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Strong all-round beat, sharp runup in stock price results in NEUTRAL rating

Result Synopsis

Symphony on consolidated basis delivered higher than expected revenue on back of strong summer season. Expectations were there for strong growth in domestic air-cooling business; however, the company has even surpassed bullish expectations with domestic air-cooling business growing at 118% yoy. Even on the international front Mexico and GSK China has reported robust performance, while CT Australia continues to remain subdued. Business transformation in CT Australia is underway and company expects it to turnaround by June ’25. Gross margins have seen further expansion of 156bps on back of tactical pricing, value engineering and softening of input costs. EBITDA margin on other hand has seen expansion of 1229bps to 20.9%, even after higher A&P spends which stands at 9.8% of sales. The company is confident that turnaround in international subsidiaries is sustainable and performance would further improve once CT Australia turns around. The company is witnessing increased traction in the domestic air-cooling market with South and East witnessing uptick which have not been traditional air-cooling market. SYML is also entering into water heater category where company will provide feature rich water heater at competitive prices. Considering strong demand traction in the domestic market and sustained improvement of subsidiaries performance, we remain positive on the aircooling space. We had upgraded the stock to BUY in Q4 and stock has rallied ~51% post our upgrade. Given the strong performance our FY25 and FY26 EPS estimates gets increased by 18% and 15% respectively, however we assign Neutral rating as stock price has seen significant appreciation and now value the stock at 45x with PT of Rs1,549. SYML has outperformed bullish expectation in the domestic market resulting in earnings upgrade. Post our dealer interaction we had mentioned strong possibility of earnings upgrade which is being played out. We continue to remain positive on the air-cooling space and this stock should be bought on every correction.

Result Highlights

* Revenue – Revenue has surpassed expectation for the quarter with revenue growing 76% yoy, with domestic revenue growing by 118% and subsidiaries growing by 22%.

* Margin – Gross margin on consolidated basis stood at 51.2% expanding by 156bps YoY. Margin expansion was aided by tactical pricing, value engineering and softening of input costs. EBITDA margin expanded by 1229bps on back of higher operating leverage.

* Other highlights – Large scale venti cooling (LSV) business continues to deliver encouraging performance, however LSV business contribution to the overall revenue is still miniscule.

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