V-Guard share price: 4 key reasons why Jefferies expects up to 17% upside post Q1 Results

Stock Market Today: V-Guard Industries Ltd share price that has gained almost 56% year to date , however is trading flat since results on 24 July'2024. Analysts nevertheless remain bullish on the V-Guard share price and those at Jefferies India Ltd have given target price of ₹530 indicates an upside of almost 17% from current market price. Here are 3 key reasons

1. Strong Q1 Earnings =V-Guard had reported a strong revenue grows of 21.6 % during quarter ending June with net profit rising 54.1 % largely led by margin expansions and better product mix. The Operating Profit Margin rose 190bps to 10.5%.

2 Business segments impress- Robust demand in summer products helped drive revenue growth in Electronics segment as that for Stabilizers, UPS and also for consumer durables such as Fans, Coolers, Appliances, and similar product segments. The trade destocking with copper price volatility though meant that wires segment which happens to be the largest category in Electricals vertical, was impacted seeing lower growth as has been the case with peers. Nevertheless analysts at Jefferies said that Performance was broad-based across regions, with contribution from Non-South markets at more than 50% in Q1.

3. Budget likely to boost Small-ticket Consumption. In union Budget, has proposed change in tax slabs and higher standard deduction that is likely to drive incremental savings of Rs17,500 per annum for a taxpayer with Rs15 lakh in taxable income under the new regime. This is being looked at slight positive for small-ticket consumption plays, including Appliances with smaller price points. Electronics and Durables collectively are about 60-65% of consolidates sales for V-Guard. Also B2C is majority (90%) of its product mix

4. Strong earnings growth estimates- Over FY24-27 Jefferies estimates 29% earnings per share compound annual growth rate. This as per Jefferies is to be aided by acquired Sunflame synergies, margin-accretive categories, and boosted by higher in-house manufacturing. V0Guard has been consistently delivering double-digit sales growth over past 5 quarter with 8-11% Operating margins, which is encouraging.

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