Consumer durable stocks rally; Voltas jumps 10%, Symphony up 7% post Q4 nos

Shares of consumer durable companies, Voltas and Symphony, were trading in the green on Monday post-their result announcements for the quarter ended March 31, 2020. 

At 09:28 am, Voltas was up 10 per cent at Rs 528 on the BSE while Symphony was ruling around 7 per cent higher at Rs 959. In comparison, the S&P BSE Sensex was trading over 2 per cent higher at 33,187.17 levels. 

Other consumer durable firm were also trading with decent gains. For instance, Amber Enterprises was trading over 6 per cent higher at Rs 1,324 and Havells was up nearly 2 per cent at Rs 505.60. Blue Star climbed 7 per cent while Crompton Greaves Consumer was trading 1.5 per cent higher. 

For the quarter under review, Voltas reported a 12.52 per cent year-on-year (YoY) increase in its consolidated net profit at Rs 159.50 crore while its revenue from operations grew over 1 per cent at Rs 2,089.63 crore, against Rs 2,062.84 crore in the year-ago period.

The company's profit before tax (PBT) came in at Rs 217 crore, up 30.72 per cent from the year-ago quarter. 

For the fiscal year ended March 31, 2020,  the company's total income grew 8 per cent, at Rs. 7889 crore as compared to Rs 7,310 crore last year. Profit before exceptional items and tax was higher by 15 per cent, at Rs. 796 crores and Profit before tax (PBT) was higher by 10%, at Rs 744 crore, the company said in its earnings release.  

Voltas said that due to lockdown, substantial business in unitary cooling products segment was lost in March 2020, which is the beginning of the peak season (summer) and year-end billings were adversely impacted. Still, segment Revenue (gross) increased by 20 per cent and was Rs 1,199 crore as compared to Rs 998 crore in the corresponding quarter last year. 

"Performance of Air Coolers and other Consumer products also witnessed good traction and growth as compared to last year and could have been much better but for the lockdown. Segment Result was significantly higher by 68 per cent at Rs 175 crore as compared to Rs 104 crore in the corresponding quarter last year," the company said in its press release.

Credit Suisse has maintained an 'outperform' rating on Voltas stock with the target price of Rs 650. 

The global brokerage firm notes that the consumer business of Voltas has grown ahead of expectations (20% in the quarter and 30%+ for the full year), with the AC category beating the slowdown that has afflicted most other categories in FY20 as well as COVID-19. Inventory levels at FY20-end at Voltas level appear manageable, it says.

"We revise earnings for FY21E/FY22E by 9%/7% to account for the impact of longer lockdown and TP to Rs 650 (35% upside) from Rs 725 earlier. Retain Outperform on the strong franchise in a large long-term opportunity, expansion into other consumer durables, domestic focussed scale-up of projects, and strong cash flows,"  wrote in a note dated June 1. 

Weather dependency in ACs and strong competition are some of the key risks for the company, the brokerage added. 

Symphony, on the other hand, reported a consolidated net profit of Rs 45 crore, up 136.84 per cent for the quarter ended March 2020 as against Rs 19.00 crore in the March quarter of 2018-19. Sales rose 11.59 per cent to Rs 154.00 crore during the quarter under review.

For the full year, net profit rose 84.16 per cent to Rs 186.00 crore and the sales rose 36.64 per cent to Rs 716.00 crore.