Sharekhan's research report on V-Guard Industries
Q4 numbers were weak as poor sales in South Indian markets particularly in electricals and consumer durable segments hit performance. High-cost inventory and increased advertising expenses impacted the profitability. The management expects 14-15% revenue growth in FY2024 as it expects a recovery in consumer durables and electricals. GPM/OPM to recover in FY2024, given better demand, higher in-house manufacturing and depletion of high-cost inventory. Sunflame’s acquisition would help unlock synergy benefits in geography, product portfolio, and channels as it is dominant in north and west through traditional channels. V-Guard can help strengthen Sunflame’s presence in south markets and on e-commerce/modern trade channels.
Outlook
We maintain a Buy with a revised PT of Rs. 300, given widening presence in non-south markets, entry into new product categories, the Sunflame acquisition, and volume-driven growth across verticals. We build in Revenue/PAT growth of 15%/~34% over FY2023-FY2025E. The stock trades at a P/E of ~32xFY2025E EPS.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.