Muted performance led by electrical division • V-Guard :: ICICI Securities

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V-Guard Industries - Stellar performance; Result Update Q2FY15 :: Edelweiss PDF link

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Strong operational performance… • V-Guard :: ICICI Securities,

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V-Guard Industries: BUY :: Business Line

V-Guard Industries Ltd. Result as per our estimates: GELP

Q4FY13 Result Highlights
For the quarter ended March 2013, V-Guard reported a top line of `3,787 mn, compared to
`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 `136 mn as compared to `30 mn in Q4FY12. There
was a one-off expense in the quarter of `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 `63 mn and after giving effect depreciation and taxes, the company’s PAT stood at
`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

Q4 FY13 Result V-Guard India: Team Microsec Research

Q4 FY13 Result

V-Guard India Ltd Net Sales increased by 39% YOY to INR379 crore YOY whereas its EBITDA decreased by 40% YOY to INR20 crore on back of higher advertisement and raw material expenses. EBITDA Margin of the company decreased from 12.1% to 5.3% YOY.PAT decreased by 53% YOY to INR9 crore.  The Result was well below estimates

FY13 Annual Result

In FY13, the company’s Net Sales increased by 41% YOY to INR1360 crore YOY and it’s EBITDA increased by 18% YOY to INR110 crore. EBITDA Margin of the company decreased from 9.7% to 8.1% YOY. PBT increased by 19% YOY to INR82 crore. PAT increased by 24% YOY to INR63 crore due to lower taxes. At the CMP of INR503, the stock is trading at a P/E of 23.8x on its FY13 EPS of INR21.1.

DESCRIPTION	Mar-13	Dec-12	Mar-12	QOQ	YOY	FY13	FY12	% change
Total Income	379	349	273	9%	39%	1360	965	41%
Total Expenditure	359	323	240			1250	871
PBIDT (Excl OI)	20	26	33	-22%	-40%	110	94	18%
EBITDA (%)	5.3%	7.4%	12.1%			8.1%	9.7%
Other Income	1	1	1			4	2
Operating Profit	20	27	34			114	96
Interest	6	5	4			20	17
PBDT	14	22	30			94	79
Depreciation	3	3	3			11	10
PBT	11	19	27	-41%	-58%	82	69	19%
Tax	2	4	8			19	18
Profit After Tax	9	15	19	-42%	-53%	63	51	24%
PAT(%)	2.4%	4.4%	7.0%			4.6%	5.3%
Equity Capital	29.85	29.85	29.85			29.85	29.85
Face Value (In Rs)	10.00	10.00	10.00			10.00	10.00
No. of shares	2.98	2.98	2.99			2.98	2.98
EPS	3.0	5.14	6.42	-42%	-53%	21.1	17.0	24%

Regards,

Team Microsec Research

V‐Guard Industries:: Outstanding performance continues; Maintain ‘BUY’ and Upgrade TP to Rs. 519:: Karvy

Outstanding performance continues; Maintain
‘BUY’ and Upgrade TP to Rs. 519
Robust growth in top‐ and bottom‐line: V‐Guard’s top‐line grew by 43%
YoY to Rs. 3,135mn in Q2FY13 due to strong growth in pumps, PVC cables,
LT cables and digital UPS. The company has increased EBITDA by 99% YoY
to Rs. 300mn and expanded the margin by 270 bps to 9.6% as Q2FY12
performance was marred by copper price crashing. Net income increased by
163% YoY to Rs. 180mn.

Technicals-Castrol, ACC, V-Guard, Tata Teleservices, IRB :: Business Line

V-Guard Industries Ltd. Management re-iterates growth momentum: IDBI cap

We hosted a two day road show with the management of V-guard Industries. Key take away from the meetings were:
 Management re-iterates 25% growth in revenues during FY13
V-Guard management has re-iterated guidance of 25% growth in revenues in FY13. Growth will come from across product categories. Management has indicated Non-South markets will grow at a higher pace as compared to the South markets in FY13. During Apr-May, 2012 it has witnessed descent growth which has further given it confidence to achieve its yearly guidance.

