Symphony Limited (SYMPHONY) Q1 2027 Earnings Call Transcript

Good afternoon, ladies and gentlemen. Welcome to the symphony call, the Q1F527 call. I have with me my colleague Aditya Bharatya, who is the co-head of research, to take us through this call and introduce to the management. Before I hand over to Aditya, please note that all of y'all are in the listen-only mode, and we will give an opportunity to ask the management a question. Do raise your virtual hand, and then we will unmute you. Please note that this call is being recorded. Oh, what do you add it, yeah?

Thanks, Vapna. Hello, AP Brian.

A warm welcome on behalf of Investec India to Q1FI27 Earnings Call of Symphony. We have with us the Senior Management Team, represented by Mr. Achil Bakkeri, Chairman and Managing Director, Mr. Nupesh Shah, Managing Director, Corporate Affairs, and Mr. Rajesh Mishra, Chief Growth Officer. Now, I hand over the call to Mr. Bhakery for initial comments, post which we will 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 Symfony on this lovely cloudy afternoon. The customary safe harbor clause applies. And as we have done in the past, my colleague Mukweesh Shah, who is the Managing Digital Corporate Affairs, will take us through a presentation, post which we are all here to take questions.

Thank you. Yeah, thank you Rupesh. So, if we summarize the

quarter of June 26, domestic momentum, absolute margin discipline, and as far as overseas subsidies are concerned, the robust performance of U.S. and China cushion the re-use export

and in-co-LCT railways. So, on a console-related basis,

for June 26, revenue stands at 378 crore, up by 8% at YOY, EBDTAG stands at 48 crore, up from 38 crore, up by 26%, while console pack stands at 40 crore, down from 42 crore. However, EBITDA and PAT and these two look at from the point of view of, in June 26, there has been one-time non-cash expenditure of Rs.5 broke, while in June 25, there was exceptional 9 crore of higher income. So, if we ignore that, then April to April, easy data for U26 is 53 crore versus 38 crore, while console patch 43 crore versus 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%. Thank you. Coming to further specifics of June 27 quarter, June 27, for consolidated as well as standalone, has witnessed second highest revenue as well as the digital vis-à-vis any historical June quarter. Here, the performance is led by domestic performance, Duly supported by Gross Profit Margin and EBITDA Margin Expanser as shared earlier. Also, known-worthy feature is BISP Segment that is Beyond India Summer Products that is safe product-wise or segment-wise not dependent upon Indian summer. Costificate about 560 crore on a console basis. In trading 12 months, that is almost 48 percentage, reinforcing our strategic deal scheme and diversification from Indian summer. Pornay USA is now back to tracks and revenue. Revenue grew by 35% with a robust profitability, mainly on account of successful scale-up of new models of air cooler. GSK China revenue grew by 43% and operating leverage lifted the profitability. As well as, now GSK China on a stand-alone basis is completely back-free, including has repaid all the debt along with interest to simple India, just like as it happened many years before with InfoMexico. GDPR 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 FY26 and for June 27, 26 quarter, The Board of Directors has announced Ethereum dividend of Rs.1 per share on a face value of Rs.2 with a

total fee out of about 7 crores. On a standalone business, that is Symfony India,

revenue stands at 241 crore versus 229 crore, while EBITDA stands at 30 crore versus 24 crore, and PATS 28 crore versus 37 crore.

Again, just like consolidated. Do you agree with it? If we... Takeout exceptional or

one time in both the quarters. The June 25th patch stands at 24 crores

versus June 26th of 28 crores. Just like console related top line,

even on stand alone, this is the second highest. June quarter performance. By the way, domestic sales, i.e. India revenue grew by 15% despite

huge inventory overhand before the summer. And importantly, all different segments of modern trade View 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 38 June 26,

that is year end, season end, that is no inventory overhand, either at a trade level or at a company level. It is completely normalized, while on a standalone basis, DISC accounts for top line of 179 perot in TTM, that is 23 percentage. And importantly, yet

at EBITDA level, it is profitable almost close to double digit percentage.

