Cooler stock Symphony has given tremendous returns to its investors in the last 15 years. The stock has skyrocketed over 55,000 percent in this period from less than ₹10 in 2007 to over ₹1,000 currently.
An investment of just ₹10,000 in the stock 15 years ago would have turned to over ₹55 lakh currently. However, recently, the stock has seen some correction in recent times and has given negative returns in the past 5 years, down around 20 percent.
Before the decline in these past 5 years, the stock had given over 80,000 percent returns between 2007-2017.
Symphony is the world’s largest manufacturer of air coolers with a presence in over 60 countries and provides air cooling products in the residential, industrial and commercial segments. The Company operates through two segments: Air Coolers and Corporate Funds. It has a strong distribution network of over 30,000 dealers, more than 1,000 distributors and over 1,000 authorised service centres across the country.
In the March quarter, the company posted a marginal growth of 1.58 percent in its consolidated net profit at ₹64 crore versus ₹63 crore in the year-ago period. Its revenue from operations rose 13.27 percent to ₹384 crore during the quarter under review, as against ₹339 crore in the year-ago period.
Since FY07, the firm's net sales of the company have risen at a CAGR of 24 percent to ₹1,039 crore since FY2007, while net profit has jumped at a CAGR of 31 percent annually to ₹121 crore in the same period.
Despite the recent decline, brokerages have still been bullish on the cooler stock.
Brokerage house YES Securities sees 17 percent CAGR revenue growth for Symphony for the FY22‐24 period. It has a target price of ₹1,215. Considering higher operating leverage, it estimates FY21‐24E EBITDA and PAT CAGR of 31 percent and 33 percent respectively. It feels the complete recovery in margins will remain challenging.
“Domestic business has bounced back well with a strong start to the summer season, with channel inventory getting liquidated in March and strong primary sales in April. The company delivers the highest domestic sales in April, and management expects that trend to continue in Q1FY23 with a slew of new launches," said the brokerage.
Meanwhile, HDFC Securities also has an ‘Add’ rating on Symphony with a target price of ₹1,200. “With normal channel inventory and robust primary sales already visible in April, we expect strong domestic growth from Q1FY23 onwards,” it said
ICICI Securities noted that Symphony's price performance has stayed muted underperforming the index in the last five years but expects it to gain market share on the back of a strong balance sheet and robust supply chain network going ahead.
“Increased rural electrification, urbanisation and 1.7 crore new houses under PMAY will augment growth in the Indian air cooler market. Strong demand for cooling products from Australia and the US will drive revenue growth of overseas subsidiaries,” ICICI Securities said.