Buy V Guard Industries; target of Rs 455: Anand Rathi

Anand Rathi's research report on V Guard Industries

V-Guard’s Q2 EBITDA beat our estimate by 4.4%, driven by stronger margins in Electricals and a sharp Sunflame recovery from all-time lows. SDA demand was soft on unseasonal rains and GST-related disruptions, leading to FY26 revenue guidance cut to 10–12% (from 14–15%). We expect an 11.2% revenue CAGR (in line with the industry) and a 180bp margin expansion driven by recovery in Sunflame and consumer durables over FY25–28, translating to a 20.4% PAT CAGR and a 570bp better RoCE to 22.7%. The stock trades near -1SD, offering limited downside. We maintain a Buy with a Rs455 TP (40x Sep’27e EPS).

Outlook

We trim FY26e/FY27e/FY28e margins 3bps/5bps/1bps to reflect a slower than-expected recovery in consumer durables. At the CMP, the stock trades at 36.1x/28.8x FY27e/FY28e EPS, near its –1SD valuation, implying limited downside. We maintain BUY with a Rs455 TP (based on 40x Sep’27e EPS).