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YES Securities
Symphony (Accumulate)
CMP: ₹1,432.7
Target: ₹1,702
Symphony Ltd is India’s largest seller of air coolers with market share in excess of 50 per cent of the organised market, which in itself is about a third of the overall industry. Given the high share of the unorganised market, the introduction of GST should gradually help the organised players increase their share in the overall pie, and thus will aid this segment to grow faster than the overall industry. What makes Symphony unique within this space is its asset light business model.
The company outsources manufacturing to select OEMs and instead focusses its resources on innovation and marketing efforts. While the company has largely been selling residential air coolers, two acquisitions over the past decade — one in Mexico and China each — have allowed it to expand into the industrial and commercial segments as well as diversify its geographical presence (Exports formed about 22 per cent of FY17 consolidated revenues).
We expect the company to grow its revenues at a healthy pace of about 21 per cent a year over the next three years led by growth across segments. As for margins, the same are expected to marginally improve, led by better performance of its subsidiaries and improvement in business.
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