SPA Securities is bullish on V-Guard Industries has recommended buy rating on the stock with a target price of Rs 248 in its research report dated December 17, 2018.
SPA Securities' report on V-Guard Industries
V-Guard's revenue base is very well diversified with stabilisers (19% of revenue), UPS (12%), C&W ( 30%), Pumps (12%), Water heaters (12%), and Fans (10%). Revenues are growing consistently at 15% annually very much in line with mgt. Guidance. In FY'19, due to exceptional event of heavy floods in Kerala, revenue growth was a tad lower at ~ 10% to Rs 1,232 crs. Kerala forms as high as 25% of the company's revenue. V-Guard has strong pipeline of new & innovative products developed through its R&D team. The company last year enetered air coolers business on pilot basis & has plans to launch the same pan-India in current year.
We estimate earnings to compound at 33% annually over FY'18-'20. Strong double digit revenue growth (14% CAGR) & robust return ratios aided by debt free BS enables us to recommend BUY on the stock with PT of Rs 248 ( 45x FY'20 E EPS).
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