However, stand-alone exports from India declined, mainly on account of geopolitical

and skipping disruptions. Thanks. About some of the financial ratios. So, by the way, as on the 38th June,

our capital employee as well as Networth has further reused and rationalized on account of impairment done in FY26. So, as on the 38th June 26, our capital employee on standalone is 73 crore versus 136 crore. Translating into ROCE percentage of 164, while return on net worth at 22 percentage, and treasury stands at 345 crore versus 363 crore, this is after ramming in to Australia and repaying their acquisition loan as well as working capital loan. Until 38 crore of approximately 225 crore. In other words, after repaying 225 crore of debt, treasury stands at 345 crore, almost in line with 38 crore 25. While on conservative basis, capital employee is now almost half. 206 versus 409 as climate technology was taking away substantial capital, translating into console ROCT percentage of 67 and return on net worth of 18 percentage.

So, thank you. With this, we can take questions. Aditi, over to you. Hi, sir.

Maybe I'll start with the first initial questions. 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?

So, due to competitive reasons, we don't divulge.

However, year after year, it registers very robust growth and profitably.

Understood.

And we club it as a part of the modern trade, which of course, apart from e-commerce and E2C, includes large commerce stores and large regional stores. So, what I can say, modern trade constitutes almost or in excess of one-third of our top line in India, while civil trade constitutes 60-65 percentage. Understood.

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

Accepted to MT versus GT.

So, I saw it almost comparable. Okay, sure.

So 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 costs 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 shouldn't 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 costs begin to normal. 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 would 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, they 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. Sapna?

Thanks, Aditya. A gentle reminder to everybody who we have opened the Q&A flow for everyone to ask their questions. You have the opportunity to raise your virtual hand, and when I unmute you, please may state your name and the fund that you represent for our understanding. With that, I will now request... Mr. Balas Ubramanyal, sir, go ahead, but please mention the fund that you are from. I have unmuted you, sir. Please unmute yourself. Thank you.

Good evening. I'm Audible.

Hello, please.

Yeah. Thank you so much for the opportunity. So, modern trade is growing over 100%, like, could you explain the drivers behind this search, whether it is a market share gain from unorganized trade, or increased, 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 are here.

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

Bala, from Arihami Thapital.

Right.

So, it's a combination of factors.

One is... That the modern trade just like Ecom or D2C didn't have any, you know, 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 the kind of inventory that they had, many rare trades would have also been, you know, 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, you know, this kind of a growth. We will be very happy if, you know, this kind of a growth continues. But that's very unlikely to happen. So, I think we shouldn't expect that going forward. Right? What was the question? Yeah, that's it, right, Mr. Bala Subramanian?

Ah, yes sir.

Answer my second question, I think, I guess I took that, yeah, just related to that. So, as a general freedom of standing in mind, 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 number one. And number two, and hence, here as a whole, as inventory has normalized, we expect, general aid in particular, and all other trade channels, should register growth, which is also our expectation and business plan.

I got it, sir. As for my second question, in USA, I think the growth is 35%. I think it was like a very good growth. Mentioned about a successful scale-up of new air cooler SKUs. Could you please mention what kind of SKUs are like really picked up in the US market? These are specially designed for US market or they are rebranded Indian SKUs?

They are essentially rebranded Indian STUs. We have one major customer in USA, which is the Home Depot, and other customer is Glow. These are two of the largest companies in retailers in the U.S. in the home center, home care kind of category, and the products that we sell to them are They mostly go from India, some even go from Mexico, and the product that has registered the greatest sales group is a model called Air Force that goes by the name of Air Force in India. It also goes by the name of Air Force, but under a USA brand, which is Bonaire, and essentially that's what gave us the big uptick in numbers. That will also be, that is, the sales has also been aided by, you know, a very good summer in the USA, especially in the southwest, which is our store market. It's very hot over there this year. So, it's a combination of everything, you know, the right product at the right price, you know, in the right channel, you know, aided by the tailwind of a good summer.

Okay, sir. So, this distribution strategy, how it is differed from Australia?

What we differ from Australia? This is Purely, so we have a warehouse in USA, 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. Installation. The installation company. You know, I think the closest resemblance would be the GT candle for India.

