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

Sharekhan is bullish on V-Guard Industries has recommended buy rating on the stock with a target price of Rs 300 in its research report dated May 31, 2023.

Broker Research

June 02, 2023 / 11:52 IST

Buy

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.

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