V Guard Industries -
Company overview and Q1 FY 25 results and concall highlights -
Company’s product overview -
Electronics -
Stabilizers
Digital UPS+ Battery
Electricals -
Home wires and cables
Fans
Switchgears
Modular Switches
Consumer Durables ( CD ) -
Water Heaters
Solar Water Heaters
Air Coolers
Kitchen Appliances
Sunflame range of products ( mainly Kitchen appliances ) - acquired in Dec 23
Financial outcomes -
Revenues - 1477 vs 1214 cr, up 21 pc
Gross Margins - 36 vs 32 pc
EBITDA - 155 vs 104 cr, up 48 pc ( margins @ 10.5 vs 8.6 pc )
PAT - 99 vs 64 cr ( up 54 pc )
Advertisement and promotion expenses @ 2.8 pc of sales vs 2.2 pc in Q1 LY
Gross Debt @ 217 cr
Cash on Books @ 351 cr
Segmental - Sales, EBITDA break up -
Electronics sales - 513 cr, EBITDA - 103 cr, margins @ 20.2 pc
Electricals sales - 487 cr, EBITDA - 49 cr, margins @ 10.1 pc
CD sales - 417 cr, EBITDA - 22 cr, margins @ 5.2 pc
Sunflame sales - 59 cr, EBITDA - 3 cr, margins @ 4.7 pc
Segment wise sales growth in Q1 -
Electronics - grew by 41 pc
Electricals - grew by 7 pc ( adversely affected by de-stocking in wires - which is their largest product category - due falling copper prices in Q1 )
Consumer Durables - grew by 27 pc
Sunflame - de-grew by 7 pc
EBITDA margins shrinkage in Sunflame business was due to aggressive advertisements and sales promotions + new hirings. Kitchen appliance category has been soft - overall
In Q2, company is seeing firming up of RM prices. They ll take price hikes - where ever necessary
Company doesn’t give out product wise breakdown within a category. All they can say is that the Fans category did well. Copper and Aluminium prices continue to trend upwards - hence the company is taking further price hikes
Company is putting up a new factory to manufacture fans. Should be able to complete the work in about 18 months
Capex planned for current FY @ 100-120 cr. Expect a similar run rate for next 2 yrs as well
Company expects the stabiliser business to sustain a 7-8 pc CAGR growth in the long term ( ie for next 8-10 yrs )
In the electronics segment, company has entered the solar - rooftop product solutions. This category is helping / driving the growth of digital UPS and battery segment ( over and above the organic demand coming from power back up category ). Solar roof top solutions is a very fast growing category - although the base is small
In the electricals space, company’s focus is mainly on the retail segment. They do not focus on the projects side of the business as that business has lower margins
Company has completely moved the Inverter manufacturing in house. This has helped them improve the margins in this segment. However, the margins in the battery segment continue to be under pressure. Company is setting up its own facility to make inverter batteries - should be operational by next FY. That should improve the margins in the battery segment as well
Company intends to repay the entire loan it had taken for the sun flame acquisition by end of this FY
In the Kitchen appliance space, company has put up a new factory at Vapi for in-house manufacturing. Expect full scale commercialisation of this facility by Nov this yr. This should help them improve their productivity in the market. This should help drive their kitchen appliance business in a meaningful way
Similarly, company has now been able to integrate the Sunflame business completely. Should see better performance from the Sunflame part of the business as well
The Kitchen appliances category has been under stress for last 1.5 - 2 yrs ( industry wide phenomenon ) . Company hopes to see some revival - this festive season
Company is guiding for 13-15 pc topline growth and EBITDA margins between 9-10 pc for current FY
Company is continuously looking to enter new categories. But would refrain to talk about them in Public
Most of the output of the upcoming Vapi factory is concentrated towards - mixers, grinders, food processors. They ll also sell these under the Sunflame brand
Sunflame’s Kitchen appliances business is expected to do 325-350 cr sales this yr. V Guard’s Kitchen appliance’s sale should be in the range of 200 cr for current FY. Both combined - that’s a significant business. In the medium term, company will integrate the back end for both the brands and maintain different front ends for both
Company’s main focus in last 2-3 yrs has been to bring as much manufacturing in-house as possible. This gives them far better control over product quality and gives them the flexibility to do quick / speedy product refreshes
Company admits - that in non-South markets, company’s brand lacks top of mind recall ( like a Havells would have ). However, the company does have a descent - aided recall ( ie - customers recognise it when assisted / prompted ). Company’s journey into non-South mkt is 8-10 yrs old ( on an avg ), and they do a sales of about 2500 cr / yr from Non-South mkts. This is already good progress. Company believes that their brand recall would improve substantially in another 4-5 yrs
In next 2-3 yrs, company intends to reach their tgt of 75 pc in-house manufacturing vs 65 pc currently
Disc : not holding, may buy on corrections, not SEBI registered, not a buy / sell recommendation
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