Nothing. I'll ask you friends, I'll ask you friends.

Okay.

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

No, no, no. The two markets have been very different. So, we couldn't even have advantage. So, we couldn't have implemented the US model in Australia or the Australia model in USA. The markets are, you know, the breakup of the markets are very different.

Got it, sir. Got it. Thank you.

Thank you. In the interest of time, I will request everybody to limit your questions to maybe two questions and then come back in the queue. I would now request Mr. Heider to please inform us your company name and go ahead with your question. I'm unmuting you, sir. Mr. Heider, please let us know your company name and ask your question. Thank you.

Good evening. Am I audible? Yeah. So, good evening, sir. This is Heather from YesSecurities. My question was, could you just tell us the revenue, EBITDA, and patent numbers for all the subsidies? Yeah.

So, Monique USA, I am sharing in ILR. 36 crore versus 27 crore, top line, and EBITDA is 18 crore versus 7 crore. I will come to EBITDA number later on. Then INCO, Mexico, 54 crore versus 66 crore, and EBITDA of 3 crore versus 7 crore, GST China, 34 crore versus 24 crore. And EBGDA 6 versus 2. All these numbers are for June 26th quarter. Symphonic Brazil, this is not a season, so nothing to talk about it. And as far as Climate Ethnology, Australia is concerned, 27 versus 31. And EBGDA negative 4 versus negative 2.

Sir, I think you missed out on the pack numbers also, if you could share that as well.

Okay. So, Bonnet USA, Pat is 17 crore. Info Mexico, Pat is 1 crore. GSK China, Pat is 5 crore. And Climate Technology Australia, because of exceptional income, as its shareholding in bussa and IPRs were sold, so it is very high pat, but it is on account of one time. Worth of about 42 crore of right back, or gain on that, and hence, PAT is 36 crore.

Okay, sir.

And it should be excluded, and it has been net off and a console level, so operating level minus that. Yes.

Okay, sir. Thank you for that. Then also, what kind of price hikes have you taken in the quarter? Because we are seeing raw material going haywire. So, what kind of price hikes have you taken and what kind of price hikes are you yet to take in the coming quarters?

As of now, we have not, you know, not really taken in the household food segment. In the other segment, we have taken about 7 to 10 percent of price height, you know, and in others, we will be taking price in the days to come, but how So, what extent will, you know, continue raising remains to be seen because, like I said, previously, it all depends on how the, you know, when the war ends and when the cost normalizes.

Right. So, see, you mean X of household products have taken 7 to 10 percent price X?

Okay, sir.

Okay. Thank you, sir. That is it from my side. Thank you.

Thanks, Mr. Heather. Before I move to the next participant, I would like to remind everyone that if you have a question, do raise your virtual hand, and we'll unmute you. If you've joined through a dial-in, please press star and five on your phone to raise your hand. I will now move to Ms. Shraddha. Ma'am, you will have to tell us the fund that you are from, and I will continue with the call. I have unmuted you. Ma'am, please go ahead.

Ms. Radek, can you hear us? We are unable to hear you. You are a mutist. Let's move to the next question.

We'll have to wait for some time, sir, for the next question. Meanwhile, I have my colleague Vineet. Vineet, go ahead, ask your question.

Hi, hi. Sir, I have one question on Australian subsidiary. We've had some challenges there for some time now. I understand we've had COVID and all supply chain issues, etc., but what is our strategy there to turn operations around?

Thank you. First and foremost, our strategy is not to deploy

any additional capital and whatever this can be done without deploying any additional capital in our Australian business. The point is, we are very clear, internal, and also to assure all the shareholders that Whatever impairment or cash losses or write-off is the history, that's not going to happen. So without that, whatever can be done, we will be doing it and as it unfolds, we will keep you informed.

Understood.

And, sir, anything incremental on product introduction, art distribution, manufacturing, anything on those lines?

Where? In Australia or India?

Australia, Australia.

Australia. No, no, no. I'm just more of a state, nothing new.

