Experts still wary of Symphony

MUMBAI: Symphony hit the right notes on Tuesday after delivering a good set of numbers, but analysts warned investors not to get carried away with the rally and stay cautious as the company is trading at steep valuations.

Shares of the air cooler company surged over 15% on Tuesday to close the day at Rs 1,368 with the stock touching an intraday high of Rs 1,427 before correcting.

The company’s PAT grew 36% to Rs 39.3 crore for the September quarter as against Rs 28.8 crore last year, and Rs 31.1 crore in the preceding quarter. The company’s sales rose 31.3% to Rs 150.3 crore for the quarter versus Rs 114.4 crore in the same quarter of the last fiscal.

“These kind of rallies happen in stocks with low liquidity,” said an analyst on the condition of anonymity. “Though the company is good, the pricing and valuation offer no comfort.”

The Ahmedabad-based company’s shares have risen 21.13% in the past week and 19.54% in the past month. The stock is trading at 55.2 times FY17 estimated earnings, as per Bloomberg estimates.

“We don’t argue on its growth prospects, but feel it is too richly valued,” said Girish Solanki, an analyst at Anand Rathi.

Analysts cautioned that these earnings may not be sustainable in the long run, and one of them said that Symphony’s market share has decreased.