Earnings Update - V-Guard Industries (VGRD IN) - Robust performance across segments - CSEC Research

Robust performance across segments

- In 4QFY17, VGIL posted strong revenue growth of 21.4% YoY to INR 6,233mn aided by robust performance across segments. In terms of geography, Non-south markets recorded robust growth of 31% YoY while South markets grew by 17% YoY.

- Pumps grew 23.5% YoY (accounts for 14.4% of the 4QFY17 revenue), stabilizers (accounts for 19.5% of the 4QFY17 revenue) grew by 24.9% YoY, UPS segment (Digital & Standalone) which accounts for 10.6% of 4QFY17 revenue, grew by 29.3% YoY. Fans (accounts for 14.0% of the 4QFY17 revenue) grew by 14.3% YoY, and water heater (accounts for 7.9% of the 4QFY17 revenue) grew by 10.3% YoY. Newly launched products such as Kitchen appliances and switchgears have gained traction (accounts for 3.4% of the 4QFY17 revenue) and have grown 23.0% YoY. Kitchen appliances (accounts for 1.5% of the 4QFY17 revenue) grew by 9.7% YoY. Switchgears (accounts for 1.9% of the 4QFY17 revenue) grew by 34.5% YoY.

Valuation: At CMP, the stock trades at 29.8X and 24.9X FY18E & 19E respectively. We are positive on the long term outlook of the company, given its market leadership position, strong financial track record, strong levers for margin expansion and quest to become a pan-India player. We maintain the stock with a BUY rating with target price to INR 255 implying a PE of 35X FY19E.

Risks: downturn in consumer sentiment, competition from both foreign and domestic players, and increase in its raw material prices.

Shares of V-GUARD INDUSTRIES LTD. was last trading in BSE at Rs.183.25 as compared to the previous close of Rs. 182. The total number of shares traded during the day was 2455848 in over 1851 trades.

The stock hit an intraday high of Rs. 186.95 and intraday low of 179.95. The net turnover during the day was Rs. 443134834.

Source : Equity Bulls

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