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Dolat Capital Report
V-Guard Industries Ltd.'s Q2 FY25 revenue was in line, however, profitability missed expectation. Electronics/Electricals/consumer durable segments posted 19/16/11% YoY growth resp.
Meanwhile, Sunflame's revenue was flattish due to reduction of orders from the CSD channel.
Gross margin expanded 200 bps to 35.8% in Q2 FY25 (marking seventh consecutive quarter of gross margin improvement) led by increase in inhouse manufacturing, cost control measures and price increases.
Management indicated encouraging initial trends in the festive demand for October. However, stiff competition in kitchen category may likely dampen revenue growth for V-Guard's and Sunflame in FY25.
Consequently, we lower our FY25/26E EPS estimates by 8/6% respectively to Rs 8.0/10.4 resp and introduce FY27E EPS at Rs 12.3. Maintain ‘Reduce' rating with revised target price of Rs 453 valuing at 36 times FY27E EPS.
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