Emkay Global Financial's report on V-Guard Industries
VGRD posted revenue/EBITDA beat of 5%/14%, but the contraction in GM continued with it declining by 268bps yoy/189bps qoq to 28.7%. Lower than estimated other opex and employee cost partially offset GM contraction impact. EBITDAM was 10.6% (-240bps yoy). The Electronics segment's EBIT margin fell sharply (-399bps yoy), as did Consumer Durables (-231bps yoy). Compared with FY21, the revenue contribution from the South was stable in FY22, at 58%. Demand in the North and West regions remain healthy. Channel inventory is not very high currently, and demand for the Consumer Durables segment is expected to be healthy. Inventories at the company level should also moderate gradually. The focus remains on increasing in-house manufacturing.
Management believes the maximum impact of commodity inflation on GMs is already reflected in Q4. We are raising FY23-24 revenue estimates by 5%, along with a 1%/4% increase in EBITDA. Retain Hold with a revised Jun'23E TP of Rs245 (31x Jun'24E EPS).
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