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Research
V-Guard Industries - Result as per our estimates - GEPL Capital
Posted On : 2013-05-19 00:21:25( TIMEZONE : IST )
Q4FY13 Result Highlights
For the quarter ended March 2013, V-Guard reported a top line of Rs. 3,787 mn, compared to Rs. 2,734 mn in 4QFY12, marking a YoY growth of 39%. Revenue growth was the result of growth in two major divisions of the company viz. Electronics (stabilizers, UPS and inverters) and Electrical/Electro Mechanical (cables & wires, water heaters etc), which grew by 38% and 39% YoY respectively. As expected, the sales in non south market grew by around 75% and its core south market sales grew by 30% during the quarter.
However, EBITDA margins for the quarter were significantly lower to 5.3% (down 680 bps YoY) due to higher advertising spends and inventory write-down due to fall in copper prices. Advertising expenses for the quarter stood at Rs. 136 mn as compared to Rs. 30 mn in Q4FY12. There was a one-off expense in the quarter of Rs. 30 mn on account of shifting the solar water heater factory from Coimbatore to Perundurai. Another hit in EBITDA margin was on account of an increase in the freight costs which could not be passed on to the consumer due to severe price cuts given the sharp correction in copper prices. Interest expense for the quarter were up by 43% YoY to Rs. 63 mn and after giving effect depreciation and taxes, the company's PAT stood at Rs. 89mn (down 53% YoY). On the positive side, the company has informed that it has already undertaken price increases in 1QFY14, as demand has started picking up given onset of summer season.
Outlook & Valuation
As expected, the company's contribution to revenue has improved from its non south market as compared to its incumbent southern market. In addition to that V-Guard has increased prices at around 5-6% in stabilizers and invertors, which will be reflected fully in Q2FY14. All in all we observe this result as completely at par with our estimates and even the development are taking place as per our mentions in the IC report. We maintain our FY14 and FY15 estimates and our BUY rating for the company with the target price of Rs. 601.
