ValuePickr Forum

V-guard - The passion of our early years and our quest for excellence

Call was add by Mr Mithun Chittilappilly MD.Key Highlights by Capital Mkt
As per the management, shorter summer, weak housing demand and uncertainty in commodity prices, all affected the overall demand of the company’s products and consumer sentiments in Q2 FY’16.Short summer resulted in lower AC sales, which affected the demand for stabilizers. Uncertain copper prices affected the wiring segment of the company. The Digital UPS demand also got affected as there were hardly any power cuts during the quarter.Gross Margins and Ebidta margins improved to around 28.7% and 8.8% respectively due to lower raw material costs.
Company continues to invest aggressively particularly in Non South Market. Advertisements and Promotions account for about 3.7% of total sales. The company continues to increase its presence in Non-South market.South market which constitute around 67% of total sales, grew by about 3% YoY to Rs 300 crore while Non South market de grew by about 4.7%.
The company was able to reduce its debt by about Rs 91 crore during the quarter. Debt Equity ratio stood at around 0.09 as on Sep’15.
The Electronics segment, which constitutes stabilizers and UPS, which contribute about 27.7% of total sales in Q2 FY’16, de-grew by 1.2% YoY. The de-growth was mainly on account of a 10% fall in sales in UPS to around Rs 48 crore YoY. Electrical which includes pumps, house wiring cable, electric water heater, fans and others, and contribute about 67% of total sales, grew by about 1%, while the new products Swithgears, Kitchen Appliances etc grew by about 4% on a lower base YoY to around Rs 21 crore.The company has launched Water heaters for markets in South and Western India
As per the management some part of the rural economy got affected in Q2, particularly the rural side which is completely dependent on Agriculture. Going forward, rural economy is expected to remain subdued as consumers are postponing their demand. However, festive season, should see some good cheer in H2 FY’16, given a low base of H2 FY’15.
Overall, management revised its net sales growth downward from earlier 15% to around 12% for FY’16. Management expects margins to be around 8-8.5%. As per the management, the festive season, the demand should be good and sentiment has already started in a positive manner.Management does not expect to spend more than Rs 20 crore on capex as most of the capex is done and now only maintenance and warehousing capex is required.


V Guard Industries

Expects 5-6% growth in FY16

V Guard Industries held a conference call to discuss the quarter ended December 2015 result.
Key highlights

Net sales for Q3 FY16 were up by 5% to Rs 416 crore while net profit inclined by 133% to Rs 21 crore.

Q3 top line growth has been impacted on account of the falling realizations in largest segment, cables and wires, which is linked to the fluctuations in international copper prices. However, volume growth in the segment continued to be healthy at 12%.

Switchgears and kitchen appliances are receiving a good response and seeing healthy growth. The quarter also witnessed a turnaround in the pumps segment. Stabilizer and fans segments continue to track well

Inverter and battery & cable and wires impacted Q3 top-line. The growth was 10 – 11% at top-line excluding these 2 categories.

Gross margins have improved by 220 bps QoQ and 450 bps YoY. Gross margin expanded due to pricing disciple. Only wire and cable reduced prices. But most of the other products are not under pressure to reduce prices.

ASP was 4.5% for 9M .

Gross margin expansion in Q3 is across products categories. Fall in crude price and metal price is good news. The company has not passed all the benefit to customers except for cable and wire business where it has to pass on. Inverter and battery has de-grown in Q3 which are low margin product this helping gross margin

The mgmt said that its margin has improved. But sale is not picking up, lot of overhead cost does not got absorb, thus impacting margin.

Tamil Nadu growing at 15-20%. Apart from Kerala, all 3 states in South India doing well.

Water heater is not performing mainly due to late onset of winter.

Cable and wires 90% of sales is domestic cable. The company is growing in new markets and in some south market where there is activities in construction industry.

The company is seeing food growth in consumer durable products.

Inverter impacted due to not much power cut in southern market this year. There was also product refreshment which is sold in northern market. But product had some problem which resulted in recall, which impacted the sales. But now the product has been corrected.

In inverter and battery, competitors are aggressive; try to cut price and increase their market share. Most of companies are trying to pre-pone their sales, due to expected long summer where power cuts will happen, helping them.

