VGUARD - V-Guard Industries Ltd. Share Price

In the earnings call for Q4 FY '25, V-Guard Industries Limited's management provided a positive outlook, highlighting robust growth and strong performance across key segments. Consolidated revenues for Q4 reached Rs.1,538 crores, marking a 14.5% year-over-year increase, the highest quarterly revenue in the company's history. The Electronics segment, which includes stabilizers and inverters, grew by 26.3%, while the Electricals segment, the largest revenue contributor, saw a growth of 14.6%. The Consumer Durables segment reported a growth of 11.9%.

Management underscored a gross margin improvement to 35.5%, up from 34.5% a year prior, attributing this to enhanced in-house manufacturing and cost efficiency initiatives. EBITDA for Q4 was Rs.143 crores (up 11.9% YoY), with a full-year EBITDA of Rs.513 crores representing a 20% increase. Consolidated PAT for the quarter was Rs.91 crores, reflecting a growth of 20% YoY, leading to a full-year PAT of Rs.314 crores (up 21.8% YoY). A final dividend of 150%, equating to Rs.1.5 per share, was recommended.

Moving forward, the management expects sustained growth momentum despite current weather challenges affecting sales in southern regions. They maintain a target of 14% to 15% top-line growth for FY '26 and are confident in continued EBITDA margin expansion. Key forward-looking initiatives include the integration of Sunflame and the launch of new product lines in fans and water heaters. Additionally, the battery manufacturing expansion is anticipated to drive further revenue, with an estimated additional throughput of Rs.300-400 crores expected from a new plant set to stabilize in the next two and a half years.

Here are the major questions from the Q&A section of the earnings transcript along with detailed answers:

1. Question by Rahul Agarwal: "What is the outlook on gross margin and working capital over the next two to three years?"

   Answer: "Gross margins are largely back to pre-COVID levels, with small improvements possible. We'll continue to work on enhancing margins, primarily through a premium product portfolio. As for working capital, while we're currently at an efficient level, further minor improvements on inventory are possible, but we're in line with our historical steady state overall."

2. Question by Rahul Agarwal: "Could you provide an update on your alternate energy ventures, particularly battery manufacturing and Gegadyne?"

   Answer: "Our solar rooftop business is experiencing strong growth, and while we don't disclose specific numbers, we anticipate significant progress in the coming years. Gegadyne has hit its technology goals and is preparing for a commercial launch, although that may take a couple more years to realize. We are also investing in expanding battery manufacturing capacity due to growing demand."

3. Question by Naushad Chaudhary: "Regarding Sunflame, should we expect growth and margin improvement in FY '26?"

   Answer: "We expect growth in the general trade and e-commerce channels, but CSD channels remain unpredictable. The focus on business integration and product offerings is ongoing and may take time to yield better growth, especially with the challenges faced last year impacting performance."

4. Question by Keyur Pandya: "What's the outlook for the Electronics segment given the recent warm weather?"

   Answer: "Summer has started off weak this year, affecting sales of cooling products, though we still have time left in the season. We don't foresee this impacting our long-term margin targets as we also have diverse product lines that can support revenue."

5. Question by Aniruddha Joshi: "With the impact of Sunflame on intangibles, are there any plans for revaluation?"

   Answer: "We review the carrying value of intangibles annually and will reassess next year. Our focus is on improving Sunflame's integration and operational performance to support recovery and growth."

6. Question by Achal Lohade: "Can you share insights into the wires business growth this quarter?"

   Answer: "Wires had a 17% revenue growth in Q4, driven by a 5% volume increase and a 12% rise in prices. We expect further improvement in volume as copper prices stabilize."

7. Question by Naushad Chaudhary: "Given the weak summer, do you still maintain your FY "˜26 top-line growth forecast?"

   Answer: "Yes, despite a slow Q1 because of weather, we aim for 14-15% growth over the full year. Our diverse portfolio helps mitigate risks from seasonal fluctuations, and we remain confident in maintaining our margins."

This provides a comprehensive overview based on the key questions and respective answers from the earnings call.