Buy V-Guard Industries; target of Rs 300: Sharekhan

Sharekhan's research report on V-Guard Industries

VGIL’s Q2 performance was below estimates on the profitability front mainly due to poor performance of the electricals segment. Consumer durables reported healthy growth and firm margin on a y-o-y basis. The company aims to scale up in-house manufacturing to enhance competitiveness and efficiency, which would lead to margin improvement. Manufacturing facilities for fans, inverters, and batteries are expected to come on board in the near future. The company expects GPM/OPM to revert to pre-Covid levels in Q4FY2023, given cooling-off of commodity prices, increased in-house manufacturing, and depletion of high-cost inventory.

Outlook

We retain our Buy rating on V-Guard Industries Limited’s (VGIL) with an unchanged PT of Rs. 300, given increasing presence in non-South markets, entry into new product categories, and volume-driven growth across verticals.

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V-Guard Industries - 31-10-2022 - khan