V-Guard Industries Ltd. share price target

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...

V-Guard Industries Ltd (VGIL) is one of the leading players in electrical consumer durables space. Major product segment includes Stabilizers, Cables & Wires, UPS, Pumps and Electrical Appliances. Q3FY19 revenue grew by 12% but PAT declined by 6% YoY. EBITDA margin fell by 180bps YoY to 7.6% on account of volatility in commodity prices & INR depreciation. Management's focus on Non-South market, new product launches and expanding retail chains will drive growth....

We maintain BUY. V-Guard reported a mixed bag with in-line revenue growth and miss on EBITDAM. In the backdrop of volatile commodity prices, the co. was unable to pass on input costs given the weakness in Kerala (~25% revenue mix). South market clocked 9% revenue growth (a 7 quarter high) despite weakness in Kerala (impacted by floods). Non-South market (37% revenue mix) continued to outperform with 18% revenue growth. EBITDA/APAT grew by -9/-6% (exp. 6/10%).

(19% of revenue), UPS (12%), C&W; ( 30%), Pumps (12%), Water Strong return ratios & Debt free BS to aid inorganic growth heaters (12%), and Fans (10%). Revenues are growing consistently V-Guard's return ratios are strong with ROE in 18-22% range driven at 15% annually very much in line with mgt. Guidance. In H1FY'19, by a combination of asset-light business model with it outsourcing due to exceptional event of heavy floods in Kerala, revenue growth ~ 60% of its production. At the same time, its gross margins are...

(19% of revenue), UPS (12%), C&W; ( 30%), Pumps (12%), Water Strong return ratios & Debt free BS to aid inorganic growth heaters (12%), and Fans (10%). Revenues are growing consistently V-Guard's return ratios are strong with ROE in 18-22% range driven at 15% annually very much in line with mgt. Guidance. In H1FY'19, by a combination of asset-light business model with it outsourcing due to exceptional event of heavy floods in Kerala, revenue growth ~ 60% of its production. At the same time, its gross margins are...

V-Guard's Q2FY19 performance was largely impacted by Kerala floods and a weak summer for its products like stabilisers and pumps (both together contributed ~30% to FY18 topline). Hence, the large part of growth in Q2FY19 came in from consumer durable segment (up ~12% YoY) driven by newer products categories like switchgear, kitchen appliances. On the geographical front, non-south markets saw healthy topline growth of ~20%. Revenue contribution from non-south increased from...