Reduce Symphony; target of Rs 900 HDFC Securities

HDFC Securities' research report on Symphony

Symphony delivered better-than-expected revenue for domestic business in the non-seasonal quarter. Domestic revenue was up 1% after clocking a 15% decline in Q1, which was impacted by an erratic summer (H1FY24 down 7% YoY). Product innovation, higher distribution reach (semi-urban and rural), and increasing presence in alternate channels (30% vs. 10% pre-COVID) support during non-season Q2. RoW business continues to remain a drag; the healthy performance of IMPCO Mexico/GSK China was offset by weak demand in CT Australia. Domestic/RoW EBIT grew by 15/-75%. Despite its domestic channel inventory being slightly higher than normal, Symphony remains optimistic about delivering growth in both revenue and EBITDA in FY24. With the aim of de-risking its business from seasonality, Symphony continues to focus on (1) geography expansion; (2) channel diversification; and (3) product expansion into adjacent segments. RoW execution is still WIP and consistent performance is still missing.

Outlook

We maintain our estimates and the stock at 30x P/E on Sep’25E EPS and derive a TP of INR 900. Maintain REDUCE.