Symphony Limited (SYMPHONY.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '26 Earnings Conference Call of Symphony Limited, hosted by SMIFS Institutional Equities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Shraddha Kapadia from SMIFS Institutional Equities. Thank you, and over to you, ma'am.

Thank you, [ Mitchell ]. Good morning, everyone, and a warm welcome to Q3 FY '26 Earnings Conference Call of Symphony Limited. We have with us today the senior management team of Symphony Limited represented by Mr. Achal Bakeri, Chairman and Managing Director; Mr. Nrupesh Shah, Managing Director, Corporate Affairs; Mr. Amit Kumar, Executive Director and Group CFO; and Mr. Rajesh Mishra, CEO, International Business. I would now like to hand over the call to management. Thank you, and over to you.

Good morning, everybody, and welcome to this Symphony's weekly -- sorry, quarterly conference call. As we do each time, we will have a short presentation followed by Q&A. And so, we'll all be here for the Q&A. The presentation will be done by Nrupesh Shah, Managing Director, Corporate Affairs. Thank you very much. Nrupesh bhai, over to you.

Thank you, and welcome to Q3 conference call of Symphony Limited. So there is a customary disclaimer statement to start with. So this is about the Symphony stand-alone performance, Symphony Limited. So for the quarter, Y-o-Y, it has been flattish. That is INR 182 crores of top line versus INR 182 crores previous year from December '24. At EBITDA level, it is INR 31 crores versus INR 34 crores mainly on account of elevated advertisement and sales promotion expenses of water heater. And at PAT level, it stands at INR 34 crores versus negative INR 4 crores. Just to remind you, in December '24, we had to take the write-off of Pathways and hence, it had come negative considering that exceptional item. In current quarter, we have recovered additional INR 4 crores from Pathways leading to total recovery of INR 8.5 crores in current year 9 months vis-a-vis write-off of INR 50.2 crores and for residual recovery necessary strong legal actions are under various stages . Also to point out and as shared earlier, now in Symphony India, there are broadly two categories: one is household air coolers and second is the products selling round the year and all counter seasonal products. So in 9 months ending on 31st December '26 -- '25 products selling round the year have contributed almost 26 percentage of the top line. And at this point of time, that is as on 31st December, trade inventory seems to have normalized as it is normally supposed to be at this point of time mainly on account of revenue [ contradiction ] and lower listing by the trade in September '25 quarter. And Board has announced third interim dividend of INR 2 per share amounting to about INR 14 crores and total interim dividend during the year about INR 28 crores. So coming to stand-alone financials of 9 months, the top line is INR 563 crores versus INR 814 crores. Gross profit margin percentage stands at 48.3 percentage. EBITDA at about INR 81 crores versus INR 188 crores of previous year for 9 months. And at a PAT level, which is higher than EBITDA one on account of treasury income; secondly, exceptional income after providing gratuity additional provision as per revised [indiscernible] Act, as well as there has been profit in ForEx fluctuation. So all put together at [ PBT ] is INR 123 crores, leading to PAT of INR 99 crores versus INR 132 crores of December '24 9 months. So for Symphony stand-alone, capital employed in trailing 12 months based on monthly average stood at INR 49 crores, translating into ROCE that is PBIT percentage on core capital employed about 371 percentage and return on net worth percentage of 19 versus 24 percentage, while treasury is INR 460 versus INR 488 crores after robust payout last year, and this excludes loans and investments to subsidiaries, all in all amounting to INR 277 crores. So all inclusive, it is almost INR 800 crores, slightly less than INR 800 crores, including equity loans and investments to subsidiaries. Coming to consolidated financials, at consol level, the top line is INR 233 crores versus INR 242 crores. Gross profit margin percentage stands at 48 percentage Y-o-Y down by about 2 percentage. EBITDA, which is a [ disbursed ] EBITDA is INR 24 crores versus INR 35 crores, while PAT is INR 20 crores versus negative INR 10 crores due to reasons explained earlier. Coming to consol financial for 9 months, the top line is about INR 793 crores, that is down by 27% versus INR 1,088 crores for corresponding period. EBITDA stands at INR 76 crores, while PAT is at a consol level INR 81 crores versus INR 134 crores. Capital employed on a consol basis for trailing 12 months is INR 343 crores that is all inclusive Symphony stand-alone and subsidiaries including capital employed in Climate Technologies translating into ROCE percentage of [ 54% and return on net worth of 21 percentage ] 8:54. So yesterday in the Board meeting, the IB transaction has been reviewed and it has been decided to