VST Inds
Despite a higher excise duty outgo – up 9.5% (YoY) and cigarette volumes falling, with no price hike to offset the rise in raw material costs, the company did pretty well for itself in Q2FY17. Net sales rose 13% (YoY) at Rs.230 crore. Costs all across were up 16%, led by a 29% hike in raw material costs and 33% rise in employee outgo. EBITDA saw a 4% rise at Rs.50 crore and margins slipped from 23.3% to 21.55%. Net profit for the quarter was at Rs.35 crore, up 9%. There was growth in Q2 but more muted when compared to Q1.
This is the third largest cigarette making company in India, next to ITC and Godfrey Philips. 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.
The company’s equity stands at Rs.15.44 crore and annualized EPS for the fiscal is at Rs.100 (FV of Rs.10). Reserves is at Rs.352 crore and cash as at 30th Sept 2016 stood at Rs.25 crore.