ICICI Direct has given Buy recommendation for V-Guard Industries with a target price of Rs. 320 in its research report issued on May 31, 2021
ICICI Direct’s research report on V-Guard Industries
V-Guard’s Q4FY21 performance was much ahead of our estimates on all fronts. A favourable base, dealer additions, launches of new products and market share gains from unorganised/regional players drive strong sales growth in Q4FY21. According to the management, V-Guard will continue to focus on expanding distribution network in non-south regions (~40% of revenue), improving mix towards premium product launches (for better gross margins). The company has plans to leverage technology benefit from its recent investment in battery startup ‘Gegadyne Energy’ for launching new products in the coming future. In the near term, lockdown related disruption are likely to hit demand and margin of the company. Hence, we revise our revenue, PAT guidance down by ~3%, 9%, respectively, for FY22E. However, we believe a healthy b/s (net cash of Rs 271 crore) and a strong brand would help V-Guard to sail through near term challenges easily.
We reiterate our BUY rating and revise our target price to Rs 310 (earlier Rs 265), valuing the company at 42x FY23E earnings.