Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Symphony Ltd (BOM:517385, Financial) reported a 76% YoY growth in consolidated top line, reaching INR531 crores.
- The company achieved its highest-ever quarterly consolidated EBITDA margin of 21%, nearly doubling from the previous year.
- Symphony India saw a remarkable 116% growth in top line, with EBITDA margins improving from INR7 crores to INR82 crores.
- The company launched 17 new air cooler models and entered the water heater market with innovative features.
- Subsidiaries like Impco Mexico and GSK China showed significant improvement, contributing positively to the overall performance.
Negative Points
- Climate Technologies subsidiary underperformed due to demand headwinds and logistical delays.
- Despite improvements, the industrial cooling segment remains a small contributor to overall revenue.
- The company faced a demand-supply mismatch, potentially leaving INR60-70 crores worth of sales on the table.
- The water heater market is highly competitive, and Symphony Ltd (BOM:517385) is entering a space with established players.
- The company refrained from providing specific guidance for future quarters, creating some uncertainty for investors.
Q & A Highlights
Q: Given that we have seen normal to severe summers in the current season and also channel would have faced some demand supply challenges, can we see inventory levels or inventory buildup exercises in terms of volumes probably may increase as compared to earlier period and we may see relatively better 2Q and 3Q performance as well?
A: No, as per our IR policy, we will resist from giving any specific guidance quarter-wise or otherwise. But we very much maintain that as we have conveyed in the past that in Central India as well as on a consol basis, on a CAGR basis, I think in line with a few years before, the CAGR growth what we had, we should register that kind of growth. Secondly, because of stellar summer and demand of air cooler, I think many more revenues in terms of dealer distribution network, including further penetration in rural and semi urban, for sure, has opened up apart from many alternate modern channels. (Nrupesh Shah, Managing Director - Corporate Affairs, Executive Director)
Q: On the subsidiary business, again, at the subsidiary level, obviously, the revenue seems to be far stronger, and that was largely driven from Impco, but margins we have seen there has been marginal decline over there. CT, we have seen some pressure, though we have been able to maintain, though we have been able to control the cost. If we look at the overall margin improvement, it has been largely because Impco contribution has been significantly higher. Can you share your views on both the subsidiary at individual level, like how we see them in the coming years and also of the cost of doing business that we were taking many initiatives probably has this been completely implemented or we might see some more actions in the coming time?
A: As far as Australia is concerned, the cost of doing business is in the process of being improved upon. We have already come a long way from where we were when we acquired the company. But there still is some improvements which will happen in the months to come. We will finally be able to execute everything by June 2025. That is when our lease expires. Until then, we will still bear some overhead, which we don't need but from thereafter, there will be almost no overhead that or no CODB that we don't need and our entire CODB reduction plan would have sort of fallen in place. Like I said, much of it has already happened and a little bit of it to go is this. (Achal Bakeri, Executive Chairman of the Board, Managing Director)
Q: We have reentered into water heaters and launched three series as of now. How are we targeting to scale this business in the coming years? And now when we have already entered into storage water heaters, would we be open to evaluate other product categories in the coming years, especially in the electrical space?
A: Even in the past, whenever we were asked this question, we always maintained that we will never say never. Although I must also add that we are not actively considering any other category at the moment. We do not know what the future has in store for us. But as of now, like I said, we are not looking at any other category. The water heater category itself is a fairly large category and a competitive category, and we have a fair amount of work to do to grow in that category. (Achal Bakeri, Executive Chairman of the Board, Managing Director)
Q: Just in terms of your entry into the water heater category, in terms of distribution, if you can help us explain in terms of what's the distribution channel? And what will be the difference between the current one? And -- or will it be largely overlapping?
A: To begin with, we will concentrate on the channel that we are already in. And as we go along and as we scale up, we'll certainly diversify into other channels. I won't be able to say anything more specifically other than that, but it is going to be a phased go-to-market strategy. So as I said, we will -- in first phase, we will focus on some of our channels that we -- where we are already selling coolers and then we will see how we -- going forward as how we expand the channel. (Achal Bakeri, Executive Chairman of the Board, Managing Director)
Q: Would you have any regional biases when you get into this product? Or will it be a pan-India launch? How should we look at it?
A: It will be a phased launch, what will be Phase 1 and what will be Phase 2, and therefore, it's still to be -- still being worked out -- worked upon. But it will be a phased launch. It will not be a sort of a big bang all India launch at one go. (Achal Bakeri, Executive Chairman of the Board, Managing Director)
Q: My first question again is on water heaters. So just wanted to understand in your internal target, how are you thinking about these categories scaling up in the next three to four years? What's the kind of target that you are having in terms of market share?
A: Honestly, it's a little premature to get to that level. So I think why don't we come back to this a year from now. (Achal Bakeri, Executive Chairman of the Board, Managing Director)
Q: Just wanted to understand, have we seen the proportion of revenues that get right from other regions increasing sharply in first quarter? Or is it that not really picked up essentially, just trying to understand, is this category becoming a little more broad-based?
A: Very much so. It is -- we are seeing sort of demand -- actions across the country. So as Nrupesh said a little while ago, there was a time when -- there was a feeling that this category seems to be sort of on it -- sort of sun seems to be setting on this category. And this summer has proven that, that is far from true. And we have seen demand for this from markets where we've never seen demand like this non-traditional markets like the South or the East and the Far East or the Northeast so -- which are not traditionally never really big air cooler markets. So we have -- this year, we had sort of reset the equations across the country. (Achal Bakeri, Executive Chairman of the Board, Managing Director)
Q: Can you explain what are the kind of orders you are getting there? Like can one say that industrial cooling is something which also as a category is seeing inflection and we could see much higher growth into the future?
A: I wouldn't say that we are seeing an inflection point. It has seen a significant tick in sales, but as a percentage of all sales, it is still in the sort of the single digit, high single digits. So it is still not a significant contributor
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
