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Profitability doubles in Q4; Outlook positive

Symphony Ltd and its subsidiaries manufacture and trade in residential, commercial and industrial air coolers in the domestic and international markets. The company operates through the air coolers and corporate funds segments, and offers residential, packaged and central air coolers.

• In Q4FY24, Symphony reported a revenue increase of 7.8% YoY, driven by a rise in the sale of air conditioners and other durables in the Indian and international markets.

• EBITDA jumped 147.8% YoY to Rs.57 crore, while margin expanded 970 bps YoY to 17.2% led by fall in input costs, employee and selling, general and administrative (SG&A) expenses. PAT doubled to Rs.48 crore.

• The Board recommended a final dividend of Rs. 8 per equity share.

• Symphony’s profitability doubled, owing to above normal temperatures in Indian regions and decent summer overseas. The intensified heat wave in India and overseas, ongoing transition and improving performance of subsidiaries are key growth factors. We reiterate to Accumulate with a revised target price of Rs. 1,151 based on 35x FY26E adj. EPS

Summer in India and overseas supports topline

In Q4FY24, consolidated revenue rose 7.8% YoY to Rs.332 crore, the highest ever quarterly revenue. Revenue from Indian and overseas operations grew 5.7% YoY, driven by growing demand in southern and eastern India and Maharashtra. The onset of summer in March in these regions supported the domestic sales. Decent demand in Mexico, Brazil and China drove the overseas revenue to Rs.111 crore (+12.1% YoY). IMPCO-Mexico, Symphony-Brazil and GSK-China registered a revenue growth of 51%, 178% and 36% YoY, respectively. However, CT-Australia reported a revenue decline of 18% YoY due to persisting demand headwinds.

Cost reduction supported by margin expansion

In Q4FY24, EBITDA stood at Rs.57 crore (up 147.8% YoY). Resultantly, the margin expanded 970bps YoY to 17.2%, led by a fall in input costs, employee and SG&A expenses. Symphony is under the process of discontinuing its in-house manufacturing facility at CT-Australia by Q2FY25. It plans to outsource portable air coolers from India and other products from China with an aim to reduce cost of sales and improve margins. PAT doubled to Rs 48 crore.

Key concall highlights

• In Q1FY25, the management expects a minor price hike in the range of 1%-2%, which is likely to aid margin improvement.

• Demand in India operations is expected to increase as summer heat further picks up in central and northern India.

• Symphony plans to expand its recently launched kitchen fans and personal air coolers in double digits in metros and tier-one cities.

Valuation

Intensified summer in India and international operations aided the revenue growth in Q4FY24. Further, the decrease in costs led to a significant improvement in margins. Rising temperatures, price hikes, planned transition to outsourced products at CTAustralia and improving financials of subsidiaries are expected to boost performance. We reiterate to Accumulate with a revised target price of Rs. 1,151 based on 35x FY26E adj. EPS