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Result Synopsis

Symphony on consolidated basis missed our revenue estimates by 6%, miss was largely on account of decline in international revenue. International revenue registered declined of 8.4% on yoy basis, while domestic business saw growth of 24.5%. Gross margins have seen expansion of 334bps on back of tactical pricing, value engineering and softening of input costs. EBITDA margin on other hand has seen expansion of 541bps to 20.3%, despite negative operating leverage in the international subsidiary. On the standalone front strong performance continued for second quarter in a row with standalone revenue growing 32% yoy, further SYML has witnessed strong advance collection resulting in buoyant trade sentiment. All the regions have equally contributed to strong domestic growth. On the flip side one of the large distributors has missed the payments to the company amounting to Rs440mn for which the company has initiated legal action, going forward there is possibility of provisions being created for the same. The company believes worst for the domestic air-cooling industry is behind and SYML is poised for growing at respectable double-digit growth CAGR in the medium term in the domestic market. International business although has seen some slowdown in Q2, in medium term it has seen improvement. Considering strong demand traction in the domestic market and sustained improvement of subsidiaries performance, we remain positive on the air-cooling space. We upgrade the stock to ADD rating with the revised PT of Rs1,696 now valuing the stock at 37x FY27 EPS.

SYML continues its outperformance in the domestic market, with internal business witnessing continued improvement trend. Management believes the worst is behind for CT Australia and it should start turning around as company have initiated certain actions which will bring down the costs. We now bake in Revenue/EBITDA/PAT FY24-27E CAGR of 18%/34%/29% and upgrade the stock to ADD with PT of Rs1,696.

Result Highlights

* Revenue – Revenue has missed estimates for the quarter with revenue growing 14.5% yoy, with domestic revenue growing by 25.5% and subsidiaries registering decline of 8.4%.

* Margin – Gross margin on consolidated basis stood at 49.2% expanding by 334bps YoY. Margin expansion was aided by tactical pricing, value engineering and softening of input costs. EBITDA margin expanded by 541bps on back of higher operating leverage.

* Other highlights – Advance collection has been robust resulting in buoyant trde sentiment. However on the flip side there has been delay in payment amounting to Rs440mn from one off the large distributor of the MT for which company has initiated legal action

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