VST Industries - Q4FY21 First Cut - ICICI Direct

(CMP - Rs. 3341, MCap - Rs. 5160 crore)

VST Industries Q4FY21 results below our estimate on revenue front however in line with our estimate on earnings front.

Q4FY21 Earnings Summary

- Revenue witnessed a decline of 4.6% to Rs. 278.1 crore (I-direct estimate : Rs. 309.3 crore) mainly on account of subdued cigarette volumes given the post covid period continued to remain adversely impacted by restricted out of home activity. However, 12% QoQ increase in excise duty reflect sequential growth in volumes

- Operating profit grew by dismal 3.8% to Rs. 98.3 crore mainly on account of continuous dip in cigarette volumes. Operating margins improved by 285 bps to 35.3% given company was able to cut the overhead spends along with reduction in some of the promotional activity

- Net profit grew by 3.1% to Rs. 72.8 crore (I-direct estimate : Rs. 74.1 crore)

We believe VST will continue to remain adversely impacted by second wave of Covid19. This would take prolonged time to recover cigarette volumes. Though, there has been stability in taxation, but lower cigarettes volumes would impact the profitability. We remain cautious on the growth prospects of cigarette industry in medium term.

We will be coming out with a detailed update soon

Shares of VST INDUSTRIES LTD. was last trading in BSE at Rs.3323.2 as compared to the previous close of Rs. 3299.35. The total number of shares traded during the day was 506 in over 188 trades.

The stock hit an intraday high of Rs. 3390 and intraday low of 3294.5. The net turnover during the day was Rs. 1684741.

Source : Equity Bulls

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