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MOSL: SYMPHONY (Buy) - Robust performance led by 69% growth in exports - New products to drive growth




Motilal Oswal Securities Ltd.


30 Apr 2014





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SYMPHONY 3QFY14: Robust performance led by 69% growth in exports; New products to drive growth and margin expansion (SYML IN, Mkt. Cap USD0.5b, CMP INR836, TP INR910, 9% Upside, Buy) Symphony (SYML) reported sales of INR1,133m (est. INR1,159m) for 3QFY14, compared to INR852m in 3QFY13, marking a YoY growth of 33%. SYML saw sales growth of 27% YoY in domestic markets from INR724m to INR914m this quarter, while exports grew better at 69% YoY from INR127m in 3QFY13 to INR216m in 3QFY14 Management indicated that apart from the strong summers, innovations in the form of new products like I-series, Winter, Diet, Ninja, Metal cooler and Windows air cooler have driven strong growth in domestic sales, while higher penetration in new markets like South Africa and Latin America coupled with strong growth in sales to Impco (last year growth in sales to Impco was flat due to inventory de-stocking by Impco) have driven robust growth in exports. During 3QFY14, SYML witnessed 34% volume growth with total volumes aggregating to 187,718 coolers, against 140,599 units in 3QFY13 Realizations meanwhile saw a marginal dip of 1% YoY, from INR6,062/unit in 3QFY13 to INR5,986/unit in 3QFY14 primarily due to increase in contribution from export sales EBITDA stood at INR335m (est. INR332m), against INR247m in 3QFY13, growth of 36% YoY. EBITDA margin expanded 60bp YoY to 29.6%, against 29% for 3QFY13. PAT grew by 50% YoY to INR270m (est. INR259m) from INR180m in 3QFY13 Valuation and view: We expect SYML to record 27% revenue CAGR and 33% PAT CAGR over FY14-16E. SYML’s market leadership coupled with strong growth prospects for the organized cooler industry and healthy financial metrics (debt free; 40%+ RoCE) are reasons why we like the stock. We maintain Buy with a revised TP of INR910, valuing the stock at 18x FY16E EPS.

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