Symphony stock surges 452 times in 10 years

Product innovation, ability to grow have augured well

Cooling is the new ‘hot’ business mantra for Symphony.

A change of business philosophy, coupled with growing demand for its products, has generated a fortune for shareholders over the last 10 years. A quick analysis of companies in the BSE 500 group in the last 10 years shows that shares of Symphony have surged a massive 452 times to around ~1,564, from ~3.46 on November 20, 2007, according to ACE Equity data.

Avanti Feeds, Caplin Point Laboratories, Ajanta Pharma, Vakrangee, Relaxo Footwears, Eicher Motors and Somany Ceramics are some of the other stocks that have rallied 60-334 times, the data show. By comparison, the S&P BSE Sensex has gained 80 per cent to 33,478 during this period.

Established with a portfolio comprising one air cooler model, Symphony was able to match large multi-product competitors such as Crompton Greaves, Usha and Polar in the air cooler category by the 1990s. It then decided to diversify into air conditioners, washing machines and other durables, which failed to attract consumers.

By 2001, investors lost faith in the company. Its net worth eroded and Symphony ended up as a penny stock on the bourses. It was then referred to the Board for Industrial and Financial Reconstruction with a debt of over ~50 crore, reports suggest. After 2005, Symphony restructured its philosophy into ‘One Product-Many Markets’ and scaled up its international presence. In 2009, it acquired IMPCO (North America) and had begun offering central air cooling solutions in India by 2011.

“Symphony operates in a niche segment. Product innovation, ability to grow and a change in business philosophy have augured well for the company over the past 10 years. This, in turn, has not only generated wealth for the promoters, but also for shareholders,” said A K Prabhakar, head of research at IDBI Capital.

The domestic air cooler market, analysts say, is largely fragmented, with unorganised players accounting for about 70 per cent of volume and 63 per cent value share. The branded air cooler industry is highly concentrated, with the top five players accounting for over 90 per cent market share – Symphony being the leading player in the space (estimated share of 50 per cent by value).

“Of the 246.4 million households in India, a mere 28 million own air coolers, implying a paltry 11 per cent penetration. This entails a humungous growth potential. We envisage penetration to increase to 25 per cent by 2026 due to warmer temperatures, increase in middle class and formalisation of the economy. Moreover, of all the consumer durable sectors, air coolers have one of the highest growth potential due to higher proportion of the unorganised segment,” said Amit Mahawar of Edelweiss Research in a note co-authored by Darshika Khemka and Ashutosh Mehta.