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Please refer to important disclosures at the end of this report
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VST Industries Ltd. is a cigarette manufacturing and distributing company.
The company primarily operates in South India.
The company has been steadily reporting growth and the sales CAGR for 10
years ended 2019 stands at 11.2%. Recently its growth momentum sped up
with increase in realistaion change in product mix to premium priced
cigarettes. The company has been witnessing superior volume growth in high
priced cigarettes as contribution of premium brands ‘Charms’, ‘Total’ &
‘Edition’ has increased to 65% of volumes in last few years. With a
favourable product mix, EBITDA/stick has grown at a CAGR of 12% from
`0.24 in FY14 to `0.43 in FY19. With a wide presence at the lower price
points and strong distribution of 1million retail outlets, VST’s brand has been
specifically popular in West Bengal, Bihar, UP, AP and Telangana
contributing ~60% of volumes.
Financial health of the company looks sound with zero debt in its balance
sheet and investments constituting 70% of the total assets. The cash flow also
remains steady. Currently, the stock trades at 26x of its earnings and delivers
36.4% RoE. The company also pays attractive dividend of average 65%. With
concrete business and attractive returns, we recommend BUY on the stock.
BUY
CMP `4,422
0.0
Reuters Code
VSTI.BO
VST IN
10
BSE Sensex
41,021
Nifty
12,101
Face Value (`)
Tobacco Products
Market Cap (` cr)
6,828
52 Week High / Low
4676/3001
Avg. Daily Volume
13,369
Jaikishan Parmar
022 – 3935 7600 Ext: 6810
jaikishan.parmar@angelbroking.com
VST Industries Ltd
Others | IT
Nov 27, 2019
2
VST Industries| Tobacco Products
2
Research Team Tel: 022 - 39357600 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement VST Industries
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)