Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    

| More

REDUCE on Symphony - Trade inventory to impact FY21 - HDFC Securities

Posted On: 2020-08-12 09:04:32

Mr. Naveen Trivedi, Institutional Research Analyst, HDFC Securities.

Symphony's 1QFY21 performance was weak but broadly in line with estimates. Domestic revenue saw a 77% YoY decline owing to COVID-led lockdown and high channel inventory (selling in non-seasonal quarters). Domestic EBIT was zero (loss excluding other income) due to negative oplev. Rest of the world (RoW) fared better, as subsidiaries saw the lower impact from lockdowns. However, CT (Australia) and China posted losses. With heavy channel inventory in the domestic business (40% of last year), we expect a weaker show in the coming quarters too. We cut our EPS estimates by 9/3/3% for FY21/FY22/FY23. We value Symphony at 30x P/E on Jun-22E EPS and derive a target price of Rs 810. Maintain REDUCE.

Weak but in-line revenue: Standalone revenue declined 75% YoY (+103% in 1QFY20 and +12% in 4QFY20), in line with our expectation. Domestic/Exports fell 77/50% YoY. RoW revenue declined by 17% YoY as subsidiaries saw a lower impact from lockdown. IMPCO was relatively unaffected up to May, after which revenue fell sharply. CT saw healthy demand for heaters and strong traction in the US. GSK China saw a marginal decline. While we remain confident about the long-term growth potential of branded air coolers in India and overseas, along with Symphony's ability to gain market share, near term pressure will continue.

A loss at EBITDA: Standalone gross margin dipped by 500bps YoY to 45% (-443bps in 1QFY20 and +729bps in 4QFY20) due to a high salience of spares sales, which have lower margins. Gross margin for air coolers was >50%, in line with 1QFY20. Employee expenses remained flat while ASP/other expenses declined by 79/53% YoY. Symphony recorded a loss in standalone EBITDA of Rs 80mn (HSIE Rs 27mn loss). RoW saw an EBIT loss of Rs 20mn due to high input cost, increased labour cost, and increased freight.

Call takeaways: (1) Channel inventory in India is at 40% of FY20 sales (similar to FY19); (2) inventory with Symphony stands at Rs 340mn; (3) gross margin for air coolers in FY21 is expected to remain stable YoY; (4) the US market is expected to grow to 50% of CT in 3-4 years (currently 15%); and (5) the company intends to maintain a dividend payout of 50%.

Shares of Symphony Limited was last trading in BSE at Rs.830.15 as compared to the previous close of Rs. 841.55. The total number of shares traded during the day was 6163 in over 651 trades.

The stock hit an intraday high of Rs. 844.4 and intraday low of 803.05. The net turnover during the day was Rs. 5113974.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Zydus Wellness - Leadership in niche categories; initiate at BUY - ICICI Securities

Power - Setting the stage - ICICI Securities

Company Update - Elgi Equipments - ICICI Securities

Nano Nivesh - The Anup Engineering - ICICI Securities

RBI OMO announcement of Rs. 10000 crore - Angel Broking

TCS deal win - Sep 24, 2020 - Angel Broking

View on Pre-Monetary Policy by Upasna Bhardwaj, Senior Economist at Kotak Mahindra Bank

US FDA approval to Zydus Cadila - Angel Broking

HDFC Securities Institutional Research Desk: Cement Sector Thematic - Spotting the sweet spot

Bharat Forge - Expectation hurdle remains steep - ICICI Securities


Mutual Fund Review - September, 2020 - ICICI Securities

UTI AMC announces IPO date - Angel Broking

Asian Paints - Mr. Amarjeet Maurya - AVP - Mid Caps, Angel Broking Ltd

Britannia Industries - Mr. Amarjeet Maurya - AVP - Mid Caps, Angel Broking Ltd

Hexaware Technologies (Not Rated): Hexaware accepts 475/share as final delisting price - ICICI Securities

CAMS IPO - Day 2 Subscription - Angel Boking

Chemcon Speciality Chemicals - IPO subscribed 12.62 times on second day - Angel Broking

General insurance - Fire, health remain growth drivers, rising Covid claims a concern - ICICI Securities

Supreme Industries - Perfect recipe for rerating; upgrade to BUY - ICICI Securities

Titan Company - Best positioned to gain from faster-than-expected recovery. Upgrade to ADD - ICICI Securities

Sector Update - Telecom - Sep 23, 2020 - ICICI Securities

Allcargo Logistics - Highlights of Blackstone deal - ICICI Securities

I-direct Instinct - Gokaldas Exports

Economy: RBI's trilemma: allows for INR strength - Kotak

HCL Technologies - Company Update - ICICI Securities

Chemcon Speciality Chemicals - IPO Review - ICICI Securities

Angel Broking - IPO Note - YES Securities

TCS - Announcement of its blockhchain based solutions on Microsoft Azure - Angel Broking

Amber Enterpirses acquire Sidwal - Angel Broking

Dixon Technologies - Buy - YES Securities

HCL Technologies acquisition of DWS Limited - Angel Broking

Allcargo Logistics CFO Resignation - Angel Broking

Upgrade to BUY on Gateway Distriparks - Strengthening the balance sheet - HDFC Securities

BUY on ITD Cementation - Execution pickup awaited - HDFC Securities

Allcargo Logistics - Trying to stich through an integrated offering - ICICI Securities

Polymer price tracker - Other polymer (ex-PVC) prices too firm up - ICICI Securities

Angel Broking - IPO Review - ICICI Securities

IPO Review - Computer Age Management Services - ICICI Securities

Company Update - EIH Ltd - ICICI Securities

Gladiator Stocks - Godrej Properties - ICICI Securities

Company Update - Dr Reddy's Laboratories - ICICI Securities

Gladiator Stocks: Pharma Thematic - ICICI Securities

Company Update - Housing & Urban Development - ICICI Securities

Covid Recovery Pulse - E-Way bill generation shows recovery signs with auto volumes flat - ICICI Securities

Quant Pick - UltraTech Cement - ICICI Securities

Lupin & Cipla - Positive News - Angel Broking

Sterling and Wilson Solar Ltd - 106.71 MW order win - Angel Broking

Dr. Reddy's Laboratories - Settles Revlimid litigation in US - ICICI Securities

Natco Pharma - Natco to launch first generic Revlimid - ICICI Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019