Religare Investment Call

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1 Q3FY18 Result Update Consumer Durables Symphony Ltd. BUY CMP (Rs) Target Price (Rs) Potential Upside Sensex Nifty Key Stock data BSE Code NSE Code Bloomberg Shares o/s, Cr (FV 2) Market Cap (Rs Cr) 3M Avg Volume 52 week H/L Shareholding Pattern (%) Jun17 Promoter 75.0 FII 6.8 DII ,815 2, % 36,030 11, SYMPHONY SYML:IN ,705 59,938 2,209 / 1,152 Sep17 Dec New launches, better mix to drive growth Symphony Ltd delivered healthy set of numbers for Q3FY18 with net revenue & PAT growth (standalone) of 20.9% & 2% YoY, marginally above our estimates. Aided by lower material cost & overhead expenses (as a % to net revenue), EBITDA margins expanded by 255bps YoY to 39.9%, which was encouraging. Going forward, we expect Symphony to maintain its healthy growth momentum, given the robust outlook of domestic air cooler industry, company's strong brand recall and its continued efforts towards innovative offerings and expanding reach. We recommend BUY on the stock with revised target price of Rs 2,160. Q3FY18 Result Update: increased by 20.9% YoY to Rs 217.6cr, driven by healthy volume offtake (more or less in line with the value growth as per the management), as dealers restocked the inventory ahead of onset of summer to get better discounts. New range of products 'Silver and Diamond' with six variants were launched during the quarter. Further, the cloud series products launched in 2017 continued to perform well. Realizations remained stable during the quarter, supported by withdrawal of introductory pricing in touch series products w.e.f July 01, EBITDA grew by 29.1% YoY to Rs 86.8cr, while EBITDA margins expanded 255bps to 39.9% (highest in the past 7 quarters), which was impressive. The gains were led by lower material cost, moderation in A&P spends and other expenses (down 71bps, 102bps & 80bps YoY as a % to net revenue). PAT grew by 2% to Rs 66.3cr, relatively lower than growth in EBITDA, impacted by lower other income and higher tax expense. Other key highlights: i) GST implementation has started to yield benefits to organized players, as impact on pricing is visible at the unorganized level, leading to loss in their market share in the air cooler segment; ii) China business is moving in line with strategy and the management expects a turnaround in its operations on the profit front in the next 23 years; iii) CAPEX would be negligible due to outsourcing business model. 1 Year relative price performance Jan17 Feb17 Mar17 Apr17 May17 Research Analyst Jun17 January 31, 2018 Jul17 Symphony Aug17 Sep17 Ni y Oct17 Nov17 Mehernosh Panthaki, CA mehernosh.panthaki@religare.com Dec17 Jan18 Outlook & Valuation: We expect Symphony's consolidated and PAT to grow by 18.4% & 2% CAGR respectively over FY1720E, led by robust demand outlook of organized air coolers market (Symphony is a market leader, commanding >50% market share) and company's efforts towards innovative launches, brand building initiatives and anticipated turnaround in the overseas operations. Volume growth would remain healthy. EBITDA margin expansion would continue on the back of new product launches in the premium category, operating leverage and better profits from subsidiaries. Premium valuations are justified, considering company's market leadership, its cash rich and debt free status, superior return ratios and high dividend payouts. We recommend BUY on the stock with revised target price of Rs 2,160. Financial Summary Consolidated Particulars, Rs cr EBITDA EBITDAM (%) APAT APATM (%) (Rs) ROE (%) P/E (x) FY17 FY18E FY19E , ,

2 Q3FY18 Result Update Consumer Durables Symphony Ltd. P&L Account Quarterly Standalone Particulars, Rs cr Q3FY18 Q3FY17 YoY % Q2FY18 QoQ % Raw Material Consumed Stock Adjustment Purchase of Finished Goods Total Material Cost Gross Profit Employee Expenses A&P Expenses Other Expenses EBITDA EBITDAM (%) EBIT Other Income Interest PBT Tax Tax Rate (% on PBT) PAT PATM (%) bps bps 2 3bps bps bps bps

