Buy VST Industries; target of Rs 2150: ICICIdirect.com

According to ICICIdirect.com traders can buy VST Industries around Rs 1855-1810 with a stoploss of Rs 1704 for a target of Rs 2150 in its November 21, 2012 research report.

“The share price of VST Industries remains in a secular bull trend, consistently forming higher peaks and troughs on the long term price charts. While the stock continues to remain in an upward trajectory, it has a tendency to consolidate sideways after every major up move before resuming the northward journey. This indicates a healthy trend as the share price works off its overbought conditions before the start of each up-leg and, thereby, provides enough entry opportunities for medium term traders. The last up move from the December 2011 low of | 994 saw the stock hitting an all-time high of 2269 levels towards late April 2012. Thereafter, the stock went into a sideways consolidation mode for nearly seven months and in the process retraced the preceding up move by precisely about 50%. The medium term moving averages on the daily and weekly charts (50 day EMA – 1775 and 21 week EMA – 1754) remain in a rising mode. The stock has been taking good support at the said averages during the whole consolidation phase, which again indicates a positive bias.”

“VST Industries is one of the foremost cigarette manufacturers in India with a presence in low priced brands like Charms, Charminar and Moments. We believe, with VST’s dominance in the low priced cigarettes market, it is well poised to benefit from increasing per capita income and shift in demand from other cheaper tobacco products to cigarettes. Following the slowdown in volumes in H1FY13, we have assumed a slight dip of - 3.5% in FY13E volume growth and expect volumes in FY14E to increase by 2.5%. VST should command higher multiples considering strong balance sheet, higher return ratios and increasing dividend payout. One can buy the stock with a target of Rs 2150 for a next 6 months time frame.” Says ICICIdirect.com research report.

FIIs holding more than 30% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More