Understood. Understood. Okay. And my second question is on the BISP products, which we sell. If you can highlight some of the larger, apart from exports within India, which are some of the larger categories, and if you can give a ballpark number, how much would they contribute and how's the traction and customer response on those products?

So, it consists of large space, that is, central line rail pulling, and apart from X-Box, it consists of table-top sign, which says round hanger,

water heater, and X-Box. And this is our standalone basis, and when it

comes to computer data, eventually in our mind, whatever sales happens, which is not dependent on Indian thermal, all that is, we own Indian thermal products, that is EISP, so on our console basis,

sales by our subsidiaries, is all. Because there is a geographical diversification.

So, on a console level, about 48% is BIS, while on a standalone business, on a trading environment, it is 23%.

Understood. And so, particularly LSP, we are quite aware about even exports. But just to harp on the other two products, tabletop fans and water heaters, is it largely online, which we are doing? And how do we plan to scale these products up across the country? Any plans to get into GT, etc., and maybe launch in other states as well?

They've already launched in other channels, modern retail and as well as GT. It's not everywhere yet. It's just a matter of time by which it will be everywhere. But we are already, you know, we are already present in the top cities across the country.

In GT as well.

Understood. Understood.

Thank you. Thank you so much. Thank you.

Thanks, Virat. My next person on the queue is Mr. Pratik Talvatkar. I have unmuted you, Pratik. Please go ahead and ask your question.

Mr. Prateek, can you ask us a question? All right, we'll come back in queue for Prateek.

I will... I will allow Mr. Haidar to come back again and ask the question. Mr. Haidar, go ahead with your question.

Thank you for the follow-up, sir. Sir, I just wanted to understand one thing. So, we have been doing good growth in the US business, but this is more from an understanding the business perspective. The US is a much more developed market than India, right? And the per-income capita and all is also significantly higher. So, why would there be a need for an air cooler in somewhere like the US as compared to an India which is a developing economy and we need something more cheaper over here as compared to an RAC? So, why is it that the sales in the US would be a good market as compared to a place like India or Brazil or anywhere which is still developing?

We have said this many times in the past that, you know, coolers is not viewed as a poor man's air conditioner everywhere outside India. It's only in India that it is seen as a substitute for air conditioner. You will find pooders being sold not only in the USA, but even across Europe, though quantities are not much because, you know, the market for this is a relatively small market, even for air conditioners or fans, but pooders are sold even in the Middle East, which has no abundance of, I mean, total abundance of energy and cost is not a consideration, price is not a consideration. So, it's only in India that, you know, we view coolers as a cheaper alternative to air conditioners. In the U.S. it is... Bought for usage outdoors, because in the southwest, all houses are centrally air-conditioned. So, despite that, air coolers are bought. Like I said, they are used mainly outdoors, near the pool, near the backyard, and, you know, in people's garages, and there are some products which are even sold, some of our models are even sold as household coolers. For whole house cooling, they are mounted on the ceiling, and they are, they cool through ducts across the house. There are some which are window-mounted coolers, which cool the entire house again. So, it's a very good alternative to air conditioning in the southwest, where it's very dry, because air coolers provide that sort of little bit of humidity, which is very good to feel in very dry conditions. So it's a combination of factors, it's a combination of factors. And most importantly, it's a portable product. It's a plug and play product. So, you know, so that's what the most compelling advantage of this product is.

Okay, sir. Thank you. Thank you for the clarity on that. Thank you. That is it from my side. Very much.

Thank you very much, sir. I am going to wait for another couple of minutes before we move to the next attendee. We'll wait for a few questions. Thank you.

Swapna, in the meantime, I think there are some questions in the chat as well, so if you can read out for the management to respond to.

Yes, perfect. I will do that right now. So we have a question from Ms. Shradda. So firstly, she's apologized. There's some network issue. She's unable to ask directly. And she's got three questions. I'll ask them one by one. The first question is, could you provide your outlook for the ROW business over the next two to three quarters, particularly for the USA and Mexico, with expectations of strong summer conditions in these markets, do you expect demand to improve meaningfully? That's the first question.