roll back the IB -- the proposed IB transaction to divest the stake in IMPCO Mexico and Climate Technology. So as it was updated from time to time, 2 investment bankers were appointed. There was a global outreach, more than 10 non-disclosure agreements were signed with some of the global consumer durable companies, some of the financial investors. However, on account of evolving geopolitical situation as well as the reasons, which we are bound as per NDA. But in a nutshell, the valuation offer didn't meet with our valuation expectation as well as broader strategic consideration. And hence, it has been found appropriate to roll back and Symphony will like to nurture the business. And the silver lining is considering the tariff situation, there seems to be a great potential in Mexico as well as United States, and we are already witnessing decent traction. Coming to [indiscernible] regarding this IB transaction, whatever our financial investments in various forms, whether it is in terms of equity investments, intangible assets, et cetera, et cetera, as on 31st March '26 by accounting year, as auditors will advise and guide appropriate accounting treatment will be taken, which is quite different from whatever business transformation may happen later on and that accounting treatment is normally done based on the past actual financial performance, so just as a guidance. Repeatedly in various forums, we are being asked as to what is Symphony's market standing vis-a-vis some of the published reports, so we thought it appropriate to take you through very specifics. So at a primary level, the market size is about INR 5,000 crores. Market comprises of different segments or different kind of the players, Symphony being by far the market leader. There are national players as per published report, which many of you are aware. And as per the published report, there are eight players having sales in excess of INR 100 crores. And that too sales in excess of INR 100 crores is at customer level, not at a company level. In addition to that, the player whose consumer level sales is less than INR 100 crores, but they call themselves or many of us understand them as national players, that is third category. Fourth is regional players. They may have a strong presence in some states or part of the state and then completely fragmented and unorganized market. Organized market share in terms of the value percentage is about 35 percentage. In published report -- in research reports to which we as well as many of you have access, it accounts for only some of the segments, the segments which it doesn't account for, but that very much forms part of our sales. And that too that part of the sales constitutes almost 40 percentage to 50 percentage of Symphony sales to dealers and distributors. And those segments are rural and semi-urban, e-commerce, quick commerce, D2C, institution sales. We are clearly excluding large space ventilated cooling from this because that we treat it as product selling round the year or counter seasonal product. Also to draw your attention, none of other national players at a company level, all segments put together have turnover. The second most company's turnover is around INR 250 crores. And top 3 to 4 players put together combined household, domestic air cooler sale is made by Symphony sales. And we clearly believe that for us, this is a structured growth story for medium to long term on account of variety of reasons as known and shared from time to time. Also happy to share with you some of the data and details as validated by external agencies. So in terms of the Google rating and review, out of more than 34,000 rating and review, Symphony score is 4.8 by far higher than most others. In terms of the share of voice on TV because that is authentic data, otherwise, we know all put together our brand reach far, far higher than #2 and #3 player. Again, everywhere, we have cited the source. Even in terms of the Google search, out of millions and millions of customers who are [Technical Difficulty] looking for and searching air coolers, as per Google analytics from July '24 to June '25, 2 out of 3 customers look for Symphony, while looking for an air cooler. Again, on our right-hand side, in terms of the market leadership, brand preference, channel partner endorsement as well as pricing premium, again, as per each of this reliable external source, you can see that Symphony scores far, far higher than peers. Yes. Thank you. So with this, we can take question-and-answer.

[Operator Instructions] The first question is from the line of Balasubramanian from Arihant Capital.

Sir, on the premium side, 95 liter to 120 liter categories, I think the market we have seen input cost deflation as well as the market is also [indiscernible]. Just want to understand how our competitors are doing in this segment, whether they are doing aggressive discounting to gain market share? And how is our volume growth in the segments? And are we seeing any compression in this premium in recent quarters? Those are my first questions, sir?

