Reduce V-Guard Industries; target of Rs 180: Dolat Capital
Dolat Capital recommended reduce rating on V-Guard Industries with a target price of Rs 180 in its research report dated July 28, 2020.
July 30, 2020 / 06:58 PM IST
Dolat Capital's research report on V-Guard Industries
V-Guard saw Sales declined 42% at Rs4bn, while EBIDTA was down 87% at Rs91mn. EBIDTA margins were down 794bps yoy at 2.2, while PAT was down 93% at Rs36mn. However, WC improved sequentially on the back of inventory drawdown and better collections in the quarter. 72% of its portfolio, contributing 83% of its profits, depend on growth of other products like ACs and appliances or geared towards long cycle recovery plays like real estate. We trim our FY21 estimates to factor in the weak Q1 numbers (Refer Exhibit 2).
While V-Guard is a well-run company with quality management, given the longer recovery cycle, we maintain Reduce with a TP of Rs180, valuing it at 38XFY22E.
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