YES Securities' research report on Symphony
Domestic business continues to see increased positive traction with better off‐season collections and optimism with new product launches. Company’s consolidated revenue was in‐line with estimates despite subdued performance of Australian subsidiary Climate technologies. Management expects sharp revenues decline for climate technologies in FY24 as their main customer Home Depot is de‐stocking on account of anticipated recession in US resulting in lower ordering. Gross margins at 43.7% was lower sequentially and yoy basis on account of change in product mix. EBITDA margin improved 125bps yoy higher operating leverage. Domestic business is expected to continue its growth momentum, and it would provide cushion to lower US sales on impending recession. Management has taken corrective actions to improve the performance of its international subsidiaries which it feels should culminate in improved performance in medium to long term. The company has also approved buy back at Rs2,000/share for1.43% of paid‐up capital and has increased payout to at least 60% of PAT from the earlier payout of up to 50% of PAT. Considering strong traction in domestic market and increased payout, we continue with our BUY rating.
Outlook
We expect a strong recovery in domestic air‐cooling market to continue in the upcoming summer, now with lower commodity prices and price increases being affected margins are set to improve and return to pre‐covid levels. We expect FY22‐25E growth trajectory of 15% revenue CAGR. Considering higher operating leverage, we estimate FY22‐25E EBITDA and PAT CAGR of 20% each. we maintain BUY with the PT of Rs1,291 valuing it at 40x rolling forward our valuation multiple.
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