So broadly, in terms of the premiums that we are talking about, the -- see the market is going into what we call a K-shaped kind of movement, where the lower end of the segment, which is migrating particularly from metal coolers to plastic coolers, that continues to be at a lower price point. And the good news there is that at least the migration from metal to plastic and in some sense from completely unorganized to regional and some branded segment has happened. So over time, this is a segment, which -- at this point in time, which is not at a premium, but we expect that this will move into the premium category over time. The other end is the actual existing premium category wherein the prices have broadly been stable. Some of the recent models that we have launched also, they are at a higher premium compared to our average portfolio, but that's something, which is a small chunk of the overall portfolio that we have.

And sir, like organized as well as unorganized air cooler market are growing at same rate? Or is there any diversion is happening? And how is our growth is coming primarily from market expansion or premiumization or share gain from organized or unorganized players? What is the split, sir?

A bigger chunk of the growth is coming from the movement of consumers from the unorganized to the organized segment. And as I said, the entire metal cooler market is mostly unorganized. So while there is some organic growth even in the traditional plastic coolers market, a bigger chunk of growth in the market is happening from unorganized to organized movement.

Sir, my last question, like what percentage of sales is coming from modern trade and e-commerce versus traditional dealers in Q3? And how our margin structures are evolving across these channels? And what investments are being made in direct-to-consumer capabilities to mitigate long-term channel dependency risk?

So about [ D2 ] sales to answer first, it has already turned not only EBITDA, but at a PAT level profitable since last year. And at EBITDA level, its profit margin is in line with our GT sales. Coming to specific breakup between traditional channel versus large format stores on account of competitive reasons, we are not sharing the data. And again, coming back to D2C, the kind of investments, whatever investment was to be made, we have already routed through P&L, and that has been already written off. So we believe for all such kind of initiatives, including the water heater, which we have launched last year, all such kind of expenditure we prefer to route through P&L, even though the variety of benefits may be a medium term to long term.

The next question is from the line of Shraddha Kapadia from SMIFS Institutional Equities.

So I would just like to understand that the India growth, which we have, is it majorly because of the air coolers, counter seasonal products channel normalizing. [indiscernible] are we getting -- are we gaining market share?

In the current quarter, Shraddha, as you know as someone who knows this sector and tracks it, the current quarter is less about the market share. It's more about the placement in the channel. So the October to December is where we place the products in the market, but there's no market share per se that we talk about for this quarter. Also regarding the channel and the counter seasonal products, that's something we are focusing on. And as Nrupesh bhai said, at this point in time, the overall share of that in the business is slightly upwards of 1/4 of our business. It has steadily increased over the years, and that is where we are right now.

And if you could give a bit of details in terms of the inventory. So we have mentioned that the channel inventory is normalized, so that would be the -- if you can give more update on that.

So on that Shraddha, basis the estimates we have of the inventories available with our partners at the distributor and dealer level, at this point in time, the inventory in the market is almost similar to what we had around the same point in time last year. So some of these lower primary sales that we did this year in the September quarter and kind of same sales as last year, net impact is at present, the inventory in the market is similar to last year. Hence, we are saying it is kind of normalized.

The next question is from the line of Keshav [ Bijatan ] Lahoti from HDFC Securities.

Sir, this time, you haven't mentioned subsidiary financial in presentation. Can you give some sense how has been their performance for this quarter? And how are the things looking for the next quarter? What sort of growth and margin we should expect?

Sure. No. So of course, we have the data and details, but to keep the presentation crisp, we are not sharing. But to share with you subsidiary-wise for Climate Technology Australia 9 months as a whole, the top line has been INR 128 crores versus INR 123 crores. At EBITDA level, it is minus INR 8 crores versus minus INR 40 crores. And at a PAT level, it is minus INR 18 crores versus minus INR 22 crores. And in terms of the cash loss, it is negative INR 15 crores versus negative INR 25 crores in terms of the cash loss. Coming to IMPCO Mexico for 9 months, it is INR 101 crores versus INR 135 crores. At EBITDA level, it is INR 4 crores versus INR 17 crores. And at a PAT level, it is minus INR 1 versus INR 10 crores, but at a cash profit level, it is positive INR 9 crores versus INR 12 crores. Just to remind you, after three bumper years in Climate -- in IMPCO Mexico, until March '24, it more than doubled its top line and almost tripled its profitability from '21 to '24. The summer of '25 was subdued, and that has led to this performance. But otherwise, structurally and in terms of the overall performance, IMPCO Mexico is very well poised. About GSK China, 9 months top line is INR 80 crores versus INR 75 crores. At EBITDA level, it is INR 8 crores versus INR 14 crores. And profit after tax including exceptional gain on account of sale of IPR, it is INR 49 crores versus INR 10 crores, but we need to exclude that. And hence, it's almost at a PAT level about INR 7 crores versus INR 10 crores. So in a nutshell, for 9 months, each of the subsidiary has delivered like this. About Symphony Brazil in totality, not being material, not sharing. Of course, we do have the details and data.

