9 VGUARD share price target reports by brokerages below. See what is analyst's view on VGUARD share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
V-Guard Industries (VIL) posted revenue of Rs6.3bn in 3QFY20, up 5% YoY, 5%/3% below our/consensus estimates. Growth was lower as consumer sentiment remained sluggish, leading to softer demand and aggressive price cutting by some players in water heater, fans and switchgears, which VIL did not resort to as it gave precedence to profitability. Revenue of Electricals segment grew 5% YoY to Rs2.7bn, driven by growth in Pumps, while Consumer Durables segment revenue rose 10% YoY to Rs2bn, led by double digit growth in fans and water heaters. Electronics revenue was flat YoY at Rs1.5bn. Revenue from South region grew by 4% YoY to Rs3.9bn (62% of total sales), while Non-south region grew by 8% YoY to Rs2.4bn (38% of total sales). Gross margin jumped 320bps YoY to 33.2%, led by margin improvement across all segments due to premiumization, benign raw material cost and pricing actions. Consequently, EBITDA rose 32% YoY to Rs594mn, leading to an operating margin of 9.5%, up 190bps YoY, exactly in-line with our estimate. PAT grew by 27% YoY to Rs429mn, below our/consensus estimate of Rs462mn/Rs480mn. VIL aims to diversify revenue profile by expanding product portfolio and scaling up non-South region and channels like modern retail and e-commerce. While near term growth outlook depends on demand recovery and onset of summer season, VIL expects to sustain its gross margin profile. We have marginally tweaked our earnings estimate and maintained Accumulate rating on the stock with a revised target price of Rs237 (Rs245 earlier) based on 38x September 2021E EPS.
Valuation – We maintain Buy with a revised PT of Rs. 285: We have tweaked our estimate for FY2020 factoring higher operating margins. We believe V-Guard’s strategy of differentiating products and avoiding deep discounting is expected to protect OPM going ahead. The gradual improvement in consumer demand along with start of best period for sales from December 2019 to March 2020 augurs well for the company’s product portfolio. The increasing contribution from non-South region, launch of new products and increasing penetration in tier II & III cities is expected to revive the company’s higher revenue growth trajectory. Further, moving towards in-house manufacturing for stabilisers (currently 50% in-house production), water heaters (50% in-house), and fans (nil) over the next 2-3 years will bring in benefits of scale andbetter control over gross margins. Hence, we retain Buy with a revised PT of Rs. 285 due to presence of multiple growth levers on the medium to long term.
Growth momentum back V-Guard’s 1Q performance was robust owing to benefits of a harsh summer and favorable base. Stabilizer biz (cash cow) fired led by >20% growth in RAC market. V-Guard is expected to regain lost ground in FY20 led by (1) Healthy growth of stabilizers, (2) Robust festive season performance (Kerala foods impacted last year), (3) Favorable base in the rest of FY20 (adj. EBITDA declined by 9%). We moderate our growth assumptions and hence cut EPS by 2% over FY20-21E. We value at 35x on Jun-21 EPS, arriving at a TP of Rs 261. Maintain BUY.
We are positive on the long term prospects of the company, given its market leadership position, strong financial track record, strong levers for margin expansion and quest to become a pan-India player. At CMP the stock trades at 46X & 39X FY20E & FY21E respectively. We are valuing the company 47XFY21E EPS to arrive at a target price of INR 282 and maintain BUY rating.
We upgrade to Buy with a revised PT of Rs. 280: V-Guard is expected to post strong earnings growth during FY2020 due to low base (Q2and Q3 of FY2019 was affected by Kerala floods). Further, its focus on non-South region has started bearing fruits in terms of improving overall revenue growth. It is cash positive with Rs. 300 crore which will aid in inorganicexpansion (at better valuation in current environment). The management’skey focus areas would be increasing non-South presence, expansion intoadjacencies and improving efficiencies. We expect revenue/operating profit/ net profit to grow at 15.0%/25.7%/26.7% respectively during FY2019-FY2021E. We revise our price target to Rs. 280 increasing valuation multiple owing tomultiple growth levers. Consequently, we upgrade V-Guard to Buy.
VIL aims for 15% revenue growth over the next few years, driven by expansion in the Non-south markets and scaling up of new product categories. It expects EBITDA margin of 9.5% to 10% for FY20. We have marginally tweaked our earnings estimate and maintained Accumulate rating on the stock with a target price of Rs245 based on 38x FY21E EPS.
We maintain Hold rating with a revised PT of Rs. 255: V-Guard’s growth revival hinges upon better performance of its Stabilizer segment, sustained growth momentum in cables and better pan-out of summer season next year. Although we have factored in almost 15% y-o-y CAGR growth in revenues along with improvement in margins over FY2019-FY2021E, the stock is currently trading at 38x its FY2021E earnings which provides an unfavourable risk reward ratio. Hence, at this stage, we maintain our Hold rating on the stock with revised PT of Rs. 255.
Over FY19-FY21E, we expect VIL to register healthy earnings CAGR of 28% (partly aided by a suppressed base). Robust free cash flow, healthy return ratios, lean working capital cycle, and high fixed-asset turnover will support VIL’s valuation.VIL expects to revert to normal revenue growth (15%) and EBITDA margin (10%) level in FY20. We slightly tweak our earnings estimate and revise our target price to Rs245 (from Rs250 earlier) based on 38x FY21E EPS. Post the recent uptick in stock price, our rating stands downgraded to Accumulate from Buy earlier.
We model revenue earning CAGR of 15%, 23% in FY19-21E led by strong performance by new product categories and expansion in new geographies. However, rising competition coupled with higher discounts in the non-south regions would restrict upward movement of EBITDA margin in future. Hence we believe, at the CMP, the stock discounts near term positives of earning growth, lower working capital requirements and positive free cash flows. We maintain our HOLD rating on the stock with a revised target price of Rs 235/share.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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