Buy Symphony; target of Rs 1983: HDFC Securities

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26 Aug, 2025 12:21

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HDFC Securities' research report on Symphony

Symphony reported a washout quarter with revenue declining by 14% to Rs 1.55bn on account of erratic summer. GM and EBITDA margins recovered partially from the impact of the launch (promo. offer) of Touch series in the base quarter, leading to 0/-8% growth in EBITDA/APAT. Twin blows (1Q and 4Q) by consecutive weak summer impacted Symphony’s consol. revenues (up only 4%) during FY18 (industry was flat to negative). Erratic summer impacted consumer offtake and primary sales during the quarter. Moreover, offtake did not pickup during Apr owing to continued weak summer. This led to higher inventory in the trade channels. With rising mercury levels in the last few days, we believe channel inventory will normalize.  As competition continues to intensify, Symphony goes back to the drawing board to re-write their strategy (developed version 3.0). They desire to compete with product differentiation (launch tech-rich coolers) and not with price discounting strategy. The company has appointed executives pan-India to drive industrial cooling business and sounds confident on accelerating growth. Symphony’s continued focus on expanding their geographical presence is evident with a recent non binding offer to acquire a ‘profitable’ company outside India.  Our bullishness on Symphony is based on (1) Rising demand for cooling products driven by growing disposable incomes, cheaper financing options and increasing up-country penetration of electricity, (2) A large unorganised air cooler market, (3) Consistent product innovation, (4) Growing distribution reach (40k dealers targeted vs. 30k now) over the next 2 years and (5) Untapped opportunities in RoW.

Outlook

We cut our EPS estimates by 8% to factor in weak summer 2018. At 45x Mar-20 EPS, our TP is at Rs 1,983 (earlier 2,150). We maintain BUY.

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