Symphony's standalone and overseas business has seen a gradual recovery on a QoQ basis, however YoY recovery was still ~74% of previous year. According to company, the trade sentiments in the domestic markets were positive and company has witnessed stock out situation in some of the geographies. The inventory level is normalised with channel partners and the company expects good volume offtake from Q4FY21 onwards. On the subsidiaries front, Climate Technologies Australia performance remained impacted due to supply issues & lower operating leverage. The management expects a turnaround of Australian subsidiary from Q4FY21 supported by various initiatives (such as changing sourcing destination from China to India) taken by the management. The other two subsidiaries, GSK China and Impco Mexico performance in terms of topline remain impacted due to pandemic, however company has taken various cost optimisation measures in the subsidiaries. This would help company to improve profitability, going forward. We slightly tweaked our earnings estimates upward by ~2%, 6% for FY22E, FY23E respectively.
Valuation & Outlook
We continue to like Symphony for its leadership position in the domestic air cooler market and its capital efficient working model. However, margin recovery and sustainability of market share in the upcoming summer season will be key variable to watch. We rollover our valuation on FY23E and change our rating from BUY to HOLD, with revised target price of Rs. 1090 (valuing 27x FY23E EPS).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Symphony_Q3FY21.pdf
Shares of Symphony Limited was last trading in BSE at Rs.988 as compared to the previous close of Rs. 1041.1. The total number of shares traded during the day was 30362 in over 3372 trades.
The stock hit an intraday high of Rs. 1056 and intraday low of 952.05. The net turnover during the day was Rs. 30225012.