Symphony- Stock Analysis

17 May 2019 Read 31 Views

Symphony (SYML) is the largest Air Cooler company in India, with 50% value market share in organized market. It is engaged in the business of manufacturing and trading of residential, commercial, and industrial air coolers in India and internationally. The massive supremacy of Symphony coolers in the residential, industrial and commercial segments has made the brand synonymous with ‘cooling’.

What's Good?

The company has a strong brand value due to which it can sell the product at 10-12% premium then its peers. The company has a strong reach with 30,000 + dealer across 5000 towns. With  outsource based manufacturing model and 100% advance from distributors on domestic sales, symphony has created unique business Model.

Management Analysis

The company was founded in 1988 by Achal Bakeri in Gujrat India. With the verge of bankruptcy in 2002 to world’s largest air cooler manufacturer, the management has successfully built the brand and raised an ordinary commodity into a branded lifestyle product by focusing on aesthetics, design and consumer preference . With strategic acquisition like Climate Technology, IMPCO, the company has expanded its business not only in India but also in overseas market.

Industry Analysis 

  • The consumer durable sector is one of the fastest growing sectors in India and is projected to grow at a blistering pace of 17% CAGR.
  • While 54% of Indian households live in hot and dry climate and currently 4% of population is using coolers and this is expected to get 8% in 2021.

Business Analysis: 

Symphony has a very innovative business model. The company primarily outsources the manufacturing to different OEMs vendors and undertakes the designing, marketing and distribution activity by itself.

This has helped the company to build an asset light and working capital light model to scale up its business. The company has a huge advantage due to its cash & Carry business Model where dealers give advance and wait for 6 months before the sales which creates a huge float. As a pioneer in the air-cooling industry, Symphony develops breakthrough technologies to combat climate change. It is providing solutions for affordable cooling and comfortable environments for maximum efficiency, productivity and wellbeing.

Valuation Analysis

  •  Company is currently trading at 64.25 P/E, much higher than the peers.
  •  Company EPS is growing at 26.32% from past 5years and we are expecting it to grow at 15% . we have used PEG ratio for forecasting the future price.

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Disclaimer- The article is for educational purpose only. Nothing in this article should be interpreted as investing advice.
Disclosure- We might have recommended this stock to our advisory clients.

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