V Guard industries Q3 concall highlights –
Revenues 981 pc, up 1pc.
South mkts degrew 5 pc, NonSouth mkts grew 10 pc yoy
NonSouth Mat’s contribution at 45 pc vs 41 pc LY
Consumer durables grew nicely. Have achieved descent scale. To contribute more to bottomline going fwd
High cost inventory levels going down. As it runs down, EBITDA margins likely to go back to pre Covid levels of 10-11 pc vs 6-7 pc currently
Completed acquisition of Sunflame electricals in Jan. Integration process to start soon. New management to be in place by March or so
Some areas where Sunflame can show immediate improvements – South Mkts where they r under-represented, Online and Organised channels, Direct go to mkt (as they were only going through distributors)
Sunflame business largely flat for 9M FY 23
Sunflame acquisition cost at 640 cr
Sunflame has large incremental (unutilized) capacities, doesn’t requrire capex. V Guard to continue with yearly capex rate of 50-70 cr
Own:Outscourced manufacturing for combined entity to be in the range of 70:30. To inch higher towards own mfg with every passing year
Cash balance + current investments of about 400cr to be used towards funding the a/m acquisition. Plus a debt of about 250 cr to be raised. Sunflame’s revenues to be added to V-Guard’s from Jan onwards
Sunflame’s margins are higher than V Guard standalone
Disc : holding a tracking position, biased
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