Buy Symphony; target of Rs 1710: KRChoksey

KRChoksey's research report on Symphony

Symphony Ltd posted its Q1FY19 results which were below our estimates. Net revenue for the quarter stood at INR 1.46 Bn (-23% YoY). The un-seasonal rainfall in some parts of India impacted the volume sales resulting de-growth during the quarter. EBIDTA for Q1FY19 stood at INR 170 Mn (-39% YoY), with OPM at 11.6% (-309 bps YoY). The EBITDA was affected due to higher levels of inventory and higher advertisement spends. PAT for Q1FY19 stood at INR 200 Mn (-48.7% YoY), with NPM at 13.7% (-683 bps YoY).

Outlook

We anticipate revenue to grow at CAGR of 8-10% and PAT to grow at CAGR of 13-14% between FY17 and FY20E. Currently the stock is trading at a P/E of 32.3x for FY20E EPS, we assign a P/E multiple of 48.5x and maintain our “BUY” rating on the stock with a target price of INR 1,710 representing an upside of 50%.