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V Guard Ind Q4: Outlook On Growth | NDTV Profit
NDTV Profit
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5/17/2024
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00:00
VGAD is in focus today after they released their quarter 4 numbers.
00:03
Revenue was up by 18% on a year on year basis while EBITDA jumped 37%.
00:08
Profit however was only marginally up by 1.4% and the board has also recommended a final dividend
00:15
of Rs 1.4 per equity share. Now to put these numbers into perspective we have Mr. V Ramchandran,
00:22
the Chief Operating Officer at VGAD Industries joining us now. Mr. Ramchandran, please tell us
00:29
about your revenue and revenue growth in quarter 4. What are your expectations going forward in FY25?
00:34
We had a very strong quarter as we had been guiding through last year that we were operating
00:45
on a base of high input cost and as the input cost increases are getting addressed I think
00:56
the margin improvement is coming back in the business. We look forward to taking some more
01:03
pricing actions to address the margin erosion which had happened last year due to the
01:10
input cost increase. I think we should be able to get back to a long-term average on margins as
01:18
we go forward. I think with a good summer we have a good beginning for the current financial year
01:27
as summer categories are outperforming in terms of growth as we speak. So I think going on we
01:34
should have a good year. I think helped by a strong summer both on the top line side and
01:41
on the bottom line side. What factors have contributed to the expansion in your margins
01:47
this quarter and fiscal year? Were there any challenges and what is your outlook for FY25?
01:52
No, I think if you go back and look at last quarter performance I think fundamentally the
02:00
margin improvement has arisen as the high cost inventory has got consumed between Q2 and Q3
02:09
and the replacement costs have moved into our consumption in Q4. So I think the improvement
02:20
in margin has fundamentally been driven by the improvement in input cost. We still have a lag
02:28
in terms of pricing transmission coming out of input cost increase of last year as in many cases
02:35
market traders have still not taken pricing corrections and I think it has been a challenging
02:40
year for transmission of input for the industry. But I think the upcoming year we look forward to
02:48
pricing transmission and improved margin as we go forward. So I think fundamentally the
02:55
action is going to be on the pricing side to improve our margins. Of course,
03:03
some of the also give us a bit of operating revenue.
03:05
And in Q3 you mentioned to experience a challenging backdrop in consumer durables.
03:13
Has the seasonality revived in the current quarter given the relatively hot summer season
03:17
and which other segments have experienced traction on ground on account of the summer
03:21
season in the one, one and a half months of this quarter? Yes, so I think Q3 is a big quarter for
03:29
winter and basically I think as far as we were concerned on consumer durables, quarter three,
03:35
water heater revenues were impacted because the water heater in Q3 was flat to single digit growth.
03:41
So I think that's what kept the segment numbers down. I think as far as Q4 is concerned,
03:49
including water heater and the remaining, I think the winter did set in late last year and so we had
03:58
some benefit in quarter four of this year, which is however a small quarter for water heater.
04:03
But I think the other summer categories picked up and that is why we could deliver a strong quarter
04:09
as far as consumer durables is concerned in quarter four. I think Q1, yes, we will be
04:14
helped significantly. I think stabilizers, pumps and inverter battery, air coolers,
04:24
I think these are categories which are seeing strong traction because of a strong summer,
04:29
which has helped us particularly in Southern and Eastern markets. I think North has been a bit
04:36
slow, but I think from this month, in terms of, relatively I'm saying, versus South and East, but
04:42
from this month, we are starting to see the temperatures go up in Northern India also.
04:51
Yes, that region is also starting to respond positively because of the weather conditions.
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