COVID-19 second wave: V-Guard Industries sees significant impact on consumer demand in Q1

Stocks

V-Guard posted a 112 percent year-on-year (YoY) rise in its consolidated net profit for Q4 at Rs 68.39 crore.

As part of the Q4 results announcement, the V-Guard board has recommended a dividend of Rs 1.20 per equity share (120 percent) for the financial year 2020-21.

As part of the Q4 results announcement, the V-Guard board has recommended a dividend of Rs 1.20 per equity share (120 percent) for the financial year 2020-21.

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Consumer electricals company V-Guard Industries expects that there will be a significant impact on consumer demand in Q1FY22 due to the second wave of COVID-19 and allied lockdowns in the country.

Sudarshan Kasturi, CFO, V-Guard Industries said in his post-results interaction that since the second wave of COVID-19 hit in April itself, lockdown-like restrictions were imposed.

“May has been severely impacted with most of the country under lockdown. The month of May is about 30-40 percent of the normal business. June could be similar unless some ‘unlock’ process begins,” he added.

V-Guard posted  a 112 percent year-on-year (YoY) rise in its consolidated net profit for Q4 at Rs 68.39 crore. 

Kasturi said that the company was able to bounce back strongly in the third and fourth quarters of FY21.

“There has been an improvement across all product categories, electronics, electrical and consumer durables. We are hoping that consumer durables share in the total business improves further in FY22,” he added.

The consolidated net revenue from operations for Q4 stood at Rs 855.2 crore, a YoY increase of 58 percent. 

Gross margins stood at 31.5 percent in Q4 compared to 33.2 percent in the year-ago period.

The CFO said that the margin impact was due to some lag in price corrections. He also added that a few of their imported products saw a rise in customs duties impacting overall margins.

“Input cost pressures have been there and some pricing action have to be taken. Though we are able to mitigate it to large extent, some near term pressures are likely to continue,” said Kasturi.

V-Guard also faced supply-side constraints during FY21. He explained that there was a severe supply disruption in Sikkim plants, as they were affected by COVID-related lockdowns up to September 2020.

When it comes to the region-wise mix, South contributes 58.5 percent while non-South contributes 41.5 percent. Kasturi added that the idea is to have a 50-50 mix over the next few years.

“We will look to increase non-South mix over 1-2 percent every year so that in the next 5-6 years, we reach 50-50,” he said.

As part of the Q4 results announcement, the V-Guard board has recommended a dividend of Rs 1.20 per equity share (120 percent) for the financial year 2020-21.