V-GUARD INDUSTRIES LTD
Result Update (PARENT BASIS): Q1 FY15
BUY
CMP
891.00
Target Price
1005.00
OCTOBER 16th 2014
ISIN: INE951I01019
Index Details
Stock Data
Sector
BSE Code
Face Value
52wk. High / Low (Rs.)
Volume (2wk. Avg.)
Market Cap (Rs. in mn.)
Highlights
Electrical Equip.
532953
10.00
936.70/403.05
5029
26594.12
•
V-Guard Industries Limited, a Kochi based, multiproduct company caters to Light Electricals
sector
manufacturing
voltage
stabilizers,
Invertors & Digital UPS systems, Pumps, House
wiring/LT cables, Electric water heaters, Fans
and Solar water heaters etc.
•
V-Guard’s net sales registered 17.04% increase
and stood at Rs. 4776.96 mn in Q1 FY15 against
Rs. 4081.59 mn in the corresponding quarter of
the previous year.
•
Net Profit and EBDITA rose by 26% and 28%
respectively in Q1 FY15 compared to the same
quarter in the previous year.
•
Net profit and EBDITA stood at Rs. 222.55 mn
and Rs. 411.07 mn in Q1 FY15 against Rs. 176.43
and Rs. 320.41 mn respectively in the
corresponding quarter of the previous year.
•
Profit before Tax stood at Rs. 319.99 mn against
Rs. 236.84 mn in the corresponding quarter of the
previous year, rising by 35.11% YOY.
•
Net profit and EBDITA margin also improved by
34 and 76 basis points in Q1 FY15 compared to
corresponding quarter in the previous year.
•
Net Sales and PAT of the company are expected to
grow at a CAGR of 13% and 15% over 2013 to
2016E respectively.
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS
Net Sales
EBITDA
Net Profit
EPS
P/E
FY14A
15175.63
1273.85
701.34
23.50
37.92
FY15E
17300.22
1471.73
836.76
28.03
31.78
FY16E
19376.25
1627.52
953.34
31.94
27.90
Shareholding Pattern (%)
1 Year Comparative Graph
V- GUARD INDUSTRIES LTD
PEER GROUPS
company name
V-Guard Industries Ltd
Havells India Ltd
Honeywell Automation India Ltd
KEI Industries Ltd
S&P BSE SENSEX
CMP
MARKET CAP
EPS
P/E (X)
P/BV(X)
DIVIDEND
(Rs.)
891.00
267.85
5320.00
32.75
Rs. in mn.
26594.12
167675.00
47081.10
2529.50
(Rs.)
23.50
7.87
109.73
1.83
Ratio
37.92
34.12
48.53
17.90
Ratio
8.35
7.87
6.03
0.94
(%)
45.00
300.00
100.00
10.00
QUARTERLY HIGHLIGHTS (PARENT BASIS)
Q1 FY15
Net Sales increased by 17.04% from Rs. 4081.59 mn
to Rs. 4776.96 mn in Q1 FY15. Net profit zoomed by
Rs. In Million
Jun-14
Jun-13
Change
26.14% at Rs. 222.55 mn and EBITDA by 28.29% at
Net Sales
4776.96
4081.59
17.04%
Rs. 411.07 mn in the current June quarter. Net profit
Net Profit
222.55
176.43
26.14%
Net Profit Margin
4.66%
4.32%
34 BP
quarter in the previous year. Other Income declines
EBITDA
411.07
320.41
28.29%
by 40.11% at Rs. 6.57 mn against Rs. 10.97 mn in Q1
EBITDA Margin
8.61%
7.85%
76 BP
Other Income
6.57
10.97
-40.11%
319.99
236.84
35.11%
and EBITDA margin also improved by 34 and 76
basis points in Q1 FY15 compared to corresponding
FY14. Profit before Tax grew by 35.11% to Rs.
319.99 mn from Rs. 236.84 mn in corresponding
quarter of the previous year.
PBT
Break up of Expenditure
In Rs. Mn
Q1 FY15
Q1 FY14
CHNG %
Cost of Material
1237.74
1070.34
16%
Emply Benefit Exp
254.34
216.73
17%
Dep& Amortiz Exp
37.08
28.70
29%
Other Exp
251.22
218.39
15%
Stock in Trade
2288.11
1675.36
37%
Selling &
Distribution
330.00
308.05
7%
Segment Revenue
V-Guard started its operations with the manufacture of stabilizers. Started in 1977, the company has diversified
into various product categories such as house wiring cable, LT cables, pumps and motors , electric water heaters,
solar water heaters, digital UPS, fans, standalone UPS systems. New additions have been made in the form of
induction cooktops and switchgears. All these products are divided into three main segments; electronics,
electrical and others. Revenues from electronics segment increased by 17% from Rs. 1650.68 mn to Rs. 1934.46
mn in Q1 FY14. Electrical/Electro-mechanical segment rose by 17% from Rs. 2351.66 mn to Rs. 2746.70 mn in
the current June Quarter FY15. Others segment was up by 21% in the Q1 FY15 compared to corresponding
quarter in the previous year.
