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V-Guard Indusries
V-Guard Industries (VGI) is a well-established brand in electrical and household goods, particularly in south
India. The company started with one product, stabilisers, where it is the market leader. Over the years, it has
successfully ramped up its operations and network to become a multi-product company. VGI presently
manufactures and markets stabilisers, pumps, cables (house wiring, industrial), water heaters, solar water
heaters, UPS, electric fans etc.
Having a strong distribution network in south India, the company has recently forayed into non-south Indian
markets and is particularly focusing on the tier-II and tier-III cities where there is a lot of latent demand for its
products.
VGI has witnessed a CAGR of 27.3% in its revenues over FY05-10, driven by the successful ramp-up of its
operations and distribution network, introduction of new products, entry into non-south Indian markets and
the overall robust growth of the consumer durables industry. We expect VGI to more than double its net
revenues and earnings over FY10-12 driven by a multifold rise in sales from non-south Indian markets, an
exponential growth in its newer products like power cables and UPS, and the booming consumer spending.
At the current market price, the stock trades at 10.5x and 7.1x its FY12E and FY13E earnings respectively. We
currently have a Buy recommendation on the stock with a price target of Rs237. The near-term trigger in the
stock is its Q4FY11 performance where we are expecting a 41.3% Y-o-Y growth in PAT.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
V-Guard Indusries
V-Guard Industries (VGI) is a well-established brand in electrical and household goods, particularly in south
India. The company started with one product, stabilisers, where it is the market leader. Over the years, it has
successfully ramped up its operations and network to become a multi-product company. VGI presently
manufactures and markets stabilisers, pumps, cables (house wiring, industrial), water heaters, solar water
heaters, UPS, electric fans etc.
Having a strong distribution network in south India, the company has recently forayed into non-south Indian
markets and is particularly focusing on the tier-II and tier-III cities where there is a lot of latent demand for its
products.
VGI has witnessed a CAGR of 27.3% in its revenues over FY05-10, driven by the successful ramp-up of its
operations and distribution network, introduction of new products, entry into non-south Indian markets and
the overall robust growth of the consumer durables industry. We expect VGI to more than double its net
revenues and earnings over FY10-12 driven by a multifold rise in sales from non-south Indian markets, an
exponential growth in its newer products like power cables and UPS, and the booming consumer spending.
At the current market price, the stock trades at 10.5x and 7.1x its FY12E and FY13E earnings respectively. We
currently have a Buy recommendation on the stock with a price target of Rs237. The near-term trigger in the
stock is its Q4FY11 performance where we are expecting a 41.3% Y-o-Y growth in PAT.
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