January 24, 2017 / 13:15 IST
VST Industries with 7.5% volume market share is a prominent player in the low priced cigarette (Rs 3.0-5.0/stick) segment in India (brands: Charms, Charminar, Kingston, Moments). Volume growth for VST declined drastically by 12.5% in FY13 & 0.5% in FY14 following the steep excise duty hikes (above 65 mm segment) of 21% & 18% in FY13 & FY14, respectively.
Outlook
On GST front, we still await clarity on quantum of cess because as per media reports, the cigarette segment is expected to attract 26% GST rate plus cess. We upgrade the stock to BUY recommendation with a target price of Rs 2792/share valuing it at 18x on its FY19E EPS of Rs 155.1.
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