Participants:
- IIFL
- Investec
- Jefferies
- Edelweiss
- Spark Capital
- JM Financial
- Emkay Global
- Sundaram Mutual Fund
Business Overview:
- Revenue at Rs 537 crore vs Rs 740 crore YoY
- Gross margin at 33.3% vs 29.6% YoY
- PAT at 33 crore vs Rs 59 crore YoY
ConCall highlights:
- Revenue has been impacted to the extent of Rs 250 crore with EBITDA compression of about Rs 70 crore during the quarter due to Covid
- Even before the lockdown, FY20 had been a slow year for growth
- Non-South markets’ contribution increased to 40.5% of the net revenue in Q4FY20 as compared to 37.3% in Q4FY19
- Wire factories at Chavadi and Kashipur have reopened in the last week of May and currently running at 33% capacity
- Company will ramp up the capacity in next couple of weeks based on the consumer demand
- Sales during April was near zero; May revenue was 70% of last year’s May revenue
- 90% of May sales came from rural and suburb market
- Southern and eastern markets are doing well as Covid cases are relatively lower in those market
- V-Guard didn’t cut salary but has deferred the increment
- Collection has improved in the month of May
- Channel inventory typically around 20-30 days but during lockdown it increased to 40 days
- Revenue from four metro cities is around 15% of total sales
- V-Guard has exited from LT Cable business which has very low gross margin of 8-9%; exiting from all low margin business and entering into high margin category
- Modular switches surprisingly doing well for the company
- Inventory days has been increased to 100 days but will come down to around 50 days by the end of July
- V-Guard has guided capex of Rs 35-40 crore for FY21; last year capex was Rs 90 crore. Company will hold non-essential capex like renovation of offices etc. this year
- Gross margin for both south and non-south market has improved; margin for south market is 150 bps higher than non-south market
- 35% of fan sales comes from decorative fan
- Gross margin in air cooler is around 35-40% depending upon the model; market leader enjoys 5-8% higher margin. V-Guard outsourc air cooler and doesn’t manufacture it
- Market leader in fan has 3-5% higher margin
- Revenue from eastern market is around 15%, but it was higher during May. Tamil Nadu contributes around 15% while Chennai alone 5%
Image source: Company website
Read more concall summaries here.
