V-GUARD INDUSTRIES

V-Guard Industries is a completely debt free company promoted by Mr. Kochouseph Chittilappilly. V-Guard Industries is engaged in the manufacturing a vide range of products which include, trading and selling of a wide range of products likes Stabilizers, Digital UPS, UPS etc.

ZStared with a borrowed capital of 100000 Rs from his father by Mr. Kochouseph Chittilappilly in 1077 with two workers assisting him V-guard industries today has company a long way. Today V-Guard Industries is engaged in the manufacturing, trading and selling of a wide range of products likes Stabilizers, Digital UPS, UPS and Solar Inverters,PVC Insulated Cables, Switch Gears, Single Phase Pumps, Three Phase Pumps and Modular Switches,Electric Water Heaters, Solar Water Heaters, Fans, Induction Cooktops, Mixer Grinders, Glass top Gas Stoves, Rice Cookers, Air Coolers and Breakfast Appliances.

Very soon the brand expanded its wings and is now available across the length and breadth of the country with a wide range of products. The reputation has been built on sheer passion and a continuous quest to understand its consumer better. With stringent quality control measures, reliable products, talented people and a responsible approach to business, V-Guard continues to steadily capture the hearts of people across the country.

The 100-member strong R&D Centre in V-Guard is fully committed in its relentless pursuance for innovation by creating products with a single minded purpose of “customer delight”. The continuous endeavours of many years has also resulted in the R & D wing being conferred with the coveted DSIR Recognition in 2012-2013 for the ‘In-house R & D Centre’. It’s a title that only a select few electrical and electronics manufacturing companies have managed to attain. The Centre has over the years played a key role in the designing of a various range of products that have been widely appreciated and accepted nation wide.

Currently the company has five manufacturing facilities located at Coimbatore and Perundurai both in Tamil Nadu; Kashipur in Uttarakhand, Kala Amb in Himachal Pradesh and Sikkim.

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In August 2017, V-Guard acquired GUTS Electromech. This company has manufacturing plants in Hyderabad and Haridwar and manufactures switch gears, circuit breakers, relays and power transformers. Comprehensive and diversified product portfolio, strong brand name and pan India presence

Currently the company has a comprehensive and diversified product portfolio across fast growing categories in the consumer electricals, electronics and durables space, catering to the mass consumption market in India.  

One of the key specialities of us at darkhorsestocks is that we try to present the stocks which are not very common or hardly few people actually know about. Most of the darkhorsestocks ideas are not covered by any of the brokerages or research house by presenting research reports .

Started as a regional player focused on both Kerala and Tamil Nadu, over the years has expanded its market presence. While consolidating its position in South, the company is consciously expanding its market presence in North, West and East of the country.  The Company is looking to expand its footprint across the country and growing its retailer base of over 40,000.

V-Guard is armed with vast network of distributors, direct dealers, retailers and service centres in its endeavour to reach every nook and corner of the country.

Today V-guard Industries has a robust channel network comprising 31 branches enabling it to reach consumers across the country and make products easily accessible

As we look into the future, it will be the endeavour of brand V-Guard to stay relevant and aspirational to a world that is growing younger, every day. The quest is to understand human life and its relationship with the tools and appliances he uses and to create a seamless experience of thoughtfully engineered products in its endeavour to enrich consumer lives.

Currently the company has inhouse manufacturing capacity to manufactures products such as stabilizers (at Sikkim), electric water heaters (at both Kala Amb & Sikkim), housing wire cables (Coimbatore & Kashipur), Fans (Kala Amb), Pumps & Motors (Coimbatore) and Solar Water Heaters (Perundurai). Currently, in-house manufacturing stands at 45%. 

As a strategy, once a product gains sufficient scale, the Company transitions to in-house manufacturing and the share from own-manufactured products is expected to reach 60% in the medium term.

