Symphony Ltd - Q3FY21 First Cut - ICICI Direct

(CMP: Rs. 986 Mcap: Rs. 6894 Crore)

Symphony's YoY revenue growth was largely impacted due to lower volume offtake by dealers amid focus on liquidation of existing inventory. However, on a QoQ basis, the company has witnessed improved demand and operating performance in both standalone and consolidated business.

Q3FY21 Earnings Summary (Consolidated)

- Consolidated revenue declined by ~26% YoY at Rs. 216 crore in Q3FY21 (up ~13% QoQ) mainly due to standalone business wherein revenue dip was at 40% YoY at Rs. 124 crore (up 11% QoQ). The standalone business recovery was slightly delayed (on a YoY basis) owing to lower volume offtake by dealers amid focus on liquidation of channel inventory.

- Despite various challenges, company has maintained its standalone gross margin same as Q3FY20 level (improved by 100 bps QoQ). On a consolidated basis, the gross margin was lower by ~350 bps YoY due to ongoing supply issues in Australia. Lower volume and higher fixed costs dragged consolidated EBITDA down by ~800 bps YoY at 15%.

- Company's consolidated EBITDA on an absolute term, witnessed recovery on a QoQ basis from a loss of Rs. 5 crore in Q1FY21 to EBITDA profit of Rs. 33 crore by Q3FY21.

- Company reported ~47% YoY drop in bottomline to Rs. 27 crore (up 80% QoQ), mainly tracking lower sales and EBITDA during Q3FY21

While Q3FY21 performance on a YoY basis, was largely marred by delay in volume offtake by dealers in the domestic markets amid weak season, QoQ improvement in the performance suggest a gradual recovery post relaxation from lockdown norms. With earnings in the short term expected to be negatively impacted, Symphony through its robust balance sheet and strong brand is expected to recover sooner than competition. We would be revisiting our estimates and target price post the conference call.

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.

Source : Equity Bulls

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