VST Industries Limited is one of the major Indian conglomerates engaged in manufacturing of cigarettes containing tobacco and unmanufactured tobacco. The company’s manufacturing facility in Hyderabad in Telangana mainly operates in the tobacco segment and has a strong geographical presence across India along with growing presence abroad.
The company is on a growth momentum, despite the trend of year-on-year tax hikes on tobacco. The company’s strategic portfolio expansion through marked differentiation in products has successfully earned it high priced trademarks like Editions King size & Total 69mm over the past two years. Also, the company’s existing trademarks such as Special & Red Charms are also delivering strong performance in the major markets.
VST Industries’ efforts to cut through the competition by offering innovative products have been well-received by the markets, while the company’s strategic expansion plans and growing investments to strengthen its distribution infrastructure and widen its geographical presence is likely to ensure company’s continued strong performance.
On the financial front, VST Industries Ltd posted 4.12 per cent drop in its revenue from ₹586.02 crore in Q1FY17 to ₹561.86 crore in Q1FY18. The company’s profit before interest, depreciation and tax (PBIDT) stood at ₹65.31 crore in Q1FY18, down by 2.38 per cent on a year-on-year basis.
The profit after tax of the company also decreased by 8.99 per cent to ₹39.79 crore in the first quarter of FY18, as against PAT of ₹43.72 crore in Q1FY17.
On an annual basis, the company’s revenue increased by 10.86 per cent to ₹2,282.39 crore in FY17 from ₹2,058.77 crore in FY16. The company’s PBIDT stood at ₹246.16 crore in FY17, up by 3.69 per cent from ₹237.40 crore in FY16. The company’s profit after tax stood at ₹167.21 crore, up by 9.21 per cent in FY17 from ₹153.11 crore in FY16. On the valuation front, the share price of VST Industries Limited is trading at a PE of 25.54x as against its peers such as Godfrey Phillips (49x). The company’s PE also seems to be slightly undervalued in comparison with the industry PE of 33.17x.