Vinay Khattar, Associate Director & Head of Research at Edelweiss Financial Services told CNBC-TV18, "Symphony has always been expensive, when we started covering, we covered it at Rs 350 just about two-three years ago, and it is still a very interesting bet."
"Symphony is into cooler business, a large chunk of its business is in the unorganised sector; in terms of value terms is 50 percent of the market share in the organised sector. Every year it launches one-two products, it has got domestic presence which is significant. Large distribution setup and something which is very peculiar to this business is that they allow only cash and carry which means my working capital cycle is very tight. Most of its manufacturing is outsourced, so net-net they have a return on capital which is almost 40 percent plus. In addition to this the company has shown a consistent growth of about 35-40 percent in last five years that is the annual CAGR they have been clocking," he added.
"In addition you have an export business in which Symphony wanted to be present in countries where there is a tendency to have very dry air. So in places like Texas the moisture content is very low, so people prefer air coolers there in contrast to air conditioning. So those are the markets in which Symphony would want to be present. They have done an acquisition in Mexico and the international business continues to grow healthily. So net-net at these kind of ratios the multiples look justified and if it maintains its growth momentum the stock could still do well from these levels," he said.
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