Cholamandalam Securities is bullish on V-Guard Industries has recommended buy rating on the stock with a target price of Rs 282 in its research report dated July 26, 2019.
Cholamandalam Securities' research report on V-Guard Industries
In 1QFY20, VGIL reported a revenue growth of 10% YoY to INR 7bn (net of GST). Revenue growth was driven by Electronics and Consumer Durables while Electricals Segment was impacted by trade destocking of wires category caused by downward trend in copper prices. South markets witnessed a steady growth of 7.1% YoY to INR 3.8bn and accounted for 54% of total sales. The company made good progress in the Non-South markets growing 14% YoY to INR 3.2bn accounting for 46% of company’s total sales. VGIL plans to extend their new products to some Non-Southern regions during the year. Electronics segment which contains Stabilizers, UPS, Solar Inverter, contributing to 40% of company’s revenues grew 17.6% YoY to INR 2.83bn on account of seasonality. Electricals segment which includes wires, pumps, switchgears and modular switches accounting for 38% of the revenue grew a meager 0.7% YoY to INR 2.63bn. Consumer durables segments (Fans, Water Heaters, Kitchen Appliances and Air Coolers) grew 15.3% YoY to INR 1.53bn.
At CMP the stock trades at 46X & 39X FY20E & FY21E respectively. We are valuing the company 47XFY21E EPS to arrive at a target price of INR 282 and maintain BUY rating.
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