Pump growth seen on low base. Also market has rebounded, which is showing positive sign. The company going forward will focus on larger pumps which are used in apartment for water shortage, bore well, agriculture etc.

Sales from south grew by 8% to Rs 291 crore. Non south was flat at Rs 125 crore. South- Non-south sales ratio was 70:30 in Q3.

The company gets Rs 500- 600 non south business is now. Expects to reach Rs 1000 crore revenue from non south. The company would like to have 40 – 50% revenue from non south markets in coming yrs.

The company is selling only 5 products in non-south:- Stabilizer, wires, water heater, pumps and inverter. It had breakeven at PBT level there. The company was able to reduce price gap with competitor from 10% earlier to 3-4%.

Non south – EBIDTA margin 4% for 9M.

Rs 1.8 crore provided for bonus provision for last 2 yrs in Q3.

Inventory days 7 – 8 days and Debtor days 5 – 8 more in non-south market. Now inventory days coming down.

Lot of WC improvement happens due to improvement in inventory which helps cash flow.

Kitchen business is Rs 45- 50 crore now. Once it hit Rs 100 crore, the company will think of expanding it all over India.

The mgmt expects the new facility in Sikkim for stabilizers to commence operations on a full state basis in 24 months. Once operational, it has a potential of manufacturing goods worth Rs 100 crore apart from benefits through income tax and excise duty exemptions. The exemption is for 10 years and the company estimates tax benefits of Rs 10 crore per annum for initial few years

The company has not seen big improvement in demand after festival season. February is expected to see onset of summer, and as such, the mgmt expects its sales picking up in March.

The mgmt expects 5% - 6% growth in top-line in FY16

The mgmt don’t expect future decline in copper prices. Expect stable level of metal prices and which is expected to rise in coming months as copper companies are cutting down production of copper. As such, trader will start building up low cost inventory which will help revenue growth in FY17. For next year, the company expects strong business in cable and wires due to low base. Stable commodity prices for now

The mgmt expects a long and hot summer this year. Products like stabilizer, inverter and fan are expected to do better.

The mgmt expects 15% growth in FY17.

Gross debt is around Rs 24 crore

CONFERENCE CALL - from Capital Markets

Expects around 15% growth in net sales with Ebidta margins of over 10% in FY’17

The company held its conference call on 5th May 2016 and was addressed by Mr Mithun Chittilappilly MD

Key Highlights

  • Revenues grew by around 16% in Mar’16 quarter on YoY basis. During the Mar’16 quarter, there was a strong growth in stabilizers and fans due to early summer. Excluding wires and cables, revenue growth was around 24% YoY in Mar’16 quarter. Ebidta margins stood at 12.8% during the quarter, largely due to higher contribution from these high margin products.

  • Fans grew by around 46% YoY in Mar’16 quarter due to early summer. AC stabilizer growth was highest in FY’16 as compared to FY’15 and it grew by around 65% in FY’16. Summer picked up only in May’15 last time as compared to early Feb’16 this time. Submersible pump sets also show strong growth due to lower water pressure and people have to dig further for water.

  • The company was able to reduce the discounts in Non-South markets in FY’16, even though it was able to get the benefit of lower raw material prices. Thus Ebidta margin stood at around 9.9% for FY’16, up by 200 bps largely due to better pricing, lower discounts, higher value added product mix and newer products.

  • Geographically, Southern market accounted for around 67% of total sales and grew by around 7.2% in FY’16 while Non-Southern market which accounted for around 33% of total sales grew by around 5.5% in FY’16.

  • During FY’16, about Rs 80 crore was spent on advertisements and branding which accounted for around 4.3% of sales. Management expects ad spend to remain around this level going forward.

  • The Electronics segment, which constitutes stabilizers and UPS, which contribute about 19.8% of total sales in FY’16, grew by around 13%. Electrical which includes pumps, house wiring cable, electric water heater, fans and others, and contribute about 66.1% of total sales, grew by about 8%, while the new products Swithgears, Kitchen Appliances (induction cook tops and mixers) etc grew by about 17% on a lower base YoY to around Rs 69 crore.

  • The company is now third largest player in electric water heaters, second largest in water heaters including solar and the largest national player in solar water heaters. The company has launched new range of stabilizers for inverter ACs which are extremely well-received in the market. The company has now around 7% market share in South India for fans. The company is also a top-5 player in branded house wiring cables and single phase pumps.

