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Symphony is a market leader in Air cooler segment and is almost synonymous to their products. Symphony has been
a highly successful turnaround in a strong growth trajectory. The company can boast of its market leader tag, brand
oriented business model, negligible debt levels, very high profitability margins and very impressive return ratios. The
company is severely undervalued at 3.3 times FY 10E earnings and 2.2 times FY 11E earnings.
HBJ Capital Services Pvt. Ltd
Web: www.hbjcapital.com
E-Mail: info@hbjcapital.com
Call: +91 98867 36791
Best Buying Price…
1st Phase : Buy at the recommended price range Rs 200 - 210 [50%
of investment]
2nd Phase : Add if the price falls down to Rs 165 - 175 [50% of
investment]
Symphony offers its Air Coolers across two key segments – Personal
and Industrial applications.
It's products are already being sold in U.S.A, Europe, Middle East,
Africa, South-East Asia and it is aggressively expanding in the export
markets.
The company is in a best shape and has reported impressive margins in the recent times. The improvement in
inventory turnover ratio is a clear example of efficiency setting into the business. The company has also reported
impressive profit margins of 33% (OPM) and 23% (NPM) in the recent fiscal year.
The company’s financial year in June ending and the company receives more than 80% of its business in the last
two quarters, owing the favorable climate conditions. To reduce this dependence, the company has forayed into
many export markets. The company has been aggressively expanding its domestic distribution network and is also
looking at bigger business opportunities from industrial applications.
The company had management re jigs and recently roped in the COO of Kenstar with 12 years of experience as the
President of the company.
The share of the organized air cooler market in India is pegged at around 15% to 20% and is growing at
a healthy pace. More customers are moving towards branded air coolers, where Symphony is in charge.
Targets
We expect the company to record earnings both in the short term and with a long term (2 or 3 years) point of
view. There is a reasonable chance that the company will grow its earnings at a CAGR of at least 35% in next few
years.
The company being a market leader and brand oriented player with negligible debt levels, 45 crore cash
reserves, impressive profit margins and return ratios looks highly undervalued at 3.3 times FY 10E
earnings and 2.2 times FY 11E earnings. There is a very high probability for a PE re-rating.
With the above considerations, following are our 6 months and 12 months price targets (Conservative)
6 months target – Rs. 300 (49% appreciations from the Recommendation price of Rs. 203.95)
12 months target – Rs. 380 (around 88% appreciation from the Recommendation price or Rs. 203.95)
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