V-GUARD

V-Guard is not having too much of a good time on the bourses today. The stock opened weak at Rs.988 to slump down to Rs.950 levels. It has recouped from that but remains down over 3% at Rs.977.

The market is not enthused with its Q4FY15 performance. Though the company’s net revenue for the quarter rose 4.5% (YoY) at Rs.442 crore, it ended the quarter with a 2% fall in net profit at Rs.20 crore. This company has said that this was on account of the higher tax outgo. But what we see in the published results is that in Q4Fy15 and Q4Fy14, tax outgo was at Rs.8 crore. Yes, sequentially it has almost doubled up from Rs.4 crore. The company has stated that its tax-free plants have partly come under the tax net in the reporting year after five years of tax-free operations. Maybe we will see the real impact of this in the coming months. Existing in a highly competitive industry of consumer electronic and electricals, 54% of the company’s total cost or 5% of net sales is spent on selling and distribution expenses.

In terms of its segment, Electrical remains its main fray with over 67% of the revenue coming from this though in Q4FY15, sales growth was flat and EBIT rose 11%. Electronics showed a 13% rise in its revenue but EBIT showed a 23% drop. The company ended Fy15 with a flat net profit of Rs.71 crore on a 15% rise in revenue at Rs.1746 crore. Though demand was low in the fiscal gone up, it expects things to get better in current fiscal. It will be focusing on expanding its network in existing markets. It completed the national roll-out of new service delivery model in FY15. The company is planning to set up its third wire factory in Coimbatore which currently houses its wire and cable factories, where work is expected to be completed over the next two years. It is currently concentrating on roll-out of its mixer grinders in South India.