Add Symphony, target price Rs 1300: HDFC Securities

HDFC Securities has add call on Symphony with a target price of Rs 1300. The current market price of Symphony Ltd. is Rs 1068.4.

Time period given by analyst is one year when Symphony Ltd. price can reach defined target.

Symphony Ltd., incorporated in the year 1988, is a Mid Cap company (having a market cap of Rs 7460.91 Crore) operating in Consumer Durables sector.

Symphony Ltd. key Products/Revenue Segments include Air Coolers, Others and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 229.00 Crore, down -3.78 % from last quarter Total Income of Rs 238.00 Crore and up 15.08 % from last year same quarter Total Income of Rs 199.00 Crore. Company has reported net profit after tax of Rs 30.00 Crore in latest quarter.

Investment Rationale
Symphony's domestic business remained under pressure due to high trade inventory. Domestic revenue was at INR 1,350mn (HSIE INR 1,446mn), up 29% YoY, down 15% on a two-year CAGR. The company remained optimistic and is focusing on new launches and initiatives to revive domestic business. Performance in stable summer season will reflect the outcome of such efforts. Exports remained volatile on a quarterly basis, registering revenue of INR 50mn (HSIE INR 95mn) with RoW revenue down 1% YoY (non-seasonal quarter). Gross margin expanded 36bps YoY (+103bps in Q2FY21, +212bps in Q1FY22, HSIE -21bps) to 48.6%. EBITDA margin came in at 25% (HSIE 24.3%), growing 21% YoY (HSIE 29%). CT saw recovery in operating profitability in H1FY22 after showing dismal margin last year. IMPCO, too, saw margin recovery, while GSK China remained weak. Given the company’s leadership position and innovative product pipeline, the brokerage believes it is well positioned to gain from a strong season (missed the last two seasons). It values the stock at 35x P/E on 24E EPS and derive a TP of INR 1,300.

Promoter/FII Holdings
Promoters held 73.25 per cent stake in the company as of 30-Sep-2021, while FIIs owned 4.25 per cent, DIIs 9.46 per cent.