Prefer Symphony: SP Tulsian

SP Tulsian of SPTulsian.com told CNBC-TV18, "Symphony is definitely a high beta stock with 75 percent of promoter holding, we know that this is a midcap or may be a smallcap kind of company. But if you really go by the financial performance, what I really liked about the company is that they have June ending, and this September is their first quarter. What I liked about the company is that they have the margin maintained at 29-30 percent. I am not breaking them in every quarter." "Apart from that, with the return on equity of 40 percent plus, we do not see these kinds of performance coming in from it. They sell about eight lakh air coolers every year, they have a very good distribution network, 16,000 plus outlets across the country and market share of 40 percent by volume, 50 percent by value. So, I do not think that you can really replicate these kind of companies, the entry barrier for these types of companies are very poor. Yes, there was in the past, the news that Voltas will also be coming out with air cooler. I am not doubting the capability of Voltas, they already have the existing network, but apart from that, the kind of grip these promoters have on the products, they are able to manoeuvre their margins maintaining that at 29 percent. If they find that, the cost of production is falling or the margins are improving, they will be able to pass it on which is key in any case of the consumer durables or the fast moving kind," he said. "The kind of scorching heat which we see, every one cannot afford to buy air conditioners. So, this has a very high potential and the best advantage is that we are buying the stock at the lower end of the price. The moment the stock crosses Rs 3,000, again we will see people jumping in on it. The fundamentals will remain same with 30 percent margins and 40 percent return on equity. But there is no point in buying the stock at that point of time. So, it is ruling at a lower end of about may be Rs 2,200 and looking at least at the Q1 numbers, I am quite confident, I will not be surprised to see earnings per share (EPS) of Rs 37-38 for FY'16. As the stock is ruling at a lower end of the price band, I would suggest."