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Counting Expansion Gains

In nearly four decades of operation, V-Guard Industries has captured a third of the organised stabiliser market in the country

We recommended V-Guard Industries, a mid-sized company, because in nearly four decades of operation, it has captured a third of the organised stabiliser market in the country. V-Guard now sells a host of consumer appliances that include UPS, inverters, PVS insulated cables, LT power cables, geysers, among others.

V-Guard has traditionally been a South-based player. As recently as FY07, around 97 per cent of the company's revenues were generated in South. The company has set out a pan-India expansion exercise. At the time of our recommendation, the non-South regions brought in only 22 per cent of V-Guard's revenues (FY12). Today, they bring in 33 per cent of sales and are growing faster - at 47 per cent (YOY) - as compared to South's growth of 21 per cent.

Outlook
The management has guided 20 per cent top line growth in the next two years. EBITDA margins have sustained above 8 per cent in the last five quarters. V-Guard's revenues and earnings per share grew by 36.8 per cent and 32 per cent, respectively, in the last five years. According to Motilal Oswal, V-Guard's revenues could compound at 23 per cent annually between FY15 and FY17. Hold.

Gain of 146 per cent at market price of ₹1,103. Recommended in May 2013 at ₹448.