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CD Equisearch
V-Guard (Accumulate)
CMP: ₹432.10
Target: ₹383
Realising the looming threat of improved power supply, V-Guard Industries has drawn plans to vigorously penetrate into non-South markets through aggressive marketing, higher ad-spend and competitive pricing. The non-South markets also provides V-Guard ample scope of revenue boost as its average revenue per distributor in non-South markets is just ₹2.5 crore compared with ₹7.5 crore in southern markets. But V-Guard is yet to show pricing power in its markets as its average realisation in this market trails that of the southern counterparts by 3-4 per cent. We believe that the current valuation does not provide an adequate margin of safety to even growth-oriented investors. We, therefore, recommend accumulating the stock on declines.
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