Symphony Limited (517385) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the Symphony call, the Q1 FY '27 call. I have with me my colleague, Aditya Bhartia, who is the Co-Head of Research, to take us through this call and introduce to the management. [Operator Instructions] Please note that, this call is being recorded. Over to you, Aditya.

Thanks, Swapna. Hello, everyone. A warm welcome on behalf of Investec India to Q1 FY '27 earnings call of Symphony. We have with us the senior management team represented by Mr. Achal Bakeri, Chairman and Managing Director; Mr. Nrupesh Shah, Managing Director, Corporate Affairs; and Mr. Rajesh Mishra, Chief Growth Officer. Now, I hand over the call to Mr. Bakeri for initial comments, post which we'll open the floor for Q&A. Thank you, and over to you, sir.

Thank you very much, Aditya, and thank you all participants for joining this earnings call of Symphony on this lovely, cloudy afternoon. The customary safe harbor clause applies. And as we have done in the past, my colleague, Nrupesh Shah, who is the Managing Director, Corporate Affairs, will take us through a presentation, post which we are all here to take questions. Thank you.

Yes. Thank you. Nrupesh Shah here. So, if we summarize the quarter of June '26, domestic momentum, absolute margin discipline and as far as overseas subsidiaries are concerned, the robust performance of U.S. and China cushioned the reduced export and IMPC and CT headwinds. So on a consolidated basis, for June '26, revenue stands at INR 378 crore, up by 8% Y-o-Y, EBITDA stands at INR 48 crore, up from INR 38 crore, up by 26%, while consol PAT stands at INR 40 crore, down from INR 42 crore. However, EBITDA and PAT, I wish to look at from the point of view of -- in June '26, there has been one-time non-cash expenditure of INR 5 crore, while in June '25, there was exceptional INR 9 crore of higher income. So if we ignore than then, apple-to-apple EBITDA for June '26 is INR 53 crore versus INR 38 crore, while consol PAT INR 43 crore versus INR 35 crore, that is up by 23 percentage. As you can observe, the gross margin, despite all headwinds and geopolitical situation and pressure on commodity prices, and also inventory overhang due to bad summer of '25, we have marginally increased the gross margin percentage to 49.8%, while EBITDA to 12.60%. Coming to further specifics of June '27 quarter. June '27 for consolidated as well as standalone has witnessed second highest revenue as well as EBITDA vis-a-vis any historical June quarter. The performance is led by domestic performance, duly supported by gross profit margin and EBITDA margin expansion as shared earlier. Also, noteworthy feature is BISP segment, that is Beyond India Summer Products, that is the sales product-wise or segment-wise, not dependent upon Indian summer, constituted about INR 560 crore on a consol basis in trailing 12 months, that is almost 48% reinforcing our strategic derisking and diversification from Indian summer. Bonaire USA is now back to track and revenue grew by 35 percentage with a robust profitability, mainly on account of successful scale-up of new models of air cooler. GSK China revenue grew by 43 percentage and operating leverage lifted the profitability as well as now GSK China on a standalone basis is completely debt-free, including has repaid all the debt along with interest to Symphony India, just like as it happened many years before with IMPCO Mexico. CTPL Australia, it is continuing, revenues soften, but our commitment, we are reinforcing. There won't be any further capital allocation. So in terms of the impairment and write-off, it is completely behind us as it was recorded in FY '26. And for June '27 -- '26 quarter, the board of directors had announced interim dividend of INR 1 per share on a face value of INR 2 with a total payout of about INR 7 crore. On a standalone basis, that is Symphony India, revenue stands at INR 241 crore versus INR 229 crore, while EBITDA stands at INR 30 crore versus INR 24 crore and PAT INR 28 crore versus INR 37 crore. Again, just like consolidated, if we take out exceptional or one-time in both the quarters, the June '25 PAT stands at INR 24 crore versus June '26 of INR 28 crore. Just like consolidated top line, even on standalone, this is the second highest June quarter performance. By the way, domestic sales, that is India revenue grew by 15% despite huge inventory overhang before the summer. And importantly, all different segments of modern trade grew in excess of 100%, while digital channels including D2C are highly profitable in excess of our normal domestic business, and has a huge potential to scale up. As of 30th June '26, that is year-end, season-end, there is no inventory overhang either at a trade level or at a company level. It is completely normalized, while on a standalone basis, BISP accounts for top line of INR 179 crore in TTM, that is 23 percentage, and importantly, at EBITDA level, it is profitable almost close to double-digit percentage. However, standalone exports from India declined mainly on account of geopolitical and shipping disruptions. Next. About some of the financial ratios. So, by the way, as on 30th June, our capital employed as well as net worth has further reduced and rationalized on account of impairment done in FY '26. So, as of 30th June '26, core capital employed on standalone is INR 73 crore versus INR 136 crore, translating into ROCE percentage of 164, while return on net worth at 22 percentage, and treasury stands at INR 345 crore versus INR 363 crore. This is after remitting to Australia and repaying their acquisition loan as well as working capital loan until 30th June of approximately INR 225 crore. In other words, after repaying INR 225 crore of debt, treasury stands at INR 345 crore, almost in line with 30th June '25, while on consolidated basis, capital employed is now almost half, INR 206 crore versus INR 409 crore, as Climate Technologies was taking away substantial capital, translating into consol ROCE percentage of 67% and return on net worth of 18%. So, thank you. With this, we can take questions.