V Guard Industries Ltd. :: Nirmal Bank

V Guard posted a strong quarter in terms of Net Sales/EBITDA/PAT growing 24.3%/69.9%/34.7% respectively. The EBITDA margin improved by 320bps YoY to 11.9% and 300bps QoQ on account of strong EBIT margin in all the business segment supported by decline in raw-material cost and selling & distribution expenses. The PAT registered a growth of 34.7% YoY to Rs. 19.17 crores and 54% QoQ. The PAT margin was improved by 50bps YoY to 6.9% and 200bps QoQ. We remain positive on the stock owing to strong domestic business, steady penetration in non-south market and gradually expansion of product portfolio, V Guard is set to outperform in the consumer durable space.

V-Guard Industries: Buy :: Business Line

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Investors with a two-year perspective can buy into the stock of V-Guard Industries. V-Guard's strong sales and the correction in copper prices since March, which should expand margins, are arguments in favour of investing in the company.

At the current market price of Rs 216, the stock discounts its 12-month earnings by 15 times. For the June quarter of FY12 the company reported a growth of 43 per cent in sales and 11 per cent in net profits. In the September quarter sales continued to grow strongly but profits declined on higher selling expenses and input costs. V-Guard may, however, see operating profit margins improve from now with copper prices down 15 per cent from the peak seen in July and one time costs on an advertisement campaign already charged to profits. The stock is a play on the growing market for consumer electronics. V-Guard's portfolio, which initially had only voltage stabilisers and cables, now includes pumps and motors, fans, geysers, solar water heater and UPS.

Last year, V-Guard launched new models across product categories. Five-star rated energy efficient models in pumps and motors, decorative models in ceiling fans and stabilisers for washing machines are among them. The company also made in-roads into the northern market. Thanks to these initiatives the company achieved a 60 per cent growth in top-line in 2010-11 followed by a 40 per cent growth in sales for the first six months of 2011-12. In terms of revenue contribution, cables are the largest product category for V-Guard. Wiring cables contribute 28 per cent and voltage stabilisers 23 per cent to overall sales. Though air-conditioner sales has witnessed a slowdown in the market in the last few months, higher demand for panel televisions from Tier-II towns will keep up voltage stabiliser demand for the company. Low-ticket consumer electronic items such as electric fans, water heaters and UPS may see good demand growth with higher rural spending over the coming months given that there was a good monsoon and above average rainfall this year.

V-Guard's solar water heater business looks promising over the long term. With the Government subsidising the cost of a solar water heater to promote use of renewable energy, there has been growth in demand for these products from the industrial users.

SOFTENING INPUT PRICES

Copper and aluminium are two key inputs for V-Guard. A 21 per cent rally in copper price and a 14 per cent increase in price of aluminium between March-2010 and March-2011 kept company's profit margins under check. For 2010-11 the company's reported operating profit margins was at 10.8 per cent (versus 11.4 per cent in previous year). In the recent September quarter operating profit margins fell further to 7 per cent on sustained increase in input prices and higher selling and distribution expenses. Poor demand in the fans and pumps segment on extended winter led to an inventory build in the company's warehouse and V-Guard had to push them by offering additional discounts. This had pushed up selling expenses. The cost incurred on the ad-campaign for voltage stabilisers was charged to profit in the September quarter and this too ate into profit margins.

There is, however, some respite for V-Guard on input front now. Both copper and aluminium have seen price corrections on global growth worries. From the peak price of $9,830 a tonne in July, copper has dropped to $8,149 a tonne now (lower by 15 per cent from the peak). Though part of this fall is offset by rupee depreciation, we expect relief on margins in the December quarter from lower input costs and selling expenses will be lower.

Outstanding loan in V-Guard's balance sheet as of end-March 2011 was Rs 139.7 crore. The debt-to-equity ratio stands at 0.8. The company's interest expense, though, has increased significantly in the last year on higher working-capital borrowings, the interest coverage ratio is still at a comfortable five times.