  • Debt equity ratio stood at 0.02 as on Mar’16.

  • Going forward, the company expects to increase retailers and increase the revenue per distributor as there is plenty of scope for expansion on existing investment base. Further management expects better pricing in Non-South market to improve margins further.

  • Overall management expects around 15% growth in net sales in FY’17 with Ebidta margins of over 10%.

  • FY’17 the focus will continue to remain to create a nationwide presence and increase the contribution from non South market.


I have been tracking it since long and to me its a great company.The only issue is it has always been overvalued in terms of price (P/E 45 plus and book value of 13) and hence so far only able to get a small chunk of it at an attractive price.The management is transparent - positive for investor considering the dividends and bonus it is paying the only question i had was sustaining growth but seeing the recent move to other products and acquisitions looks like they can grow at same pace for few more years atleast. The debt stands at just 10 crore with a market cap of around 7000 crore plus. I am looking for more indepth details as there are no post after may 2016. if someone can see point out if there are any hurdles for this company.ALso any details on cash flow and Long term assets would be great.Thanks

1 Like

Not to forget the commodity prices :slight_smile:

V-Gurad results are out.

Annual Revenue - 215062 L (15.5% YoY)
Annual Net profit for FY 17 - 15180 L (36% UP YoY)

Q on Q
Revenue - 62647.10 L (21.55% increase)
Net profit - 4185.78 (0.2% Lower)

Acquisition: Decided to acquire GUTS Electromech Ltd.
As per filing The Company is having its registered office at Hyderabad and is engaged in manufacturing and selling of switch gears, circuit breakers, relays, current transformers and similar electromechanical products. The Company has its plant at Hyderabad and Haridwar and has achieved a turnover of Rs. 29.93 crores during the Financial Year 2015-16.
• Net Revenue from operations for the Financial Year ended 2016-17 was Rs.2,150.62
crores; an increase of 15.5% over previous financial year 2015-16 (Rs.l,862.28 crares).
• Profit After Tax for the Financial year 2016-17 was Rs.151.80 crores, an increase of36%
over the previous financial year (Rs.l1 1.68 crores)
• Net Revenue from operations for the Fourth Quarter, ending March 31, 2016-17 fiscal,
was Rs. 623.26 crores; an increase of 21 % over corresponding period of last quarter
(Rs.513.30 crores)
• Profit After Tax for the Quarter, ending March 31, 2016-17 fiscal, was Rs. 41.86 crores,
at the same level when compared with the Profit After Tax of RsA1.97 crores achieved
during the corresponding quarter of previous financial year.
• Recommends dividend of 70% on equity which is Rs.0.70 per share.

Key developments
• Second phase of expansion of House Wiring Cable plant at Chavadi, Coimbatore will
commence commercial production in May, 2017. Capacity will get increased to 8.7lakhs
coils per month. The project was completed at a cost ofRs.12 crores.

For details refer Filing to exchanges:
Views invited future growth prospects especially changes to due to capacity expansion and acquisition

Disc: Tracking.

1 Like

V Guard Industries - conference call highlights (Source:capital market)