Aditya, over to you.

Maybe I will start with the first initial question. It would be helpful if you could guide us what could be the proportion of sales that are generated from modern trade and e-commerce channels?

No. So due to competitive reasons we don't divulge; however, year-after-year, it reaches very robust growth and profitably.

Understood, sir.

And we club it as a part of the modern trade, which of course apart from e-commerce and D2C includes large format stores and large regional stores. So what I can say, modern trade constitutes almost or in excess of 1/3 of our top line in India, while general trade constitutes 60%-65%.

Understood. That's helpful sir. And in terms of profitability, will it be as good as our traditional channel or it lacked by a wide margin?

It will MT versus GT.

So it's almost comparable.

Understood. Okay. Sure. Sir, my second question is on the cost side. Do you think that -- I mean, in this quarter, we have recorded very good margins, but of course, some costs have gone up, and I guess, something like plastic cost itself would have gone up. So, do you anticipate some impact in the next few quarters on margins because of cost going up, or is it a case that because inventory in the channel is so low that everything should essentially get passed on and we should really be seeing any impact on profitability?

So, we will -- frankly it all depends on how long the war lasts and when the sort of cost begin to normalize. So as of now, the costs are still fairly elevated. So at least in the short term, we expect there to be margin pressure, although we won't be passing on some of it to the market, not all of it because we don't know how long this is going to last. So in anticipation of a normalization, which has to happen sooner or later, we will pass on some but not all of it. So in the short term, margins are likely to be impacted.

Understood, sir. Understood.

Despite all the value engineering, despite all the cost reduction that we will be attempting to do, there will be some impact. Difficult to quantify as yet how much, but there is likely to be some impact.

Sure, sir. I'll come back in the queue. And in the meantime, we can take some questions from the participants. Swapna?

Yes. Thanks, Aditya. [Operator Instructions] With that, I will now request Mr. Balasubramanian. Sir, go ahead, but please mention the fund that you are from.

Sir, modern trade is growing over 100%. Like, could you explain the drivers behind this surge, whether it is a market share gain from unorganized trade or increased, like -- or like, increased in the market itself, or we have, like, changed our strategy? Or is there a -- low base from last Q1? Like, how sustainable this growth rate in the coming quarters or years?

Bala sir, you are from which fund, sir? Sorry, I'm going to ask again.

Bala from Arihant Capital.

Thanks.

So it's a combination of factors. One is that the modern trade, just like e-com or D2C, didn't have any channel inventory unlike the general trade, which had elevated levels of channel inventory carried over from the previous year. Had the general trade not had such kind of inventory that they had, maybe their sales would have also been 100% or whatever. So it is really a function of the inventory that the channel was carrying. That's one. And secondly, we cannot expect this kind of a growth. We'll be very happy, if this kind of a growth continues, but that's very unlikely to happen. So I think we shouldn't expect that going forward. What was the third question? Yes. That's it, right, Mr. Balasubramanian?

Yes, sir. Sir, my second question, I think...

Yes. Just related to that, Balasubramanian. So as general trade was carrying the inventory obviously, there was a subdued performance at a company level in terms of sales to them, but obviously at their level, there was a phenomenal sales. That is #1. And #2, and hence year as a whole as inventory has normalized, we expect general trade in particular and all other trade channels should register growth, which is also our expectation and business plan.

Got it, sir. Sir, my second question. In U.S.A., I think the growth is 35%. I think it was, sir, like a very good growth. You mentioned about successful scale-up of new air cooler SKUs. Like, could you please mention, sir, what kind of SKUs are, like, really picked up in the U.S. market? These are especially designed for U.S. market, or they are rebranded Indian SKUs?

They are essentially rebranded Indian SKUs. We have one major customer in U.S.A., which is Home Depot and other customer is Lowe's. These are 2 of the largest sort of companies in retailers in U.S. of -- in the home center, home care kind of category. And the products that we sell to them are -- mostly go from India, some even go from Mexico. And the product that has registered the greatest sales growth is a model called Air Force that we -- that goes by the name of Air Force in India. It also goes by the name of Air Force, but under our U.S.A. brand, which is Bonaire, and essentially, that's what gave us the big uptick in numbers.

Okay, sir...

That is also we -- that is, the sales has also been aided by a very good summer in the USA, especially in the Southwest, which is our core market. It's fairly hot over there this year. So it's a combination of everything, the right product at the right price in the right channel, aided by the tailwind of a good summer.

Okay, sir. Sir, this distribution strategy, how will this differ from Australia?

Vastly differs from Australia. This is purely -- so we have a warehouse in U.S.A., and this is a retailer that we sell to. Whereas in Australia, the part of our business that comes from retailers is still very small. Bulk of it still goes to sort of the GT equivalent of India.

The installation companies.

The installation companies. You know, the -- yeah. We will -- I think the closest resemblance -- assemblance would be to GT channel for India. Vast difference. Vast difference.

Okay. So we learned most of the lessons from Australian market, and we implemented in the U.S. It's a right way to understand, sir?

No, no, no. The two markets have been very different. So we couldn't -- even if we had wanted to, we couldn't have implemented the U.S. model in Australia or the Australia model in U.S.A. The markets are -- the breakup of the markets are very different.

Thank you. [Operator Instructions] I would now request Mr. Haider to please inform us your company name and go ahead with your question.

This is Haider from Yes Securities. My question was, could you just tell us the revenue, EBITDA, and PAT numbers for all the subsidiaries?

Yes. So Bonaire USA, I am sharing in INR, INR 36 crore versus INR 27 crore --

Revenue.

Top line. And EBITDA is INR 18 crore versus INR 7 crore. I will come to EBITDA number later on. Then IMPCO Mexico, INR 54 crore versus INR 66 crore and EBITDA of INR 3 crore versus INR 7 crore. GSK China, INR 34 crore versus INR 24 crore, and EBITDA INR 6 crore versus INR 2 crore. All these numbers are for June '26 quarter. Symphony Brazil, this is not a season, so nothing to talk about it. And as far as Climate Technologies Australia is concerned, INR 27 crore versus INR 31 crore, and EBITDA negative INR 4 crore versus negative INR 2 crore.

Sir, I think you missed out on the PAT number also. If you could share that as well.

Okay. So Bonaire USA, PAT is INR 17 crore. IMPCO Mexico, PAT is INR 1 crore. GSK China, PAT is INR 5 crore. And Climate Technologies Australia, because of exceptional income as its shareholding in BUSA and IPRs were sold, so it is very high PAT, but it is on account of onetime worth of about INR 42 crore of write-back or gain on that, and hence, PAT is INR 36 crore.

Okay, sir. And --