Symphony Ltd - Strong Quarter…Consistent Performer; Result Update Q2FY15 :: Edelweiss

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Symphony Ltd. yet again reported stellar set of numbers for Q2FY15 (June ended company). Revenues grew by 30.4% YoY while EBITDA and PAT catapulted to INR 52 cr and INR 36 cr, respectively. Symphony has reported a strong quarter on back of strong sales volumes recording a 27% YoY increase. For Symphony, Q3 and Q4 are strong quarters due to change in weather conditions. Growing aspirations of the demography, increasing focus on branded goods as well as implementation of GST are expected to positively tilt the scale for organised air cooler players. Symphony has been the foremost amongst the domestic air cooler industry and sees a huge growth potential - both in the domestic as well as international air-cooling markets. Going forward, the company plans to increase its presence in the international air-cooling market and the domestic industrial cooling segment.

Revenues grow 30.4% on back of strong volume growth

Symphony has reported a strong set of numbers for Q2FY15. Revenues grew by 30.4% YoY to INR 156 cr, primarily on the back of a robust domestic market. EBITDA and PAT catapulted to INR 52 cr and INR 36 cr, respectively, growing YoY at 49% and 46%, respectively. Domestic sales grew by 34% at INR 140cr whereas exports grew by 10% at INR 11.3cr. This quarter witnessed an increase in sales volume by 27% YoY to 239000 units. Symphony has not undertaken any price hike this quarter. Favourable product mix, introduction of newer models and upgradation of earlier models have resulted in volume growth. Higher offtake at the distributor as well as dealer levels have also contributed to the higher sales volume.

EBITDA and PAT soar 48.7% and 45.6% respectively

EBITDA for this quarter saw a 48.7% growth and stood at INR52cr. EBITDA Margins were reported at 33.6%, a yoy improvement of 412bps. Improvement in EBITDA margins can be attributed to strong sales and volume growth supported by softening of raw material costs as well as better economies of scale.

Impco to move to an Asset light model

In order to improve the operational efficiency of Impco, Symphony will be undertaking two key plans i.e. Impco would introduce an outsourcing model currently being followed by Symphony and it would monetize its assets, proceeds from which would be utilised in reducing the parent company’s loans, in turn improving working capital.

Strong long-term growth drivers in place

The Indian air cooler industry size by volume is estimated at 0.6 crore units. The organized sector currently accounts for 20% of the total industry in volume terms, which has grown from the ~15% share five years ago. Growing aspirations of the demography, increasing focus on branded goods as well as implementation of GST would tilt the air-cooler market in favour of organised players. We expect organised sector to record a growth of 20-25% going ahead.  Symphony - with its leadership position is well placed to capture long-term growth potential.

LINK
https://www.edelweiss.in/research/Symphony-Ltd--Strong-Quarter%E2%80%A6Consistent-Performer;-Result-Update-Q2FY15/10005465.html