  • The revenue for the quarter grew by 15%. Adjusted for GST related price changes, revenue growth for the quarter stood at 21% YoY.
  • Broad-based growth across all product categories led by kitchen appliances, stabilizers and Digital UPS.
  • Partial recovery seen of the sales lost due to GST in Q1. Sales expected to fully recover over the upcoming quarters.
  • PAT grew by 25% to Rs 46 crore
  • Commodity price increases were passed on quickly in the market leading to a favorable impact on margin. EBITDA margins expand 100 bps YoY to 12.3%.Favorable product mix and better fix cost absorption help margin improvement
  • The company has Rs107 crore of net cash.
  • Mgmt said that it is yet to see full restocking. It also had product expansion, which is seasonal in nature and its restocking will start from October.
  • Working Capital constraint for wholesale resulting in destocking. If demand raised, these wholesales will run out of inventory, as a result, they will have to start restocking.
  • Non south gross margin was at 25% and south of 29% in Q2 FY18 vs Non south of 24% vs south 26% in Q2 FY17.
  • South sales were at Rs 718 crore and non south at Rs 410 crore in H1.
  • Kitchen Appliances “Mixer grinder” led the segment growth. In kitchen appliance, the company’s strategy to extend product portfolio, which are much different than the present market products for growth
  • Durable trade has come back after GST. But electrical trade continue to disturb, also construction activities is standstill which is effecting electrical business. Consumer demand largely remains unaffected after GST. Television sales were good, as result stabilizer sales were good. The mgmt expects electrical trade to come back to normal soon, but has more challenges for them.
  • The company has seen no impact in change in business unorganized players to organized due to GST
  • Working Capital improvement has happen due to tight control inventory and fine tuning activities towards sales. GST has not helped Working Capital improvement, while it has slight impacted Working Capital.
  • 24% like to like stabilizer growth for Q2.
  • Expects by Q4 thing to get back to normal.
  • Hoping rural demand to be better this year due to good rains. Expects little extra growth to come from non south region, which will help growth in H2
  • Cable business saw 3.5% volume growth and 11.8% value growth in Q2.
  • In H1, cable volume growth was flat while value growth was 10%.
  • Re-stocking is slow in non south market vs south market. The company has regain Rs 20-25 crore lost business of Q1 but balance Rs20-25 crore has to regain.
  • The potential market size of kitchen appliances segment is pegged at Rs 22000 crore and management is targeting at least 10% revenue contribution from this segment
  • The Sikkim facility may see some increase in employee cost and COGS may be impacted temporarily. Also, the operations cost may be high due to higher transportation cost.
  • Project “Udaan” - phase 1 focus on Supply chain efficiency, resulted in reduced inventory, strengthened cash flow and improved efficiency. Phase 2 focus on sourcing more like Centralized procurement and that will be online, new product development and need to place process for better quality.
  • Warranty cost is now 1-1.5% of sale. Hope to bring it down future. In last 2-3 yrs, warranty cost has not gone up.
  • 1.5% decline in cable business due to discontinuing of LT cables in FY18. Due to low margin and various processes involved in getting business, the company has shut down this busienss.
  • 3-5% price growth in kitchen appliance for Q2. 26% and 15% volume growth in induction cooktop and mixer for Q2.
  • Stabilisers sales value did not drop drastically as they are still in the 18% tax bracket
  • Price rise of 3-5%, planned in April, was effected in June due to resistance from dealers and competitors not increasing prices. A second round of price hikes has been planned in Q3FY18.
  • Pricing gap between organized and unorganized segments was in the 20-25% range earlier. However, unorganized dealers have hiked prices now, narrowing the price differential to the 5-6% range
  • Management expects 15% comparable revenue growth and 10-12% reported growth for FY18, with margin of 10.0-10.5%.
  • Management envisages sales of Rs 100 crore in kitchen appliances in South market alone.

Sharp rise in commodity price (especially Copper) could hurt electrical / cable manufacturing companies. Sharp rise in raw material and lack of strong demand (not much growth in actual realty sector) could be hard impact on bottom line of these companies. Please note that past few quarters such companies’ PAT growth better than Sales due to very low commodity price.

Just commenting. Have never analysed the company.

It is trading at 65x earnings. How much more of a multiple do you want. 100? Mid cap valuations are through the roof. Someone will be left holding the bag. See Porinju email.

1 Like

Annual Report - FY2017-2018

Receivables increased 43% to 449.27 Cr and 5% of the total receivables has been impaired !

Q2 Results

Investor Presentation


Hello, Stabilizer is ~ 18% of the Company’s revenues.

Few months ago I was visiting Shops for purchasing Air Conditioner. My main criteria was energy saving as the AC was meant for regular use.

I was shown many models of Inverter AC by the
Sellers which had some sort of a built in Compressor. As per the shopkeepers there is no need to purchase a separate voltage stabilizer if this is there. I checked it online and found same info on companies websites -

Additionally I realised that in developed countries like US, people don’t use voltage stabilizers since there is no major voltage fluctuations.

As similar power transmission technologies get implemented in India, would the demand for Stabilizers keep growing at this rate ?

P.S. - Stabilizers Revenue in H1 FY 19 has de grown by -5% compared to H1 FY 18. In FY 18 it grew only by 3.5% compared on FY 17.

1 Like

Q3 results:

How does the distribution reach of V guard compare with that of Havells ?