiatives undertaken. Symphonys 1Q performance was a blowout, even beat our aggressive estimates. 1Q performance has proved the naysayers wrong about the relevance of air coolers (in the era of fast growing RAC) and Symphonys market share loss. Growth visibility for FY20E is high despite slowdown in macros owing to low channel inventory and new launches. We maintain our estimates and value Symphony at 45x Jun-21 EPS, arriving at a TP of Rs 1,686. Maintain BUY.

Strong summer, low channel inventory push volume growth After a dull standalone performance in FY19, the company started the year with strong volume growth in Q1FY20 supported by strong demand from its dealers. However, rising competition coupled with a change in product mix restricted any price hike in Q1FY20. On the subsidiary front, the financial performance of Impco and Climate Technology showed some improvement while GSK China slipped into negative in Q1FY20. The management has given a guidance of strong volume demand in the domestic business led by...

Q4FY19 consol. revenues at Rs 235 cr grew 32% y-o-y aided by robust demand due to onset of summer during the quarter. While gross margins haves softened by ~300bps to ~50% levels , the management is confident in revival of growth going forward at sustained gross margins at current levels.

The EBITDA margin remained under pressure in FY19 largely due to lower gross margin. We model improvement in consolidated EBITDA margin (at 23-24% in FY20E-21E against ~16% recorded in FY19) led by a recovery in domestic performance (at ~29% in FY20E-21E against ~26% recorded in...

A key concern for investors over the last 2 years has been that there is no growth in air coolers. We remain contrarians, as we believe performance was primarily impacted due to seasonality factors rather loosing market share by Symphony. Summer 2019 confirms our thesis that there are 2 types of consumers in India (AC and Air cooler). A consumer will purchase coolers when summer is strong (impulse based). With trade inventory now at lower levels, Symphony will enjoy off-season stocking, opportunity to launch tech-rich coolers and benefit from a favorable base. Besides, its international performance will improve given the various initiatives undertaken Symphonys weak 4Q performance was largely in-line, given the spillover impact from an erratic summer in 2018. We remain constructive driven by positives like (a) Beat on domestic volume growth, (b) Clearance of channel inventory, (c) Healthy 1Q offtake across geographies (few exceptions like NCR, part of Rajasthan) and channels, and (d) New launches returned after a gap of 2 years. Our estimates cut by 5% to factor weak CT performance. We value the co. at 45x on Mar-21 EPS, arriving at a TP of Rs 1,643. We believe at current price, the risk-reward is favorable.