Symphony Ltd. share price target

The standalone performance of Symphony was much below our estimate due to lower volume growth impacted by bad weather condition for cooling products. Revenue dip of ~39% YoY to | 79 (I-direct estimate of | 144 crore) on account of poor volume offtake as dealers refrain from building new inventories in the wake of weak summer across the country. The fall in domestic sales volume impacted the consolidated performance however its...

Symphony Ltd has signed an agreement to purchase ~95% equity stake in Australia based Climate Technologies Pty Ltd (CTPL) for an enterprise value of | 201-221 crore (based on FY18 EBITDA). The company plans to finance the acquisition through a mix of debt (| 121 crore) and internal cash accruals (| 76 crore). Started in 1979, CTPL manufactures and sells evaporative air coolers (topline contribution of ~54%), ducted gas heaters (topline contribution of ~40%) and other cooling products (like air conditioners) in Australia and US. With the strong brand of Bonaire' and...

At 45x June-20 EPS, our TP is at Rs 2,059 (earlier 1,949). Maintain BUY. Symphony has signed an agreement to acquire 95% stake in Australia-based Climate Technologies Ltd (CT). The deal EV is ~Rs 2.01-2.21bn (A$ 40-44mn). At FY18P earnings, the deal is valued at EV/sales of 0.73-0.80x, EV/EBITDA of 7.3-7.8x and P/E of 9-10x. We expect this deal will add ~4% to Symphonys EPS in FY19E (9m consol impact) and ~5% for FY20/FY21E.

Symphony Ltd reported subdued Q4FY18 numbers (standalone) with net revenue & PAT de-growth of 14% & 8.1% YoY, below our estimates. However, EBITDA declined marginally by 0.1% YoY, while EBITDA margins expanded by 446bps YoY, aided by higher gross margins (driven by price hikes), moderation in Ad spends and decline in the other expenses.

We cut our EPS estimates by 8% to factor in weak summer 2018. At 45x Mar-20 EPS, our TP is at Rs 1,983 (earlier 2,150). We maintain BUY. Symphony reported a washout quarter with revenue declining by 14% to Rs 1.55bn on account of erratic summer. GM and EBITDA margins recovered partially from the impact of the launch (promo. offer) of Touch series in the base quarter, leading to 0/-8% growth in EBITDA/APAT. Twin blows (1Q and 4Q) by consecutive weak summer impacted Symphonys consol. revenues (up only 4%) during FY18 (industry was flat to negative).

Revenues declined 14% YoY to | 155 crore (vs. I-direct estimate: | 230 crore) on account of poor volume offtake as dealers refrain from building new inventories in the wake of weak summer across the country. The company has taken a price hike on selected range of air coolers (especially in i-touch) to increase the contribution margin of the products. The company launched two...

Our valuation is based on 45x Mar-20 EPS, yielding a TP of Rs 2,150. Initiate coverage with a BUY. Symphony, once an almost bankrupt company, has risen from the ashes and become the global leader in air coolers. After suffering financial stress and restructuring, post 2005 the company focussed on a one product, many markets strategy. This has worked out well and revenues/EBITDA/APAT grew at 35/49/54% CAGR during the last 10 years.

Symphony posted robust performance in Q3FY18 with standalone revenue growth of 21% YoY in Q3FY18 driven by healthy growth in volumes. EBITDA margin surged by 255 bps YoY to 39.9% on the back of strong response to new product launches, premium models and benefit of cost optimisation. The company's continuous focus on new product launches and potential market share gains due to implementation of GST will augur well for revenue growth. We factor revenue CAGR of 20% over FY17-20E. The increasing demand for premium products will aid the company in sustaining...

Symphony Ltd delivered healthy set of numbers for Q3FY18 with net revenue & PAT growth (standalone) of 20.9% & 20.7% YoY, marginally above our estimates. Aided by lower material cost & overhead expenses (as a % to net revenue), EBITDA margins expanded by 255bps YoY to 39.9%, which was encouraging.

Revenues grew 20.8% YoY to | 217.6 crore (vs. I-direct estimate: | 216.8 crore) on account of healthy volume growth as dealers started re-stocking inventory before the summer season to gain higher discounts. The company launched two new range of products (namely Silver' & Diamond) with six variants. One fourth...