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CRISIL maintains fundamental grade of 3/5 to Symphony

Published on Mon, Jan 23, 2012 at 14:00 | Source : Moneycontrol.com

Updated at Mon, Jan 23, 2012 at 14:07

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Symphony

BSE | NSE 31/05/12

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CRISIL Research has come out with its report on Symphony . The research firm has maintained the fundamental grade of 3/5, in its January 20, 2012 report.

Symphony's Q2FY12 standalone revenues were below CRISIL Research's expectations. Revenues grew marginally y-o-y due to dip in volume in the domestic market as channel partners remained cautious about building inventory due to the macro headwinds. However, internationally, the company posted strong growth albeit at a lower base. We expect volume sales to rebound in H2FY12 but will monitor the unfavourable weather risk, which had impacted the company last year. We lower our earnings estimates for FY12 and FY13, and maintain the fundamental grade of 3/5.

Q2FY12 result analysis - standalone
� Revenues increased marginally by 4.9% y-o-y to Rs 562 mn on account of increase in realisations (up ~6% y-o-y) as healthy export volume sales (up 382% y-o-y to 29,000 units) offset the domestic volume de-growth. The company has reported 18% y-o-y drop in local volume sales primarily on account of low demand from the southern and eastern regions. The improved product mix, which includes sale of newly launched high-end models, has supported the increase in realisations along with the price hike. The company has sold 10,072 water geysers in the first half of the current year. It has reported 10.6% increase in revenues during H1FY12 to Rs 850 mn over H1FY11. Due to the seasonal nature of the business, quarterly numbers are not comparable.

� EBITDA margin declined by 284 bps y-o-y to 24.5% due to increase in employee cost, which increased 43% y-o-y to Rs 37 mn. To increase its focus on exports, the company has hired 10 country managers.

� Foreign exchange gains of Rs 5.7 mn are primarily on account of restatement of advances to its subsidiary Impco.

� PAT margin increased by 87 bps y-o-y to 20.1% as the company got tax exemption on its production (which commenced in the current year and will be exported) from SEZ in Surat, Gujarat. PAT has increased 9.6% y-o-y to Rs 113 mn.

� Adjusted standalone EPS increased 4.1% y-o-y to Rs 6.3.

� We have not been able to analyse subsidiary Impco as the company has only reported standalone financials.

Valuations: Current market price is aligned
We continue to use the discounted cash flow method to value Symphony and maintain our fair value estimate of Rs 1,119. Our fair value gives implied P/E multiples of 10.8x FY12E consolidated EPS of Rs 105 and 8.3x FY13E consolidated EPS of Rs 135.

To read the full report click on the attachment

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report. The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.