Q4FY21 Result Update - VST Industries - ICICI Direct

VST Industries posted revenue growth of 9.4% but, net of excise, revenues saw 4.6% de-growth. Cigarette sales witnessed growth of 12% to Rs. 347.4 crore with flattish YoY volumes. However, on a sequential basis, cigarettes volumes grew 15% during the quarter. Tobacco sales declined 45.3% to Rs. 35 crore on account of adverse exports due to the non-availability of containers. The company has not taken a price increase in last nine months and does not intend to make any price changes in the next six months. High priced cigarettes (at a price point of Rs. 6, Rs. 7, Rs. 11) contribute ~45% of total volumes. On an annual basis, the company witnessed 17% cigarettes volume decline in FY21. Though cigarette volumes recovered considerably in the last three months, we believe state wise lockdowns would impact volumes in Q1FY22E. Operating profit increased 3.8% given the overhead spends were down 13.7% during the quarter. PAT increased 3.1% to Rs. 72.8 crore. The company declared a final dividend of Rs. 114 / share.

Valuation & Outlook

VST maintaining its profitability despite severe volume challenges shows its ability to manoeuvre pricing & promotion to its advantage. We believe stable taxation would help it to recover volume in future, which would help it grow revenue, earnings trajectory for the next few years. However, localised lockdowns due to severe second wave of Covid-19 would restrict out of activity and, in turn, cigarettes volumes in H2FY22. We maintain HOLD with a revised target price of Rs. 3600 (earlier Rs. 4200), valuing it at 15x FY23E P/E.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_VSTInds_Q4FY21.pdf

Shares of VST INDUSTRIES LTD. was last trading in BSE at Rs.3310 as compared to the previous close of Rs. 3341.75. The total number of shares traded during the day was 1640 in over 372 trades.

The stock hit an intraday high of Rs. 3325.9 and intraday low of 3259.4. The net turnover during the day was Rs. 5410887.

Source : Equity Bulls

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