July 31: V-Guard Industries Ltd. reported a strong performance for the first quarter of FY27, with revenue rising 24percentage year-on-year to INR 18.1 billion, ahead of expectations. Growth was broad-based across all segments, led by Electricals, which grew 28percentage year-on-year, and Sunflame, which registered 18 percentage growth. Electronics and Consumer Durables also delivered healthy growth of 23percentage and 19 percentage, respectively.
The strong quarterly performance was supported by robust growth across the Electricals portfolio, with copper-led realisations in wires complemented by healthy volume growth in switchgear, modular switches, and pumps. The ex-wires Electricals portfolio also recorded high double-digit growth, while the wires business was largely driven by higher realisations as steep price increases impacted volumes.
Electronics grew approximately 23% year-on-year, with all key categories, including stabilizers, UPS, and solar, registering growth. Consumer Durables grew 19% year-on-year, supported by a favourable summer season, a spike in induction cooktops, and broad-based growth across the kitchen portfolio. Pedestal TPW fans witnessed strong demand in South India, although inadequate inventory in April resulted in some lost sales.
Gross margin remained stable year-on-year at 36.9%, despite significant input-cost inflation amid the West Asia conflict. The company has completed approximately 80-85% of its pricing actions, with around 75-80% of the required pricing already passed through. The blended price increase stood at approximately 14%, ranging between 5% and 18% across categories. Management expects gross margins to remain at similar levels in FY27.
EBITDA margin expanded sharply by 212 basis points year-on-year to 10.5%, significantly ahead of expectations of 8.9%. The margin expansion was primarily driven by operating leverage from higher scale, with overall operating expenses as a percentage of sales declining 211 basis points year-on-year.
With the balance pricing actions expected to flow through and structural levers such as increased in-house manufacturing, which now accounts for more than 65%, favourable product mix, and cost optimisation remaining intact, EBITDA margins are estimated at 9.6%, 9.8%, and 10% for FY27E, FY28E, and FY29E, respectively.
The growth outlook for FY27 remains positive, with management guiding for more than 15% growth during the year, supported partly by pricing. Electricals is expected to sustain realisation-led growth, while Consumer Durables is likely to benefit from a favourable summer season and a softer base. Core business growth, excluding Sunflame, is estimated at approximately 19% for FY27.
Sunflame also showed signs of improvement, growing 18% year-on-year as functional integration was completed and the sales-acceleration programme began to contribute to improved momentum. The company is prioritising a volume-led recovery, while margin improvement is expected to be more gradual and dependent on pricing transmission. The new product development pipeline is expected to roll out from Q2 FY27, alongside improving reach across general trade and organised retail.
The kitchen appliances business is expected to witness a meaningful turnaround over the coming quarters, with a gradual margin recovery anticipated through FY27E-FY29E as the category emerges from its post-Covid slowdown.
The overall outlook remains positive, supported by strong margin performance, sustained realisation-led growth in Electricals, and an expected turnaround in Consumer Durables on a favourable base. These factors are expected to provide strong momentum through FY27.
V-Guard Industries maintains a LONG rating with a September 2027 target price of INR 418, valued at 33x forward EPS of INR12.7.