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Sunday, May 26, 2013

Symphony Ltd:-The best play on Temperature

Stock idea:-

Scripscan:Symphony Ltd
Cmp:324
Target:450
Return percentage:40%
Duration:6-9 months
Traded in:Nse-Bse

Business:Symphony Limited manufactures and sells consumer durable products in India. The company provides domestic, commercial, and industrial air coolers across various models under the Symphony name. It offers desert, tower, room, and personal coolers for residences, shops, showrooms and offices; heavy duty industrial air coolers for factories, offices, schools, malls, assembly halls, warehouses, and metro stations. The company also provides storage and instant water heaters under the Sauna name.Symphony develops its own models, designs and prototypes of air coolers before giving it to OEM’s for large scale manufacturing.In addition, Symphony Limited holds intellectual property comprising 8 patents, 49 designs, 108 trademarks, and 7 copyrights. The company also exports its products to approximately 60 countries.Exports contributed around 16% in the last fiscal.It offers its products through a network of approximately 750 distributors and approximately 15,000 dealers across India.The company has a 50% market share in the organized air-cooler market in India up from 45% in the last fiscal.

Expansion plans:The company is planning to further increase its distribution network to 20,000 dealers in FY13. Also it plans to increase its presence from 4336 towns & cities in FY12 to 5119 in FY13.The company is addressing the seasonality factor by focusing more on exports,creating demand during the september-october period and also by ensuring inventory buying by its dealers through high discounts,during the off season.It had introduced new cooler models like Storm 70E and Storm 100E in December 2011, addressing 700 sq ft and 1000 sq ft residential spaces respectively.The company witnessed huge demand for the same and went out of stock.The demand momentum continues and it has seen high advance orders for it in the present fiscal.In order to increase its presence in export markets Symphony has acquired 100% stake in IMPCO, a Mexican company.IMPCO has been in the air cooler industry for over 50 years and has a significant presence in the USA and Mexico market.IMPCO has an established relationship with large format stores such as WalMart, Home Depot etc.It would be prudent to note that IMPCO has the ability of making industrial air coolers which Symphony does not possess.

Story:Symphony ranks very high in my list of amazing companies.There was a time when I was kinda 14-15 years of age with little idea about stocks.During that time symphony was in huge trouble,eroded net worth,BIFR case blah blah.Symphony since then has transformed into a huge behemoth with market-cap of nearly 1200crs.Its order book is full all the time with 100% advances from dealer/distributor/clients.The way its shaping up I wont be surprised to see its marketcap touching half a billion Usd in the next couple of years.One may ask me the basis of selecting it?Its a pure play on "climate".Mother Earth is hottest in over 11000 years and symphony is set to reap rich benefits out of it.The company is set to report blockbuster earnings for at least next few quarters.Mutual funds,FII's I interact are crazy about it,they crave for a pie till 450 bucks but lack of volume plays the spoilsport.The genius promoters own the maximum permissible owning limit of 75% in the company.

Conclusion:Symphony is a remarkable instance of a company that has virtually redefined the cooler industry in India.The Company accounts for nearly one out of every two coolers sold in India’s organised sector and has the highest sectoral margin. Despite this, Symphony is still a single product company (with residential and industrial manifestations).I love the stand of its management to only concentrate on air coolers and nothing else.Diversification rather diworsification is something I avoid from far.The company delivered sales of 320crs and PAT of 53crs for fy12.Symphony is expected to grow at a CAGR of about 35-40% for the coming couple of years.The company should report sales of over 500crs for fy14 with PAT of 105-110crs.A PE multiple of 15 odd gives me the price target of 450 bucks.In a good market condition this particular company would go to places,provided it keeps its guidance.It has increased all of its product prices of around 10-13% which will reflect in the coming quarters.Its really hard to ignore this counter which is a true leader and boasts of ROE and ROCE of over 35% respectively.


btw:People looking for midcap/smallcap positional call professional service may rush a mail at my mail id arunsharemarket@gmail.com to know more about it.

3 comments:

Dipesh majumdar said...

just now I was myself assessing this company,price chart... :-P

Arun Mukherjee said...

Wah..mast hain..

Anonymous said...

1000.....shd book profit or hold....thx for the awesum stuff....

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