Symphony Ltd - Q1FY21 Result Update - ICICI Securities

Symphony's consolidated Q1FY21 performance was mainly impacted by revenue loss for almost 40 days in domestic markets. Consolidated revenue fell ~47% YoY led by ~77% YoY fall in revenue of domestic business. However, overseas businesses were relatively less impacted and revenue fall was limited to only ~17% YoY during the pandemic. Profitability was largely impacted by a change in product mix, higher raw material prices (in Australia) due to disruption in supply and lower operating leverage. The management expects improvement in domestic performance, going forward, with ease in lockdown restrictions and inventory build-up by dealers post Q2FY21 (~60% of channel inventory has been liquidated). On the international front, business in Australia, China saw good demand recovery while Impco's performance was impacted by Covid-19 in June 2020 after a good start in April-May 2020. The management has further guided at maintaining gross margin despite a shortfall in revenue in FY21 largely impacted by washout Q1FY21. Further, its asset light model and various other cost optimisation measures (like travel & conveyance cost, legal & professional cost, etc) would further provide cushion to its bottomline, going forward. While we revise our FY21E, FY22E earnings estimate downside by 13%, 9%, respectively, we continue to maintain our positive stance on the stock considering its strong brand patronage and robust balance sheet (cash of Rs. ~400 crore with strong RoE/RoCE).

Valuation & Outlook

We maintain our positive stance on the stock given 1) market leadership position, 2) strong financials to tide over rough phase of FY21, 3) market share gain from unorganised market. We expect a strong recovery in FY22E led by domestic business. We maintain our BUY rating on the stock with a revised target price of Rs. 960.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Symphony_Q1FY21.pdf

Shares of Symphony Limited was last trading in BSE at Rs.832.9 as compared to the previous close of Rs. 842.2. The total number of shares traded during the day was 10311 in over 1275 trades.

The stock hit an intraday high of Rs. 875 and intraday low of 820. The net turnover during the day was Rs. 8765992.

Source : Equity Bulls

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