V-Guard reports 70% higher Q4 net profit as it continues its growth trajectory
Moneylife Digital Team 31 May 2012

The electrical and electronic appliance maker has posted good results and plans to spend Rs25 crore on capex to expand capacities

V-Guard, the makers of electrical and electronic appliances, saw its net profit for the fourth quarter of the fiscal 2011-12 increase 70% to Rs19.17 crore over the corresponding period last year, excluding exceptional profits. Net sales for the quarter was Rs276.46 crore, a rise of 25%, from Rs222.35 crore recorded in the final quarter of the 2010-11.  The company’s net sales growth is below its average year-on-year (y-o-y) growth rate for the last three quarters, while its operating profit grew at an impressive 70%, which is a lot higher than its three quarter y-o-y average growth rate of 32%. It recently reached a new milestone of Rs1,000 crore turnover. 

The sales turnover of the company for the financial year 2011-12 was Rs1,006.53 crore, showing an increase of 36%, from Rs737.47crore it recorded in the previous fiscal. However, despite the vigorous expanding, its valuation remains somewhat subdued, at market-cap to operating profit of 4.37 times. This might sound quite undervalued considering the company has been making ambitious plans of expanding, over the last few years, as it tries to grow beyond its native home turf of Kerala.  Of course, there is a risk of losing steam while expanding too fast. Its return on networth stood at a healthy 30%. 

Mithun K Chittilappilly, managing director of the company said that margins for the quarter under review have improved mainly due to better product mix and cost control measures. He said that demand for all the product verticals were good and contributed to the robust sales growth. Margins were much higher in the company’s electrical department, with profit before tax (PBT) margins of 16.2% while its electronics segment recorded PBT margins of 8.3%.

Even though the company has increased its borrowings to Rs19.72 crore, up from a mere Rs2.63 crore, its debt-equity ratio is well under control, at 0.16 times. 

The company is planning to spend Rs25 crore as capex for the 2012-13 fiscal which includes doubling of its wire plant capacity at Kashipur. Meanwhile, the board of directors recommended a dividend of Rs3.50 per share, or 35% of its face value.


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