COMPANY PROFILE
V-Guard Industries Limited, a Kochi based company, was established in 1977 by Kochouseph Chittilapilly to
manufacture and market Voltage stabilizers. The Company has since then established a strong brand name and
also diversified to become a multi-product company catering to the Light Electricals sector manufacturing
voltage stabilizers, Invertors & Digital UPS systems, Pumps, House wiring/LT cables, Electric water heaters, Fans,
Solar water heaters etc. The company has recently also forayed into Induction cook tops and switchgears. VGuard outsources 60% of its products and the rest are manufactured in – house by the company. The company
has manufacturing facilities at Coimbatore (Tamil Nadu), Kashipur (Uttaranchal) and Kala Amb (Himachal
Pradesh). V-Guard has been a dominant player in the South market but it has also successfully entered in non
south geographies. In 2008, the contribution to total revenues from non south market was 5% which has
increased to 25% in 2013. The company has a diversified client base and an extensive marketing & distribution
network. Its client base differs from product to product and includes direct marketing agents, distributors and
retailers. V- Guard has a strong network of 28 branches, over 230 distributors, 3,000 channel partners and
15,000 retailers across the country.
FINANCIAL STATEMENTS & ESTIMATIONS (PARENT BASIS)
(A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as on 31st March 2013 to 2016E
V-GUARD INDUSTRIES LTD
FY13A
FY14A
FY15E
FY16E
Share Capital
298.48
298.48
298.48
298.48
Reserves and Surplus
2314.83
2885.85
3405.30
3950.15
2613.31
3184.33
3703.78
4248.63
Long-term borrowings
320.42
310.00
294.50
282.72
Deferred Tax Liabilities [Net]
105.77
117.34
125.55
131.83
Other Long Term Liabilities
79.01
95.45
108.81
120.78
Long Term Provisions
34.08
40.67
45.96
50.55
539.28
563.46
574.82
585.89
Short-term borrowings
1253.91
681.84
559.11
503.20
Trade Payables
1629.34
1752.56
1857.71
1932.02
Other Current Liabilities
300.82
290.84
276.30
265.25
Short Term Provisions
211.97
276.58
318.07
349.88
3. Total Current Liabilities
3396.04
3001.82
3011.19
3050.34
Total Liabilities (1+2+3)
6548.63
6749.61
7289.80
7884.86
1313.19
1582.07
1824.63
2107.84
Intangible assets
68.92
79.93
89.52
97.58
Capital Work in Progress
73.60
34.11
39.23
43.93
Intangible assets under development
13.99
0.49
0.61
0.73
a) Sub total - Fixed Assets
1469.69
1696.60
1953.99
2250.08
b) Long Term Loans and Advances
186.27
90.01
108.42
122.42
1.11
0.05
0.07
0.08
1657.07
1786.66
2062.48
2372.59
Inventories
2485.72
2525.49
2626.51
2757.83
Trade Receivables
1987.99
2121.04
2248.30
2360.72
Cash and Bank Balances
149.67
27.67
31.82
40.73
Short Term Loans and Advances
267.77
287.76
319.42
351.36
0.41
0.99
1.28
1.63
5. Sub Total - Current Assets
4891.56
4962.95
5227.32
5512.27
Total Assets (4+5)
6548.63
6749.61
7289.80
7884.86
EQUITY AND LIABILITIES:
Shareholders’ Funds:
1. Net worth
Non-Current Liabilities:
2. Total Non Current liabilities
Current Liabilities:
ASSETS:
Non-Current Assets:
Fixed Assets
Tangible assets
c) Other non-current assets
4. Sub Total - Non Current Assets
Current Assets:
Other Current Assets
Annual Profit & Loss Statement for the period of 2013 to 2016E
Value (Rs. mn)
FY13A
FY14A
FY15E
FY16E
Description
12m
12m
12m
12m
13602.15
15175.63
17300.22
19376.25
Other Income
36.22
48.39
35.81
38.67
Total Income
13638.37
15224.02
17336.03
19414.92
Expenditure
-12502.79
-13950.17
-15864.30
-17787.39
Operating Profit
1135.58
1273.85
1471.73
1627.52
Interest
-199.71
-210.63
-193.78
-182.15
Gross profit
935.87
1063.22
1277.94
1445.37
Depreciation
-114.11
-120.39
-134.83
-148.32
Profit Before Tax
821.76
942.83
1143.11
1297.05
Tax
-192.61
-241.49
-306.35
-343.72
Profit After Tax
629.15
701.34
836.76
953.34
Equity capital
298.48
298.48
298.48
298.48
Reserves
2314.83
2885.85
3405.30
3950.15
Face value
10.00
10.00
10.00
10.00
EPS
21.08
23.50
28.03
31.94
Net Sales
Quarterly Profit & Loss Statement for the period of 31st Dec, 2013 to 30th Sep, 2014E
Value(Rs. mn)
31-Dec-13
31-Mar-14
30-Jun-14
30-Sep-14E
Description
3m
3m
3m
3m
3529.29
4224.38
4776.96
4108.19
Other income
12.40
13.69
6.57
6.96
Total Income
3541.69
4238.06
4783.53
4115.15
Expenditure
-3238.05
-3870.13
-4372.46
-3763.10
Operating profit
303.64
367.94
411.07
352.05
Interest
-54.33
-53.29
-54.00
-48.60
Gross profit
249.31
314.65
357.07
303.45
Depreciation
-31.49
-31.69
-37.08
-34.11
Profit Before Tax
217.82
282.96
319.99
269.34
Tax
-42.53
-78.18
-97.44
-71.91
Profit After Tax
175.29
204.77
222.55
197.42
Equity capital
298.48
298.48
298.48
298.48
Face value
10.00
10.00
10.00
10.00
EPS
5.87
6.86
7.46
6.61
Net sales
Ratio Analysis
Particulars
Charts
FY13A
FY14A
FY15E
FY15E
EPS (Rs.)
21.08
23.50
28.03
31.94
EBITDA Margin (%)
8.35%
8.39%
8.51%
8.40%
PBT Margin (%)
6.04%
6.21%
6.61%
6.69%
PAT Margin (%)
4.63%
4.62%
4.84%
4.92%
P/E Ratio (x)
42.27
37.92
31.78
27.90
ROE (%)
24.07%
22.02%
22.59%
22.44%
ROCE (%)
29.84%
33.39%
35.25%
35.27%
Debt Equity Ratio
0.60
0.31
0.23
0.18
EV/EBITDA (x)
24.67
21.63
18.63
16.80
Book Value (Rs.)
87.55
106.69
124.09
142.34
P/BV
10.18
8.35
7.18
6.26
OUTLOOK AND CONCLUSION
At the current market price of Rs. 891.00, the stock P/E ratio is at 31.78 x FY15E and 27.90 x FY16E
respectively.
Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.28.03 and
Rs.31.94 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 15% over 2013 to 2016E
respectively.
On the basis of EV/EBITDA, the stock trades at 18.63 x for FY15E and 16.80 x for FY16E.
Price to Book Value of the stock is expected to be at 7.18 x and 6.26 x respectively for FY15E and FY16E.
We recommend ‘BUY’ in this particular scrip with a target price of Rs.1005.00 for Medium to Long term
investment.
INDUSTRY OVERVIEW
The consumer durables industry bears direct relation with the overall economic environment and disposable
incomes. The slowdown in GDP growth over the past two years together with high interest rates and inflation
has led to increased pressure on disposable incomes and consumer spending, thereby adversely affecting the
demand for durables. Further, the depreciation of the rupee in the first half of the fiscal year led to an increase in
the imported raw material and forced players to take price hikes across categories. This further impacted
consumption demand.
The festive season (Diwali, Onam) which is the peak season for consumer durables companies and accounts for
majority of the sales in the year, was not very encouraging and was a reflection of the dampened consumer
sentiment.
However, the formation of a stable Government has revived hopes of a strong recovery and should augur well for
the industry. The onset of the summer season has also seen an uptick in demand for durables like AC’s,
refrigerator, inverters etc. The long term prospects of the consumer durables and household appliances industry
are robust and expected to see significant growth due to lower penetration, increasing incomes, and growing
urbanization. The need for comfort and convenience in urban households will result in change in perception of
durables and appliances from luxury to necessity, driving rapid growth.
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale
of any financial instrument or as an official confirmation of any transaction. The information contained herein is
from publicly available data or other sources believed to be reliable but do not represent that it is accurate or
complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. This document is provide for assistance only and is not intended to be and must
not alone be taken as the basis for an investment decision.
Firstcall India Equity Research: Email – [email protected]
C.V.S.L.Kameswari
Pharma
U. Janaki Rao
Capital Goods
B. Anil Kumar
Auto, IT & FMCG
M. Vinayak Rao
Diversified
C. Bhagya Lakshmi
Diversified
B. Vasanthi
Diversified
G. Amarender
Diversified
Firstcall India also provides
Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO’s, QIP’s, F.P.O’s,Takeover
Offers, Offer for Sale and Buy Back Offerings.
Corporate Finance Offerings include Foreign Currency Loan Syndications,
Placement of Equity / Debt with multilateral organizations, Short Term Funds
Management Debt & Equity, Working Capital Limits, Equity & Debt
Syndications and Structured Deals.
Corporate Advisory Offerings include Mergers & Acquisitions(domestic and
cross-border), divestitures, spin-offs, valuation of business, corporate
restructuring-Capital and Debt, Turnkey Corporate Revival – Planning &
Execution, Project Financing, Venture capital, Private Equity and Financial
Joint Ventures
Firstcall India also provides Financial Advisory services with respect to raising
of capital through FCCBs, GDRs, ADRs and listing of the same on International
Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and
other international stock exchanges.
For Further Details Contact:
3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071
Tel. : 022-2527 2510/2527 6077/25276089 Telefax : 022-25276089
E-mail: [email protected]
www.firstcallindiaequity.com