V-Guard Industries Ltd. share price target

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. The extent of the impact from de-stocking lead by GST was completely...

We upgrade our rating to BUY with a TP of Rs 207. V-Guards 1QFY18 performance was disappointing, mainly on the margin front. However, factors like healthy underlying growth, recovery witnessed in July, and the recent price hike inspire confidence in the companys future prospects and performance in the coming quarters. We foresee EPS CAGR of 27% over FY17-20.

V-Guard recorded flattish revenue in Q1FY18 due to GST related temporary de-stocking by trade leading to a drop in volume. Consumer durable (CD) segments recorded ~9% YoY dip in sales while revenue of other two segments electronics and electricals increased by ~4% each YoY. Geographically, south regions (contributes 62% to sales) recorded ~2.4% YoY dip in sales while non-south regions continued to grow ~8% YoY during Q1FY18 The rise in raw material coupled with a delay in passing on prices...

Post demonetisation, V-Guard posted strong revenue growth of 21% led by strong sale growth of stabilisers, inverters, pumps and wire & cable segments, to 25%, 29%, 24% and ~21% YoY, respectively. Revenue from the non-south region recorded strong growth of ~31% YoY. The company also launched its smart series inverter, which is controlled by an intuitive smart phone app The rise in raw material coupled with a delay in passing on prices led to a contraction in gross margin by ~190 bps YoY. In addition, one...

V-Guards 4QFY17 revenue grew by a strong 21% (17% volume growth) to Rs 6.2bn (est 16% growth). V-Guard?s revenue recovery was encouraging, as 3QFY17 revenue growth was only 10% owing to the demonet impact. Cables & Wires, Stabilizers, Pumps and Fans (80% of business) registered robust growth of 21%, 25%, 24% and 14% respectively.

V-Guards 3QFY17 revenues grew by 10.4% YoY to Rs 4.6bn ? ahead of our expectation of 5% growth. EBITDA & APAT was up by 11% & 30%. V-Guard has delivered such an encouraging performance during tough times. It has increased our confidence on V-Guard?s core competence.

We arranged investor meetings for V-Guard. Our confidence in long term business trajectory has improved, despite the near term tremors caused by demonetisation. The company is confident of achieving 15% revenue growth in FY17 with 11% EBITDA margin. However, we are factoring 13.5% sales growth for FY17 as demonetisation has impacted the overall retail demand.

ICICI Securities Ltd | Retail Equity Research V-Guard reported a strong Q2FY17 performance with revenues and earnings growth of ~14% and ~71% YoY, respectively. Growth has been broad-based across all product categories driven by better market conditions and good response during Onam. Stabilisers, water heater and pump segments, recorded sales growth of 15%, 25% and 20% YoY, respectively. Realisation of the cable & wire segment remained subdued due to a decline in commodity prices....