V-Guard Industries Ltd. share price target

Once again, V-Guard missed estimates with a wide margin, with its performance being weaker than peers. Gross margin continued to expand, while now base catch-up has happened. The sharp fall in revenues and stable costs led to 42% EBITDA decline yoy. Majority of the revenue recovery has happened in rural and suburban areas, while metros yet to open up fully. The management remained confident on sustained gross margin expansion (+390bps in FY20). FY21 capex would be Rs400mn vs. Rs850mn in FY20. In the wake of extended lockdowns delaying recovery, we have cut FY21/FY22 revenue estimate by 8%/7%; however, the EPS cut has been restricted to 14%/4% on gross and...

V-Guard Industries Ltd (VGIL) is one of leading player in Electrical consumer durables space. Its major product segment includes Stabilizers, cables & wires, UPS, pumps and Electrical appliances. We upgrade VGIL to Accumulate from Hold as we believe that near...

After a mixed bag in FY19, this year was expected to be solid for revenue acceleration and recovery in margins. 1HFY20 has seen margin recovery but revenue growth was challenged due to various issues. We expect partial recovery in revenue growth in 2HFY20. We believe various disruptions (Demon, GST, Floods) over the last 2 years delayed the benefits from its non-south investment. Co had taken a hard decision last year to invest significantly on branding to grow its consumer business. We believe over the next 3 years (FY19-22E), V-Guard will be able to expand its EBITDAM by 200bps. We expect co's up-front investments on newer products to start accruing benefits. V-Guards 2Q performance was mixed with miss in revenue but beat in margins. Cables and Stabilizers were the outliers, while other products were under pressure owing to floods, short term supply issue, competition and weak macros. Adjusted EBITDA grew by robust 35% led by 39 quarter high gross margin at 33.8%. We expect a pickup in revenues in 2HFY20 and margin expansion. However, we cut EPS by 4% to factor muted south performance, slower consumer durables and higher tax rate. We value V-Guard at 35x on Sep-21 EPS, with TP of Rs 242. With limited upside, we downgrade to NEUTRAL.

Q1FY20 Revenue grew by 10%, while PAT grew by 52% YoY. EBITDA grew by 42% YoY and margin improved by 280bps YoY to 10.2% led by better product mix, prices hikes and cost rationalisation. Management reiterated their focus on Non-South market, new product launches and expanding retail chains. We expect earnings growth momentum to continue led by new product launches and deeper retail penetration. We upgrade our EBITDA margin estimates by 30bps & 20bps for FY20 & FY21E to factor in potential improvement in margin profile....

V-Guard's Q1FY20 performance was largely driven by electronic and consumer durable categories, up 18% and 15% YoY, respectively. Electronic products (stabilisers, UPS) sales growth came on the back of a revival in sales of air conditioners while consumer durable sales growth came in on a low base. During the period, increase in gross margin (up 200 bps) coupled with a change in product mix helped drive EBITDA margins. This resulted in strong PAT growth of ~50% YoY in Q1FY20. The period also witnessed an improvement in working capital cycle by 11 days compared to...

V-Guard witnessed strong quarter with an improvement of 200 bps+ and 100bps+ in gross and operating margin respectively due to lower volatility in commodity and forex. Hence, the reported and adjusted net profit (adjusting for Rs. 10 crore incremental ad spend in Q1FY2019) grew by 52% and 18% y-o-y. Non-South regions grew at a strong rate of 14.8% y-o-y leading to overall revenue growth of 10% y-o-y. ECD segment revenue grew by 17% y-o-y while electronics grew by just 0.7% y-o-y affected by lower copper prices. The management will be targeting 12-15% revenue growth (with...

V-Guard Industries Ltdis a major electrical appliances manufacturer inIndia, and the largest in the state ofKerala.

V-Guard is coming out of a difficult phase (floods, volatile cost inflation, up-front investments on newer products) with a strong outlook on FY20. Hot summer in 2019 is driving healthy RAC offtake, this makes us believe that stabilizer will fire (favorable base) which will drive margin expansion. Meanwhile, newer categories (GM accretive) continue to enjoy distribution expansion and drive incremental growth. Newer categories contributed 7% of revenues in FY19, we expect it to grow to 10% in FY21. V-Guards 4Q performance was healthy despite a slight miss in revenue and margins. 4Q performance was optically robust owing to a favorable base (impact from one-time ad spend). FY20 outlook is strong as we expect revenue growth to accelerate and margins to revive. We value at 35x on Mar-21 EPS, arriving at a TP of Rs 250. Maintain BUY

y-o-y to Rs. 740 crore, marginally below our estimate. The revenue was driven majorly by the electrical segment (14.8% y-o-y, in which sub-category cables grew 24.8% y-o-y) and new product categories (up 61.5% y-o-y in which sub-categories switch gears and kitchen appliances grew by 89.3% and 41.8% y-o-y respectively). Stabilizers reported only...

growth to fall short of initial guidance: V-Guard Industries (V-Guard) is expected to fall short of its revenue guidance for FY2019 due to slower than expected demand recovery in the Southern market dominantly Kerala. Replacement demand pick-up down South is still slow and has not picked up as expected in some of its core segments such as wires...