In south, while the company has its general trade reach across different tier cities, it is now building the same across large format stores (Modern Trade or Regional Speciality Stores). 

Outlook -: The electronics, electrical and consumer durable will continue to see a strong uptrend in the medium to long-term driven by macroeconomic and industry factors like increasing disposable incomes, increased ease of availability of finance, low product penetration levels, growing middle class, favorable demographics, urbanisation and nuclearization of families, premiumization in metros and urban towns, and increasing distribution reach by companies in tier II and tier III cities. In addition, the government’s push for housing for all, increasing availability of electricity and GST rate reduction will fuel, well for long term growth prospects of the sector.  

The voltage stabilizer demand is related to demand for air conditioners, refrigerators and LED televisions, as it’s used to protect these durables from voltage fluctuations, the company benefits from strong replacement as well as fresh demand for the above product group. 

Further the Company is present in key product categories having significant market size with medium to low branded penetration, leaving immense headroom for organised players to benefit especially market leaders, with established brands and entrenched manufacturing and distribution capabilities.  

Financials 

For the Year Ended March 2020

• Company has a 5 year CAGR of 21%.
• Opm of the company is stable at the rate 10%.
• Company has cash and equivalents of 121 Crore Rs.
• Company has reserves of 950+ crores.
• Company has ROCE of more than 25% consistently over past 4 years.

For the second Quarter Ended Sept 2020.

• The company has net cash of  453 crore by the end of September 2020.
• During the quarter, the company launched a range of new products – water purifiers, breakfast appliances, kitchen hobs and chimneys – through online channels.
• Q2FY21 Revenue was flat YoY, but on QoQ basis was up by 52%, due to pent-up demand as Covid-19 disruptions ease out.
• It is expected that the company will grow at 10-13% CARG over coming period.
• Net Sales at Rs 616.66 crore in September 2020 down 0.43%.
• Quarterly Net Profit at Rs. 50.01 crore in September 2020 down 12.75%.
• EBITDA stands at Rs. 80.55 crore in September 2020 down 4.65%.
• EPS has decreased to Rs. 1.17.

As of September 2020 7 mutuals funds are holding shares of V-guard Industries which totals around 3.88 Crore shares held by mutual funds while promoters hold around 62.64% of the total share capital of the company.

Mutual Funds

Furthermore recently , SBI Mutual Fund has acquired 2.2 percent equity stake in V-Guard Industries, via open market transaction on August 20 when the share was trading around 160 Rs.

Outlook -: The electronics, electrical and consumer durable will continue to see a strong uptrend in the medium to long-term driven by macroeconomic and industry factors like increasing disposable incomes, increased ease of availability of finance, low product penetration levels, growing middle class, favorable demographics, urbanisation and nuclearization of families, premiumization in metros and urban towns, and increasing distribution reach by companies in tier II and tier III cities. In addition, the government’s push for housing for all, increasing availability of electricity and GST rate reduction will fuel, well for long term growth prospects of the sector.  

The voltage stabilizer demand is related to demand for air conditioners, refrigerators and LED televisions, as it’s used to protect these durables from voltage fluctuations, the company benefits from strong replacement as well as fresh demand for the above product group. 

Further the Company is present in key product categories having significant market size with medium to low branded penetration, leaving immense headroom for organised players to benefit especially market leaders, with established brands and entrenched manufacturing and distribution capabilities.

Conclusion-:

Although V-guard industries do look attractive for long term perspective we always advice investors to keep risk in check and as a result even though we are suggesting this stock currently , it is advised that please don’t jump in completely into this stock. Markets are at all time high and can go further but it is better to be cautious because capital preservation is the key to success in the market. Therefore if you are willing to invest in this stock we would advise you to add 10-10% on every dip instead of buying all in one go. However users are requested to do their own research before taking any investment decisions. 

Please note that above expressed are our own views. Users are requested to take their own decision regarding investments. No member of DARKHORSESTOCKS would be responsible for any loss.