Symphony dips over 25% in three days on brokerage downgrade

Symphony
Shares of Symphony has dipped 19% to Rs 2,275, extending its 11% fall in past two trading sessions on the NSE, after Motilal Oswal Securities downgrade the stock with sell rating and target price of Rs 2,500.

Volume growth at 13% was disappointing and was much below 1H volume growth of 31% and FY14 volume growth of 37%, Niket Shah and Atul Mehra, analysts at the broking firm said in a research report.

“Analysts cut FY15E, FY16E and FY17E earnings estimates by 4%, 3% and 3% to reflect lower volume growth. Given the substantial run-up in stock price analysts believe valuations are now rich at 38x FY17E EPS”, added report.

Since January 2015, the stock had rallied 62% from Rs 1,947 to Rs 3,151 on April 21, compared with 1% rise in the CNX Nifty.

Meanwhile, Symphony board has empowered the CMD/ED to explore the potentiality of synergy of convergence with the affairs of the company to accomplish its broader vision to tap the export market.

The company said considering the international practice and non-disclosure undertaking, it is desirable to maintain complete confidentiality at this primitive stage and therefore further information will be revealed at appropriate time, if needed.

According to analysts, this is in line with its intention of looking at inorganic opportunities in overseas markets to gain market access. Some portion of cash on books will be utilized for inorganic opportunities, while rest will stay in company as a safety buffer.

At 1208 hours, the stock was down 17% at Rs 2,325 on the NSE and has seen a combined 95,982 shares changing hands on the counter on the NSE and BSE.