VST Inds

This is the third largest cigarette making company in India, next to ITC and Godfrey Philips. The company for Q4FY14 posted a 18% (YoY) jump in net sales at Rs.189 crore, helped by robust demand and a 21% drop in payment in excise duty. Operating costs as a percentage of net sales was down at 70% compared to 76% in Q4FY13. Tax outgo rose 67% from Rs.15 crore to Rs.25 crore. It ended the quarter with a net profit at Rs.52 crore, up 48%.

For FY14, the company posted a 18% increase in net sales at Rs.785 crore and net profit for the year was at Rs.150 crore, up 19%. On an equity of Rs.15.44 crore (Rs.10 face value), EPS for the year was at Rs.97.24, discounting the current price by over 19 times.

This company was founded way back in 1930 as Vazir Sultan Tobacco. It is an affiliate of British American Tobacco (BAT), UK, one of the largest cigarette manufacturers in the world, and holds 32.16% stake. It operates mainly in the lower-end category of the industry, with brands like Charms, Charminar, Moments and Special Extra Filter. It also exports leaf tobacco to cigarettes manufacturers across the globe. The company has been debt-free since FY05 and has been able to finance all the growth through internal accruals. Currently, its cash balance is at Rs.47 crore and reserves stands at Rs.309 crore.