V-Gaurd share price down 2%: Should you Buy, Sell or Hold the stock?

V-Guard Industries share price though declined 2% on Tuesday, however is up more than 5% since results.  

The December quarter performance though saw impact of demand softness, nevertheless optimism prevails on the future outlook. 

While V-Guard  Q3 FY24 revenue increased by 18.6% YoY to Rs. 1,165.39 crore, the major improvement was seen in the operating performance. Gross margin expanded by 420 bps YoY, at 33.9% in Q3 FY24 with continued moderation in input costs. Ad/promotional spends, at 2.7% of revenues in Q3 FY24 as compared to 2.7% in Q3 FY23.

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Earnings before interest tax depreciation and amortisation (Ebitda) at Rs. 101.62 crore in Q3 FY24 grew 51.9% YoY, as compared to Rs. 66.89 crore in Q3 FY23.  Ebitda margins expanded by 190 bps YoY, at 8.7% as compared to 6.8% in Q3 FY23 . All this helped net profit during Q3 FY24 increase 48.3% YoY to Rs. 58.24 crore.

Sudarshan Kasturi, Chief Finance Officer of V-Guard Industries highlighted that even acquired  Sunflame portfolio has turned around and is stable.  Kasturi expects improvement in demand and Ebitda margins improving to 10% (8.7% in Q3).

With visible signs of demand revival by end of the quarter and expectations of a good summer season, management is optimistic about stronger topline growth in Q4. 

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Analysts at HDFC Securities too said that "Given its newly constituted team (including a south-focused sales team) and preparations for scaling up its e-commerce/MT presence, Sunflame’s growth rate could accelerate in the upcoming quarters. They estimate 210bps margin improvement for FY23-26 due to the softening raw material basket, stabilizing manufacturing operations and operational leverage. They maintain Add ratings for the stock.

Analysts at JM Financial Institutional Securities said that V-Guard is hopeful of demand revival in the upcoming summer as 40-50% of product sales heavily depend on summer. We broadly maintain our FY24-25 estimates, introduce FY26 and roll-forward to Mar’25 target price of ₹370, basis 38x FY26EPS.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions