Buy Symphony; target of Rs 416: Maximus Securities

Maximus Securities is bullish on Symphony and has recommended buy rating on the stock with a target of Rs 416 in its November 15, 2012 research report.

“Incorporated in 1988, Symphony Comfort Systems was promoted by Achal Anil Bakeri. The company manufactures consumer durables under the Symphony brand name. The company commenced business with the manufacture of air coolers. Symphony coolers have plastic bodies unlike the conventional metal-body coolers manufactured by the unorganized sector. At present, it manufactures ten models of coolers which include desert coolers, window coolers and portable coolers. The company's range of products include ventilation fans, room heaters and water purifiers. Its water purifier, called Crystal Clear, is the only brand in the market to use membrane technology in India. The company has also introduced a heater-cum-cooler in the market. The company's products are exported to Dubai, Burundi, Namibia, Bahrain, Nepal, Senegal, Oman, Sudan, Saudi Arabia, Tanzania, Switzerland, Srilanka, etc.”

“The company has the unique distinction of having the largest number of trademarks and registered designs in the air cooler industry. Company has about 108 trademarks, 49 registered designs, 7 copyrights and 8 patents. The company has successfully launched 4 new models in air cooler category viz; Sumo, Ninja, Mini Sumo and S-4700. Symphony holds the Guinness Book of World Record for designing and manufacturing the world's largest functional air cooler. It has developed the world's largest working model of air cooler having Sumo design measuring 14 feet in height, 8 feet 10 inches in length and 8 feet in width. In order to establish its products in European countries, the company has successfully obtained CE certificate for 2 more models i.e. Sumo and Mini Kaizen. Air coolers of Symphony have the highest air blast, air delivery and cooling efficiency. They consume minimal electricity and help conserving energy. Its products are eco-friendly as these are energy efficient and minimise the impact of greenhouse gas emissions. Company has acquired global certification like CE (Europe), ETL (USA), GS (Germany), NOM (Mexico), SASO (Saudi Arabia), SONCAP (Nigeria), PCT (Russia), etc.”

“Symphony, for quarter ended Sept 2012, the net sales dropped by 16% to Rs 24 crores against 29 crores and net profit by 54% to Rs 2 crores against 4 crores. Exports at 7,741 units registered a decline of 29% y-o-y due to no dispatch to its Mexican subsidiary, Impco which accounts for ~50% of total exports. Company executed 6 orders in Q1FY13 in industrial air-cooling segment in India. It is also in various stages of negotiation for 40 projects worth Rs 3 crores in the near term. Company received confirmed sales orders of 115,815 units compared to 52,019 units in the same period last year. The management has guided for a strong Q2FY13, due to a high unexecuted order book of Rs 40 crores for which full advance has been received from dealers/distributors. The company has decided to set up a unit in DGDC, Surat SEZ at Sachin, near surat in Gujarat.   The company has received ISO 9001:2008 for quality management system for its design and development, manufacture and after sales service of Air coolers and water heaters.”

“At the CMP of Rs 310, the stock is trading at 21.6x FY12EPS. The management has guided for a strong Q2FY13 since the company has received full advance payment for the order to be executed in Q2FY13. With the rising demand in global markets the company aims to double its export to 200,000 plus units within the next two years. We therefore recommend a “BUY” with a target price of Rs 416. Valuation at 21.6x FY13E EPS,” says Maximus Securities research report.

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