Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Creating Wealth through Alpha and Compounding

Yellowstone Equity

Providing unbiased and independent research on Indian equities to global institutions and individual investors


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Regulatory Disclosure: 
Note that Ankit Agrawal (Proprietor of Yellowstone Equity) is a SEBI registered Research Analyst (Registration No.: INH000007216). Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Research Analyst Contact Details:
Address: A-412, Shilp Aaron, Sindhu Bhavan Road, Ahmedabad, Gujarat - 380059
Email: services@yellowstoneequity.com
Mobile: +91-7575817289

Compliance/Grievance Officer:
Name: Ankit Agrawal
Email: services@yellowstoneequity.com
Mobile: +91-7575817289
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Equity Bottom-Up

<ul>
<li>Polycab is a high-quality wires/cables and FMEG brand, benefitting from growing domestic consumption and rising capex led by India gaining foothold in global manufacturing.</li>
<li>Its FMEG business is currently in nascent stage representing just 10-12% of revenues but is poised to scale up exponentially over the next 3 years.</li>
<li>Its Wires and Cables business, despite commanding a dominant 22%+ market share, has been gaining share and is benefitting from strong demand tailwinds, positioning it well for double-digit growth.</li>
</ul>


Polycab is a high-quality wires/cables and FMEG brand, benefitting from growing domestic consumption and rising capex led by India gaining foothold in global manufacturing.
Its FMEG business is currently in nascent stage representing just 10-12% of revenues but is poised to scale up exponentially over the next 3 years.
Its Wires and Cables business, despite commanding a dominant 22%+ market share, has been gaining share and is benefitting from strong demand tailwinds, positioning it well for double-digit growth.


2023 High Conviction | Polycab: A High Quality Play on Rise of India as a Manufacturing Hub

External broker reports(aggregated public sources), ICICI Securities Ltd

ICICI Securities Limited

External broker reports(aggregated public sources)

ICICI Securities Ltd

ICICI Securities Limited provides investment services. The Company provides corporate and investment banking, securities, wealth management, retail brokerage, initial public offerings, and advisory services. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

V-Guard Industries Ltd / Equity Bottom-Up

<ul><li>V-Guard has signed a definitive agreement to acquire 100% stake in Sunflame Enterprises (Sunflame) for a consideration of Rs 660 crore, on a cash-free and debt-free basis.</li><li>In the last 3 years, Sunflame’s revenue grew at 15% CAGR (higher than industry growth of ~10-12%) supported by new product launches and geographical expansions.</li><li>It will finance this acquisition through a mix of debt and internal accruals (V-Guard had net cash of ~Rs 151 crore as on September 2022).</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

V-Guard has signed a definitive agreement to acquire 100% stake in Sunflame Enterprises (Sunflame) for a consideration of Rs 660 crore, on a cash-free and debt-free basis.In the last 3 years, Sunflame’s revenue grew at 15% CAGR (higher than industry growth of ~10-12%) supported by new product launches and geographical expansions.It will finance this acquisition through a mix of debt and internal accruals (V-Guard had net cash of ~Rs 151 crore as on September 2022).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

V-Guard Industries - ‘‘Sunflame’ to Scale up V-Guard’s Kitchen Portfolio…

External broker reports(aggregated public sources), Nirmal Bang

Nirmal Bang

A Relationship Beyond Broking

Nirmal Bang, one of the leading stock broking companies in India, caters to retail and institutional clients by offering them a range of financial products and services, including equities, derivatives, commodities, currency derivatives, mutual funds, IPOs, insurance, depository services and PMS.

Nirmal Bang is drawn from a diversity of professional backgrounds, and blend of experience, skill and dedication is shared with its clients. Nirmal Bang emphasizes adequate, thorough research local and world-wide developments, balancing these with the astute discovery of intrinsic values, synergies and growth. The aim is simply to help the investors to maximize their returns.

