ICICI Direct's research report on Symphony
Symphony’s strong consolidated performance in Q1FY20 came on the back of a low base, a demand revival in the domestic business and consolidation of Climate Technology, Australia. On the standalone front, fresh demand from dealers on account of strong summer vis-à-vis low base had translated to strong volume growth at ~100% for Symphony. However, gross margin remained under pressure (down 377 bps YoY on standalone basis) due to a change in mix and higher advertisement expenses restricting EBITDA margin expansion to 15% (vs. standalone annual average of 30%). The company reiterated strong volume growth and margin recovery in FY20E-21E led by leveraging dealer networks along with rationalisation of cost in the overseas and domestic markets.
Outlook
Hence, we maintain HOLD rating on the stock with a revised target price of Rs 1295 (valuing at 38x FY21E).
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