V-Guard Industries : :: Mahurat Picks for Diwali 2011 ::ShareKhan

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V-Guard Industries
Remarks : V-Guard Industries was started in 1977 as a small-scale industry (SSI) unit to manufacture and market
voltage stabilisers under the brand name V-Guard. Over the years, the company has emerged as the
leading player in the stabiliser market with ~15% market share. The company has a diversified client base
and an extensive marketing & distribution network.
It has witnessed a CAGR of 27.3% in its revenues over FY2005-10 and is expected to grow at a much faster
rate of 37.6% CAGR over the next four years. The growth will be driven by a multifold rise in the sales from
regions other than south India, an exponential growth in newer products like power cables and UPS
systems and the domestic consumption boom.
The company has recently also entered non-South India and is particularly focusing on the tier-II and III
cities where there is a lot of pent-up demand for its products .We expect the company to post a CAGR
of 38% in its earnings over FY2011-13.

click link below for COMPLETE list, details of other company in Mahurat Picks for Diwali 2011 ::ShareKhan

Mahurat Picks for Diwali 2011 ::ShareKhan

Accumulate V-Guard Industries - Play on mass consumption story: IDBI capital

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V-Guard is into the manufacturing and marketing of products such as stabilizers, cables, water and solar
heater, pumps, fans, UPS and Digital UPS which have mass consumption demand. It is a significant brand in
South India. It has recently expanded operations pan India and we believe the market for its products offer
high growth opportunities. We expect revenue/PAT CAGR of 28%/25% during FY11-13. Maintain ACCUMLATE
and price target of Rs244 (12x PER FY13E).
Investment Highlights
 A play on the mass consumption market in India
V-Guard products are consumed by the mass market. As per NCAER, the number of middle income households
is going to increase by 70% to 238 mn households by 2015. The growing middle class in India, lower penetration
of household appliances, increasing housing activity will lead to sustained demand for the company's product
portfolio. Also increased power availability in the country over the next few years will result in higher demand.
 Broad portfolio + wide distributor network + prominent brand name = High Growth
V-Guard over the last decade has expanded its product portfolio from stabilizers and cables to many other
products such as pumps, electric and solar water heaters, UPS, Digital UPS and Fans. These products have
high demand especially in the semi-urban and rural market. It has also over the past three years nearly doubled
its distribution network (208 distributors, 2,688 dealers and ~11,000 retailers) and thus addressed the wide
spread market. As it has a strong brand name, it has been able to enter newer consumer related products and
has significant presence. We believe the robust product portfolio along with a wide reach will enable a
revenue/PAT CAGR of 28%/25% during FY11-13.
 Expanding geographical reach to aid high growth
V-Guard has predominantly been a South Indian player but over the past few years it has expanded its presence
across India. It has been able to penetrate the newer markets due to its product portfolio and ability to set up a
wide distribution network. In order to cater to the growing market it has also increased its product portfolio.
VGuard
has grown its revenues from Non-South markets from 3% of sales in FY07 to 22% in FY11. We believe
that the increased product portfolio, wide distribution network and new geographical markets will result in
sustainable growth over the next few years.
 Revenue/PAT CAGR of 28%/25% during FY11-13
V-Guard had a top line and bottom line CAGR of ~34% during FY06-11. Going ahead, we expect revenue/PAT
CAGR of 28%/25% during FY11-13 due to entry into new markets and increased revenues from its expanded
product portfolio. V-Guard OPM is expected to decline by ~15bps (9.9%) in FY12 and by further ~10bps (9.8%) in
FY13 due to increased contribution from low margin products (cables, fans etc) and raw material cost pressure.
 Working Capital cycle to stabilize
V-Guard‟s working capital increased significantly in FY11 primarily due to higher inventory. The increase in
inventory was primarily due to higher stocking of finished goods in order to cater to the high demand period
(AprJun).
Management has guided that going ahead the working capital should reduce due to lower debtor days
by giving cash discounts and providing channel financing too. Also prudent inventory management will enable
inventory days to reduce.
 Attractive Valuation: Maintain ACCUMULATE and a price target of Rs244
V-Guard has outperformed the BSE sensex (return of ~34% since our coverage in August, 2010 as against BSE
giving negative returns of 8%). Going ahead, we believe the company is poised for high growth as it has created
a broad portfolio, wide distribution network and a strong brand name. We continue to value V-Guard at a PER of
12x FY13 and maintain our target price of Rs244.

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Consumption - A play on the evergreen, resilient theme: IDBI Cap

V-Guard Indusries- Sharekhan Top Picks: May 2011

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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.