Buy VST Industries; target of Rs 1445: Firstcall Research

“The Vazir Sultan Tobacco Company Limited was incorporated on 10th November, 1930, under the Hyderabad Companies Act No. IV of 1320 Fasli and now governed under the Companies Act, 1956. It shares collaboration with British American Tobacco group of the United Kingdom. The name of the Company was subsequently changed to VST Industries Limited on 30th April, 1983. The Company has its Registered Office at Azamabad, Hyderabad. The Company has a manufacturing facility at Hyderabad (A.P) and its principal activities are manufacture & sale of cigarettes and unmanufactured tobacco.”
 
“VST Industries Ltd. has reported net profit of Rs 379.70 million for the quarter ended on December 31, 2011 as against Rs 260.80 million in the same quarter last year, an increase of 45.59%. It has reported net sales of Rs 1700.70 million for the quarter ended on December 31, 2011 as against Rs 1380.40 million in the same quarter last year, a rise of 23.20%. Total income grew by 25.55% to Rs 1755.00 million from Rs. 1397.80 million in the same quarter last year. During the quarter, it reported earnings of Rs 24.59 a share.”

“At the current market price of Rs.1290.00, the stock is trading at 13.66 x FY12E and 11.93 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs. 94.42 and Rs. 108.17 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 39% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 8.53 x for FY12E and 7.50 x for FY13E. Price to Book Value of the stock is expected to be at 4.90 x and 3.47 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 1445 for medium to long term investment,” says Firstcall Research report.     

Public holding more than 90% in Indian cos

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