Document 6568558
Transcription
Document 6568558
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. 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