3 P&L Account Consolidated Particulars, Rs cr FY17 FY18E FY19E Growth (%) Material Expenses Employee Expenses A&P Expenses Other Operating Expenses EBIDTA EBIDTAM (%) EBIDTA Growth (%) EBIT Other Income Interest PBT Tax Minority Interest Share of Profit/(Loss) in Associated Company PAT PAT Growth (%) Growth (%) , , Balance sheet Consolidated Particulars, Rs cr FY17 FY18E FY19E SOURCES OF FUNDS Share Capital Reserves Total Shareholders' Funds Minority Interest Long Term Debt Short Term Debt Total Debt Net Deferred Taxes Long Term Provisions & TOTAL SOURCES OF FUNDS APPLICATION OF FUNDS Net Block CWIP Goodwill Investments LT Loans & Advances and Total NonCurrent Assets Inventories Trade Receivables Cash & Equivalents ST Loans & Advances and Other Current Assets Total Current Assets Trade Payables Other Current Liabilities & Provisions Total Current Liabilities Net current Assets TOTAL APPLICATION OF FUNDS

4 Cash Flow statement Consolidated Key Financial ratios Consolidated Particulars, Rs cr FY17 FY18E FY19E Particulars, Rs cr FY17 FY18E FY19E Reported PBT Nonoperating & EO items Interest Expenses Working Capital Change Tax Paid OPERATING CASH FLOW ( a ) Capex Free Cash Flow Investments Nonoperating income INVESTING CASH FLOW ( b ) Debt Issuance / (Repaid) Interest Expenses FCFE Share Capital Issuance Dividend FINANCING CASH FLOW ( c ) EO items NET CASH FLOW (a+b+c) Closing Cash (34.9) (1.9) (120.6) (88.7) () (37.8) (2.0) (13.5) (1.4) (1) (46.5) 35.9 (0.4) (21.1) () () (84.0) 0.3 (103.7) (10.4) (15.0) (58.2) (1.1) (31.6) () (109.2) (109.2) (9.5) (15.0) (72.7) 49.8 (1.2) (39.1) () (142.8) 0.8 (142.7) PROFITABILITY (%) GPM EBITDAM EBITM APATM RoE Core RoCE RoCE EFFICIENCY Tax Rate (%) Fixed Asset Turnover (x) Inventory (days) Debtors (days) Payables (days) Cash Conversion Cycle (days) Debt/Equity (x) Net Debt/Equity (x) PER SHARE DATA C BV Dividend VALUATION (0.9) (1.0) (1.0) P/E (x) P/BV (x) EV/EBITDA (x) Dividend Yield (%) (1.1)

5 Before you use this research report, please ensure to go through thedisclosure interalia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014 and Research Disclaimer at the following link : Specific analyst(s) specific disclosure(s) interalia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014 is/are as under: Statements on ownership and material conflicts of interest, compensation Research Analyst (RA) [Please note that only in case of multiple RAs, if in the event answers differ interse between the RAs, then RA specific answer with respect to questions under F (a) to F(j) below, are given separately] S. No. Statement Answer Tick appropriate YES I/we or any of my/our relative has any financial interest in the subject company? [If answer is yes, nature of Interestis given below this table] I/we or any of my/our relatives, have actual/beneficial ownership of one per cent. or more securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance? I / we or any of my/our relative, has any other material conflict of interest at the time of publication of the research report or at the time of public appearance? I/we have received any compensation from the subject company in the past twelve months? I/we have managed or comanaged public offering of securities for the subject company in the past twelve months? I/we have received any compensation for brokerage services from the subject company in the past twelve months? I/we have received any compensation for products or services other than brokerage services from the subject company in the past twelve months? I/we have received any compensation or other benefits from the subject company or third party in connection with the research report? I/we have served as an officer, director or employee of the subject company? I/we have been engaged in market making activity for the subject company? Nature of Interest ( if answer to F (a) aboveis Yes :... Name(s)with Signature(s)of RA(s). [Please note that only in case of multiple RAs andif the answers differ interse between the RAs, then RA specific answer with respect to questions under F (a) to F(j) above, are given below] SS.No Name(s) of RA Signatures of RA Serial Question of question which the signing RA needs to make separate declaration / answer YES Copyright in this document vests exclusively with RSL. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose, without prior written permission from RSL. We do not guarantee the integrity of any s or attached files and are not responsible for any changes made to them by any other person. Disclaimer: