V-Guard Industries - Q2FY21 First Cut - ICICI Securities

(CMP: Rs. 170; MCap: Rs. 7300 crore)

V-Guard Industries reported a healthy performance in Q2FY21 with operations across all three segments reaching at pre-covid level.

Q2FY21 Earnings Summary

- Net sales of the company came in at Rs. 617 crore almost at a same level of Q2FY20 while it was up by 52% on a QoQ basis. Segment wise, Electronics segment (stabilizer & UPS) and Electricals segment (Pump and Wire & Cable business) which contributes 28% and 46% in topline grew by 2% each on a YoY basis to Rs. 171 crore and Rs. 282 crore respectively. Consumer durable segment (Fans, Water Heaters, Kitchen Appliances, Air Coolers) reached at ~93% of pre-Covid level amid intermediary lockdowns in its key selling markets

- The EBITDA margin came in at 12% led by savings in other expenses which were down by ~254 bps YoY. The company has focused on rationalising warranty cost, A&P spends and travelling cost

- Finally PAT came in at ~Rs. 50 crore lower by ~13% YoY dragged by higher tax rate of 30% in Q2FY21 Vs 25% in the base period

- Cashflow from operations continues to be strong (up 116% to Rs. 325 crore) on prudent working capital management

The company has witnessed sharp improvement in demand on a QoQ basis. However, the consumer durable segment witnessed a slow recovery due to supply disruption as some of the key vendors have faced covid-19 related shutdowns. Further, working capital has improved with reduced receivables and inventory days. We maintain our positive stance on the stock and a detailed report shall be released post Q2FY21 result con-call.

Shares of V-GUARD INDUSTRIES LTD. was last trading in BSE at Rs.169.05 as compared to the previous close of Rs. 171.9. The total number of shares traded during the day was 26386 in over 1168 trades.

The stock hit an intraday high of Rs. 180 and intraday low of 168.4. The net turnover during the day was Rs. 4581296.

Source : Equity Bulls

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