V-Guard Q1FY23

 Business Overview 

- Company has reported robust performance during the period.

- This growth was mostly with strong supported growth from Electrical and Consumer Durables segment.

- In ECD, fans and water heaters had good demand due to seasonality.

- This cycle is expected to continue in upcoming period.

- During the quarter, there was strong contribution from both south and non-south markets.

- In terms of key margins, they did faced some pressures due to commodity price inflation.

- With Rise in their consumer durables cost all steps were been taken to hedge its effect. 

- In water heater, the company did loose their market share few periods back but they have regained their share and are growing due to their upgradation.

- In their pump business, there has been an constant price increase due to passing the cost to customer.

- Now as the margins are improving, they expect a reversal in this business segment.

Financials:

- On YoY levels company has reported strong performance during the period.

- Their gross margins did faced some hit due to pricing pressures but are been taken cared off.

- Company has also taken many cost effective measures towards controlled and effective spending.

- Their CFO generations stood strong due to improved working capital positioning.

- Under their fan space, the premium vs economy mix is around 40 to 50 in premium and rest in economy.

- They expect premium stake to increase.

- They have normalized their adv spending to 2% levels.

- On product likes copper, there was a significant price drop seen which affected their wire margins and expect this to be their in Q2 as well.

- At present, many product prices have seen a reduction from their peak.

- On products pricing, those which are left to come down might make them suffer till Q3 but post their they expect a comfortable levels.

- Looking at their business cycles they are focused towards maintain less inventory avoiding additional costs.

- Leading to better cash flows for more opportunities in the market. 

Investments:

- Company did made an investment in auto tech company to improve their supply chain.

- The company did incur 6.5 crores for 26% investments.

- In stabilizer space, there is huge growth pipe for them.

- In inverter and battery business, 2 new factories are been planned to set up, which will improve their gain from 3% market to bigger number in times to come.

- The transaction lead to 74% at start and remaining 26% post 5 years.

- This company is focused towards manufacturing switch gears and supply.