Just a sense, we have just taken a decision to sell it off, now we are rolling it back. So what sort of valuation gap was there? Because earlier call, you were very sort of positive this might happen by this year and possibly early next year and we had a strong interest, as you highlighted from more than 10 parties. So why was the valuation so [indiscernible] pardon nothing so much has changed geopolitical, we take a decision, we want to roll it back. Can you give some more color on it? What was the thought process?

Sure. So as we conveyed, there was strong interest by several multinational consumer durable companies from Europe, from China, from North America, apart from also financial investors as well as ] CP ] investors. However, when it came to the valuation vis-a-vis our expectation as well as the way in which we wanted to treat it strategically in terms of further sourcing of product by us for those markets

From us.

From us, we didn't find it favorable. About gap of the valuation, you will appreciate that with each of the prospective buyer, we have entered into NDA. So legally, we can't disclose as we have also announced on the stock exchange, as well as in our earnings presentation as to precisely what kind of the valuation was offered or what was the gap. But we believe that this is suffice to mention that there was a gap. And obviously, gap was not insignificant. Had it been insignificant, we would have gone ahead. Having said that, the silver line is considering this evolving geopolitical situation, now in Mexico, despite their imposed tariff of 50% as far as air cooler is concerned, there is no tariff. And even between Mexico and United States, as far as air cooler is concerned, there is no tariff, and there seems to be a very strong traction, especially from both the markets. And considering our position as well as our presence in multiple geographies, this may work beneficial if we treat it as a silver line.

And the U.S. company, as you will know, is a subsidiary of the Australian company. So the prospects that we see in the U.S. company are bound to benefit the holding company, which is the Australian company as well.

And when should we expect this Climate Australia to hit the profitability part? Should we expect it should be back to profitability on PAT, as well as cash level from next year onwards?

Well, we are working towards that. We're working towards that, but we can't really sort of confirm anything yet. We will -- time will tell. Well, time will well.

But will it be a fair assumption at least things will be on improving path from here onwards?

You could say that. Yes, you could say that.

One last question from my side. How has been the non-core category growth this quarter? And how much it was as a percentage of mix?

So as it was shared earlier in the presentation, in Symphony India, it contributes more than 25 percentage in last 9 months, and it is growing steadily, which comprises of large space ventilated air cooling, water heaters, tabletop and kitchen cooling appliances and exports from India. So they are not dependent upon Indian weather or Indian summer. And if we consider at a consol level, then at a consol level, it is like 50-50 percentage because overseas subsidiaries in a way, air cooler and other product sale is counter seasonal or coming from other geographies. Of course, from subsidiaries as a whole, still they are not contributing big chunk to profitability. However, we have to bear in mind IMPCO, Mexico and GSK, China have not only turned around, but they have contributed significantly.

What was their growth non-core for this quarter and as 9 months as a whole?

I mean, it's more meaningful to share for 9 months rather than quarter-to-quarter due to a variety of reasons. So we don't really do the business or plan or strategize quarter-to-quarter, even though we do have a budget. But on 9 months Y-o-Y, the pie has grown, and it is continuously growing.

Possible to give a number for 9 months and 3 months, both because at least we can get some sense how the cooler is doing?

Yes. Right now, we don't have readily available, but one-to-one separately, it will be given. By the way, until September quarter, we have given those figures and data.

[Operator Instructions] The next question is from the line of Aditya Bhartia from Investec.

Sir, two questions.

Mr. Bhartia, your audio is too low sir. Sir, your audio is low.

Hello?