Buy V-Guard; target of Rs 238: HDFC Securities

HDFC Securities' research report on V-Guard

V-Guard reported a mixed bag with in-line revenue growth and miss on EBITDAM. In the backdrop of volatile commodity prices, the co. was unable to pass on input costs given the weakness in Kerala (~25% revenue mix). South market clocked 9% revenue growth (a 7 quarter high) despite weakness in Kerala (impacted by floods). Non-South market (37% revenue mix) continued to outperform with 18% revenue growth. EBITDA/APAT grew by -9/-6% (exp. 6/10%).

Outlook

We value V-Guard at 35x P/E on Dec- 20EPS, with TP of Rs 238 (Rs 249 earlier). We maintain BUY.

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