V-Guard Industries (532953) Q4 10/11 earnings summary

Executive summary

• FY11 net sales rose 59.96% to ₹726.34 crore; net profit excluding the ₹3.63 crore exceptional land-sale gain grew 55.84% to ₹39.70 crore.

• Growth spanned all product verticals and markets, supported by higher volumes, market-share gains and improved capacity utilization; non-South Indian markets contributed over ₹160 crore.

Financial highlights

• Gross sales were ₹737.47 crore, net sales ₹726.34 crore and total income ₹728.33 crore, versus ₹462.29 crore, ₹454.09 crore and ₹455.51 crore, respectively, in FY10.

• Operating profit before depreciation, interest, tax and exceptional items was ₹74.74 crore; PBT before exceptional item was ₹55.47 crore, versus ₹51.79 crore and ₹39.51 crore in FY10.

• Net profit was ₹42.64 crore including ₹3.63 crore profit from land sale; excluding that gain, net profit was ₹39.70 crore, up 55.84% YoY.

• Operating cash flow was negative ₹34.10 crore, with cash generated from operations negative ₹15.99 crore; debtors and inventory absorbed working capital.

Outlook and guidance

• A five-year business plan is reviewed annually; priorities include product upgrades, new models, R&D, high factory utilization, outsourced capacity and expansion into rural and untapped markets.

• Solar water-heater manufacturing at Perundurai was targeted for commissioning by Q3 FY12, with ₹8 crore investment; warehouse and pilot-unit expansions were also planned for FY12.

• Hubli and Vijayawada service and distribution centers were expected to be completed by end-Q3 FY12, following delays in local approvals.

• New home-appliance products were under consideration, alongside wider ranges of energy-efficient water heaters, fans, pumps, stabilizers and UPS products.