So, as far as Mexico is concerned, we went to consecutive, you know, bad summers. So, by bad, we mean mild summers. So, the summer of 25 and the summer of 26 have been both have been sort of mild summers and which have had an impact on stage. This is the first time. In memory, you know, that this has happened, and we have people in Mexico who have been with the company for more than 30 years, and they've never witnessed two consecutively mild summers. So, we hope and we expect that the summer of 27, you know, should be certainly, you know, statistically, it will be almost impossible for it to be a mild summer. It should be certainly a fairly robust summer, and the sales should grow significantly. I cannot put a number on it yet, but we expect there to be significant growth. As far as USA is also concerned, as you said, if we were to assume that the summer will be robust, if that's the assumption, then the sales should further increase next summer. Even this year, you know, there was, so we could have, so I'm for sure this next year will be significantly

better if the summer is as good as this year.

Thank you, sir. Her next question is, have export shipments now fully resumed, or are you still facing logistic or shipping-related disruptions? Are geopolitical uncertainties continuing to affect order inflows or execution in key export markets?

So, the Middle East, which is our primary,

you know, which was primarily infected, continues to remain affected,

and for other reasons, the cost gets shorter, so that it's impacting the overall demand. So overall, the costs have gone up, and it is also impacting the buyer's sentiment, so people are more cautious because the landed costs have gone up, and they are not able to pass on the entire increase. So therefore, the purchase is now a bit muted.

So it's still not back to normal.

Okay. Her next question is, Bonaire, USA, and JSK, China delivered healthy growth during the quarter, while Mexico and Australia remained relatively weak. How should we think about the growth trajectory of each of these businesses over the next few quarters? During Q1, demand for air coolers was somewhat patchy, particularly in North India, due to uneven weather patterns. Could you help us understand the impact this had on your sales and demand trends across regions? How have secondary sales trended in July and early August? Have you seen any improvement in off-tech after the normalization of weather conditions?

It's not a question, that's an essay.

I agree. Would you want me to break it down further?

No, it's okay. It's okay. Hold on, Sofna.

So, A.B.

Essentially, Bonaire is the first part, so the growth trajectory. Second part is in Q1 versus the patchy North Korea weather.

Yeah, okay, hold on. So, for... You know, in the next few quarters, see, again, this business is likely to see sales in the summer. So, the U.S. summer sort of extends into the current quarter. So, we will witness revenue in the current quarter, but the next two quarters, we will see, you won't see much. Revenue in the U.S. market because primarily it's coolers and coolers are, you know, as you know, sold only in the summer. As far as China is concerned, that has more of an even thing, even sales cycle because there's a lot of industrial

coolers and plus exports which will continue with us. So, we expect the GSK to continue, you know, the momentum, and in the coming quarters, you know, based on how much export orders, you know, have received, so we believe that we should be able to, you know, do fairly good in GSK, bondage-based, coming quarter should be good. Time quarter. Time quarter, which is the current quarter. But after that, it will be, you know, muted. So that is what is as far as USA, Bolly USA and GSK China is concerned. As far as the second question is concerned, the Q1 was definitely patchy as far as North India and even East Asia is concerned, but in the coming quarter, we don't expect any secondary phase, but there will be primary phase. This is basically off-season buying which happens by our channel partners, which will happen in the in the current and the subsequent quarters.

All right. I think that's the last of it. Maybe I'll make the last announcement if there are any questions. We'll wait for one or two minutes, sir. Otherwise, I would request you to make the closing remarks before we end the call for today. Yes, sir. Just a couple of minutes if there is any last-minute question. Otherwise, I think we are good to go. Yes, sir. Go ahead, and I would request you to make the closing remarks.

Okay. All right. Once again, thank you all for your participation and for the interest that you have shown in our company, and we look forward to seeing all of you again next quarter. Thank you, and have a great day. Bye-bye.

And also, thank you to English Tech as well as Anish Tech for organizing and coordinating this. Thank you.

Thank you, sir. And on behalf of Investec, my colleague Aditya and Vidit and I thank the Symphony Management for giving us the opportunity to host their earnings call.

Thank you.