<div><div><div><div><ul><li>The management highlighted that VIL has a strong brand equity, vast established distribution and good brand recall in South India.</li><li>VIL also uses South markets for incubating new categories.</li><li>It highlighted that it is working on expanding distribution and improving brand awareness in the Non-South region</li></ul><ul style="list-style-type: none;"><li> </li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

The management highlighted that VIL has a strong brand equity, vast established distribution and good brand recall in South India.VIL also uses South markets for incubating new categories.It highlighted that it is working on expanding distribution and improving brand awareness in the Non-South region Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

V-Guard Industries - Expects ECD Segment Margin to Improve Gradually

<div><div><div><div><ul><li>Expects double-digit margins going forward: The management highlighted that despite some challenges related to the third covid wave in the first few weeks of 4QFY22, VIL was able to effectively carry forward the momentum from 3QFY22 and end FY22 on a strong note.</li></ul><div><div><div><div><ul><li>Electronics segment sales to recover in 1QFY23: Electronics segment showed a moderate growth due to delayed start to the summer and channel partners unwilling to stock up due to the Omicron wave.</li></ul><div><div><div><div><ul><li>Working capital position &amp; capex plans: As on 4QFY22, NWC days on TTM basis stood at 106 days vs. 102 days QoQ and 83 days on YoY basis.</li></ul></div></div></div></div></div></div></div></div></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Expects double-digit margins going forward: The management highlighted that despite some challenges related to the third covid wave in the first few weeks of 4QFY22, VIL was able to effectively carry forward the momentum from 3QFY22 and end FY22 on a strong note.Electronics segment sales to recover in 1QFY23: Electronics segment showed a moderate growth due to delayed start to the summer and channel partners unwilling to stock up due to the Omicron wave.Working capital position &amp; capex plans: As on 4QFY22, NWC days on TTM basis stood at 106 days vs. 102 days QoQ and 83 days on YoY basis.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

V-Guard Industries - Robust Topline Growth; Electronics Segment Sales to Recover

<ul><li>V-Guard reported earnings CAGR of 8.6% over FY17-21 vs Havells (15.4%), Crompton (21.5%) and Polycab (39.2%).</li><li>We model V-Guard’s earnings growth to be lower than peers ahead too due to negligible growth in stabilizer business with improving quality and quantity of power supply pan India, While V-Guard has forayed into high-growth consumer durables business, it generates lowest margin among all three segments, Non-South region also offers higher growth but lower margins and V-Guard’s right-to-win in kitchen appliances also appears low.</li></ul><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

V-Guard reported earnings CAGR of 8.6% over FY17-21 vs Havells (15.4%), Crompton (21.5%) and Polycab (39.2%).We model V-Guard’s earnings growth to be lower than peers ahead too due to negligible growth in stabilizer business with improving quality and quantity of power supply pan India, While V-Guard has forayed into high-growth consumer durables business, it generates lowest margin among all three segments, Non-South region also offers higher growth but lower margins and V-Guard’s right-to-win in kitchen appliances also appears low.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Earnings growth likely to remain lower than peers

India

V-Guard Industries Limited produces and manufacturers stabilizers, pumps, cables, fans, and electrical and solar water heaters.

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V-Guard Industries Ltd (VGRD IN)

2023 High Conviction | Polycab: A High Quality Play on Rise of India as a Manufacturing Hub

Polycab is well-placed to see strong earnings growth over the next 3 years starting FY24. We project a 65%+ upside potential, bulk of which could...

Ankit Agrawal, CFA

V-Guard Industries - ‘‘Sunflame’ to Scale up V-Guard’s Kitchen Portfolio…

V-Guard has signed a definitive agreement to acquire 100% stake in Sunflame Enterprises (Sunflame) for a consideration of Rs 660 crore, on a cash...

ICICI Securities Limited

V-Guard Industries - Expects ECD Segment Margin to Improve Gradually

The management highlighted that the ECD segment margin declined from 7% in FY17 to 1.6% in FY22 on account of commodity cost headwinds

Nirmal Bang

V-Guard Industries - Robust Topline Growth; Electronics Segment Sales to Recover

V-Guard Industries (VIL) posted its highest-ever quarterly revenue of Rs10.5bn in 4QFY22, up 23.7% YoY. The topline was in line with our estimate,...

Nirmal Bang

Earnings growth likely to remain lower than peers

V-Guard reported earnings CAGR of 8.6% over FY17-21 vs Havells (15.4%), Crompton (21.5%) and Polycab (39.2%).

ICICI Securities Limited

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