Midcap Stock To Buy With Good Potential Of An Upside

Broking firm Sharekhan believes the stock of Symphony has good upside potential and has suggested a buy on the stock.

Upside potential of 20% to 22%

According to Sharekhan, Symphony Limited, India's largest maker of air coolers is well-positioned to leverage on the strong demand for cooling products anticipated in the upcoming summer season.

As per the brokerage's talks with the management, the scorching heat across India and pent-up demand of the last two summers is likely to lead to robust volumes for air coolers, which should normalize the high channel inventory.

"Symphony, with the highest market share, strong distribution network and product portfolio would be a key beneficiary of the likely spurt in demand. Further, consumers' shift from fans to air coolers, cost and energy efficiency of these products as compared to air conditioners (ACs) and preference for new designs and features would drive the market's longterm growth. We initiate viewpoint coverage on Symphony with an upside potential of 20-22%," the brokerage has said.

Air coolers showing good growth

According to Sharekhan, as per industry reports, the air cooler industry is expected to clock a CAGR of 15% during FY21-27E.

"Increase in disposable income, increasing urbanization, hot climate across the country, consumer shift from fans to coolers is likely to increase the penetration of air coolers (currently 14%) to 25% by FY25E.

Further, air coolers' cost effectiveness, less power consumption and low maintenance cost as compared to ACs makes them more suitable for middle income group of India. Moreover, superior quality, attractive designs and smart features as well as better after-sales service is causing the shift of consumers from unorganised to organized players.

Demand for commercial and industrial coolers is also gaining traction as organizations are now deploying energy efficient and economical solutions keeping in mind the comfort of factory men and other workers. Symphony being a market leader is well positioned to leverage on the growing demand for both residential and commercial coolers," the brokerage has said.

Disclaimer

The stock has been picked from the brokerage report of Sharekhan. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.