V-Guard Industries - Q4FY21 First Cut - ICICI Direct

(CMP: Rs. 250; MCap: Rs. 10750 crore)

V-Guard Industries results were ahead of our estimates on both revenue & earnings front.

Q4FY21 Earnings Summary

- The company witnessed strong set of results with net sales growth of 58% to Rs. 855.2 crore (I-direct estimate: Rs. 733.8 crore) mainly on account of steep sales decline in base quarter. Electronics (stabilizer & UPS) & Electricals segment (Pump and Wire & Cable business) saw sales growth of 62% & 58% respectively. Consumer durable segment sales also grew by strong 55% during the quarter

- Gross margins contracted by 200 bps with sharp increase in key raw material prices (Copper). However, the company was able to save 113 bps in employee spends & 536 bps in other overhead spends. This resulted in operating profit growth of 42% to Rs. 110.4 crore. Operating margins expanded by 448 bps to 12.9% during the quarter

- Led by strong operating profit growth & stable interest expense, net profit grew by 112.1% to Rs. 68.4 crore (I-direct estimate: Rs. 57 crore)

We believe strong recovery in consumer demand & some pent up demand from previous quarters has led to the strong growth across segments for the company. Even on a full year basis, the company saw 8.7% growth reflect that sales was completely recovered in H2FY21 despite severe disruption in initial lockdown period. The company has been able to move its margins territory upwards in last five year despite many disruptions (Demonetisation, GST implementation, unfavourable summer & Covid-19 related lockdown). This reflects certain pricing power with the V-Guard brand. We remain positive on the stock.

We will be coming out with detailed report post result conference call.

Shares of V-GUARD INDUSTRIES LTD. was last trading in BSE at Rs.262.9 as compared to the previous close of Rs. 249.9. The total number of shares traded during the day was 363265 in over 9994 trades.

The stock hit an intraday high of Rs. 265.4 and intraday low of 251.9. The net turnover during the day was Rs. 94257007.

Source : Equity Bulls

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