SYMPHONY - Symphony Limited Share Price

Outlook by Management:
Symphony Limited anticipates a robust Q4 FY25 driven by deferred sales of 17 new margin-accretive air cooler models (Rs.150 crore unbilled advances) and strong summer demand. Positive consumer sentiment is bolstered by income tax reliefs and early high temperatures. New product launches, including AI-enabled water heaters, are expected to gain traction.

Major Points:

1. Q3 Performance: Muted revenue due to spillover sales to Q4, but EBITDA rose 91% YoY for 9M. Provisions of Rs.46 crore for Pathways Retail (legal recovery ongoing) and forex losses impacted profits.
2. Subsidiaries:
   • GSK China: Revenue surged to Rs.75 crore (9M), PAT at Rs.10 crore. Synergies with IMPCO Mexico and Climate Technologies.
   • IMPCO Mexico & Brazil: Growth despite forex headwinds.
   • Climate Technologies Australia: CODB halved; focus on scaling new HVAC products.
3. Strategic Initiatives:
   • Launched 17 new air coolers and water heaters (margin-accretive).
   • Tightened credit policies post-Pathways issue; credit insurance adopted.
4. Market Trends: Strong channel inventory build-up for summer. Tax reforms and disposable income growth to boost consumer spending.
5. Challenges: Climate Technologies' turnaround remains critical; forex fluctuations affect subsidiaries.

Key Catalysts:

• Summer demand surge, new product contributions, and operational leverage in subsidiaries. Focus remains on ROCE-driven growth and scaling innovations.

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Manoj Gori: So based on your opening remarks, what I understood is optically, this quarter is looking weak on the domestic front. But probably, there will be a lot of spillover into Q4. So probably for the fourth quarter, we should expect normal growth that we would have expected earlier and plus this spillover effect. Is that understanding correct?
The management confirmed that Q3's subdued performance was due to spillover of Rs.150 crore in orders for 17 new models to Q4, with no business loss. Production delays shifted sales to March, but margin-accretive models and robust summer demand are expected to boost Q4 growth.

Manoj Gori: Are we seeing the channel going very aggressive as compared to previous historical trends?
The channel and Symphony have built significant inventory anticipating strong summer demand, reflecting optimism about early and sustained high temperatures. This aligns with positive trade sentiment and tax relief boosting consumer spending.

Manoj Gori: Will new models contribute to margins in Q4?
New models, delayed to Q4, are margin-accretive. Q3's gross margin dip reflects lower-margin products billed earlier. Focus remains on EBITDA margin improvement via operational efficiency rather than gross margin alone.

Manoj Gori: What is the outlook for subsidiary performance, particularly Climate Technologies Australia?
IMPCO Mexico and GSK China are performing well. Climate Technologies Australia completed cost-cutting (CODB halved to A$7.5M) and expanded its product line (ACs, heaters). Growth depends on scaling sales; management is evaluating options to address shareholder concerns about its underperformance.

Pulkit Patni: Could U.S. tariffs on Mexico/China impact Symphony?
Current U.S. sales are minimal, and tariffs would likely pass to consumers. Australia could become an alternative export hub to the U.S. if tariffs rise, but currency fluctuations (Mexican Peso, Brazilian Real) pose indirect risks.

Pulkit Patni: Are EMS companies relevant for Symphony's sourcing?
Symphony uses EMS firms like EPACK as OEMs but retains design ownership. It avoids undifferentiated products sold to multiple brands, focusing on proprietary models for competitive distinction.

Shraddha Kapadia: Have prices been hiked, and what are the new cooler features?
Prices incrementally rise from July to summer. New cooler features (details in corporate presentation) drove strong pre-sales. The 17 new models aim to enhance market share with advanced technology and consumer appeal.

Shraddha Kapadia: What is the revenue expectation for new coolers?
New models' revenue is deferred to Q4 due to production delays. Features include AI integration, energy efficiency, and enhanced cooling, with details available in the company's online presentation.

Mayur Parkeria: How is Symphony addressing credit risks in modern trade/e-commerce?
Post-Provisioning Rs.58 crore for Pathways Retail, Symphony tightened credit policies: credit insurance, party limits, and deeper evaluations. No staff changes occurred, emphasizing process improvements and learning from the lapse.

Mayur Parkeria: What is the strategic plan for Climate Technologies Australia?
Manufacturing in Australia ends by June 2025, with sourcing shifted to China/India. New products (ACs, heaters) aim to diversify revenue. Management is open to strategic reviews if growth lags, acknowledging subsidiary's ROCE drag.

Vineet Pasad: What is the water heater strategy and early feedback?
Launched in select markets, water heaters focus on hair-fall prevention and AI controls. Initial feedback is positive, but full-scale rollout and channel stocking await Winter 2025-26. GTM prioritizes modern trade and e-commerce initially.

Vineet Pasad: Is Q3's sales delay a structural shift?
No structural change; delayed production of 17 models caused Q3-Q4 shift. Normal seasonality resumes next year, with channel inventory buildup aligned to summer demand cycles.

Abhishek Ghosh: What is the growth outlook post-Q3 spillover?
Q4 expects strong growth from deferred orders, high channel inventory, and favorable weather. Tax cuts and disposable income boosts further support demand. Competitive pressures remain stable with no major entrants/exits.

Vinay Nadkarni: How much has procurement increased for summer?
Production and inventory levels hit records, exceeding competitors' annual sales. Symphony is "bullish" on summer demand, with aggressive stocking to capture market share.

Ashish Shah: Can GSK China scale up meaningfully?
GSK China supports global subsidiaries (Mexico, Australia) via cost-effective sourcing and component procurement. Growth ties to Symphony's international expansion, with domestic China sales a smaller focus.

Jayesh Gandhi: Will air purifiers/ACs launch in India?
No immediate plans. Australia's AC/purifier push replaces phased-out gas heaters. Indian air coolers already offer air filtration, reducing purifier urgency.

Mayur Parkeria: Why hasn't industrial cooling scaled up?
Market education challenges persist despite product readiness. Management believes demand will rise as worker expectations evolve, mirroring trends in markets like China. Persistence in outreach continues despite slow adoption.

Mayur Parkeria: Feedback on water heater positioning?
Symphony's heaters withstand high-pressure setups (8 bar), addressing a key market need. Differentiation via hair-care tech and AI aims to carve a premium niche against competitors like A.O. Smith.