Sell Symphony; target of Rs 300: SPA Research

SPA Research is bearish on Symphony and has recommended sell rarting on the stock with a target of Rs 300 in its October 17, 2012 research report.

“Symphony Ltd (Symphony) reported lower than expected numbers in Q1FY13 due to deferment of sales owing to up-gradation of products across all models. Consequently, standalone sales at INR 275mn and PAT at INR 21mn registered a decline of 9% and 54% YoY respectively. Although, we are positive about company’s long term growth prospects and industrial air-cooling opportunity in India (significant contribution from the same would come in medium to long term), we believe there has been lot of optimism built up in the stock price.”

“Symphony reported 10% de-growth in domestic air-cooler sales in Q1FY13 at 43,405 units (~75% of total units). This was primarily due to deferment of production and thus sales as company decided to upgrade features and technology of the models to increase its competitive positioning in the market. Company received confirmed sales orders of 115,815 units worth INR 603mn at the end of Q1FY13 (with 100% advance) compared to 52,019 worth INR 247mn in same period last year. The orders will be executed in October and November. According to the management, there has not been any loss of sales at retail level due to this exercise.”

“Symphony is the largest air-cooler company in the world with presence in residential and industrial air-cooling segment. We expect demand for company’s residential air-cooler to continue to remain strong on the back of expansion in distribution reach and company’s strong brand & quality products. Demand would also be aided by lower purchase price and significantly lower running expenses in the scenario of increasing power tariffs. We expect company’s consolidated sales and PAT to register a CAGR of 11% and 15% respectively over FY12-14. Due to recent spurt in stock price, it is currently trading 33% above our fair value of INR 300 (15x FY14E EPS). We recommend Sell,” says SPA Research report.

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