(Reuters) – Indian electrical appliances manufacturer V Guard Industries reported a smaller-than-expected rise in third-quarter profit on Tuesday, as intense competition in the wires segment pressured its margins.
The company’s consolidated net profit rose to 602.2 million rupees ($6.96 million) for the three-month period ended Dec. 31 from 582.4 million rupees a year earlier.
Analysts, on average, had expected a profit of 712 million rupees, according to data compiled by LSEG.
Revenue from operations climbed nearly 9% to 12.69 billion rupees, missing analysts’ estimate of 12.94 billion rupees.
For further results highlights click [full story].
KEY CONTEXT
Rising demand from the real estate and power distribution sectors has boosted sales growth for consumer electrical goods manufacturers.
However, the high-margin wires segment is seeing intense competition.
“Demand for wires was impacted by commodity fluctuations, thereby impacting overall growth for the electricals segment,” the company said.
Earlier this month, peer Polycab reported a weaker-than-expected third-quarter profit, impacted by margin pressure in the wires business.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBI Price/ Revenue Profit Mean # of Stock to Div
TDA Sales growth (%) growth (%) rating* analyst price yield
s target** (%)
V Guard Industries 38.13 25.12 – 14.81 26.58 Buy 17 0.79 0.38
Havells India 53.07 36.12 4.07 14.91 23.07 Buy 24 0.82 0.66
Crompton Greaves 31.21 21.30 2.39 12.35 25.93 Buy 32 0.70 0.89
Consumer Electricals
Voltas 41.30 33.11 2.53 16.08 37.42 Hold 33 0.81 0.39
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
OCTOBER-DECEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 86.5010 Indian rupees
(Reporting by Ashna Teresa Britto; Editing by Mrigank Dhaniwala)
