Investec cuts Symphony stock target to INR1,650, keeps Buy rating

On Thursday, Investec (LON:INVP) analyst Aditya Bhartia revised the price target for Symphony Ltd (NSE:SYMP) (SKC:IN), a leading air cooling company, to INR1,650 from the previous INR1,790. Despite the reduction, the firm sustained its Buy rating on the stock. The adjustment follows Symphony’s third-quarter consolidated EBITDA, which fell short of both Investec’s and the consensus estimates.

The shortfall in EBITDA was attributed to a combination of factors including delayed product launches in the Indian market, which pushed expected sales from the third quarter to the fourth, and certain one-time expenses. These included a foreign exchange loss of Rs94 million and costs associated with the launch of new Water Heaters amounting to Rs36 million.

Symphony’s sales deferral is evidenced by an unusually high amount of customer advances at the end of December 2024, which exceeded Rs1.5 billion. This figure is more than triple the amount from December 2022 and even higher compared to December 2023, providing a clear indication of revenue visibility for the fourth quarter.

Internationally, except for the performance of its Australian subsidiary Climate Tech, all of Symphony’s subsidiaries reported satisfactory results. The company has initiated several strategies to revamp Climate Tech, with the anticipation of seeing positive outcomes in the coming quarters.

Investec’s analysis suggests that the fourth quarter is expected to compensate for the sales missed in the third quarter. The valuation of Symphony, at approximately 30 times the FY27 PE, is considered reasonable by Investec in light of the company’s competitive strengths, strong cash flow conversion, and impressive returns on invested capital.

Furthermore, Symphony’s expansion into the Water Heater market is seen as a strategic move that doubles its addressable market, reinforcing Investec’s decision to maintain the Buy rating on the company’s shares.

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