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).
Outlook
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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