ICICI Direct's research report on VST Tillers Tractors
Union Budget 2017-18 delivered on its expectations with a clear focus on achieving its vision to double farm income by 2022. Due emphasis was given to both productivity as well as better farm realisations. Total allocation towards agriculture & farmer welfare was increased 16% YoY to Rs 41,855 crore in FY18E.
Outlook
Going forward, we expect sales & PAT to grow at a CAGR of 10.1%, 4.4%, respectively, in FY16-19E. We value VST at Rs 1950, i.e. 20x P/E on FY19E EPS of Rs 97.5 and assign HOLD recommendation on the stock. A key positive risk to our call is disposal of premium existing land at Whitefield while the key negative risk to our call is dismal return realised out of the incremental capex spend (FY17E-18E).
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