VST Industries in focus, rallies 11% after June quarter numbers

Analysts with ICICI Securities note that VST Industries reported resilient sales.
Shares of VST Industries rallied as much as 11 per cent to Rs 3,595 apiece on the BSE on Tuesday, a day after the company reported its June quarter numbers for the fiscal year 2020-21 (FY21). 

The company's net profit rose 0.04 per cent to Rs 75.71 crore for the quarter under review as against Rs 75.68 crore logged during the corresponding quarter of the previous fiscal. The company's sales, however, declined 19.4 per cent to Rs 245.39 crore as against Rs 304.45 crore in the year-ago quarter. 

In a separate filing to exchanges on the impact of Covid-19 pandemic on the company's business operations, VST Industries said that the business operations were adversely impacted in the form of disrupted supply chain and decline in consumer demand. "Since mid-May 2020, while the manufacturing operations have gradually started returning to normalcy, we estimate the pandemic to continue having its impact on sales," it said in the press release

Analysts with ICICI Securities note that VST Industries reported resilient sales despite manufacturing, supply chain as well as retails selling points remaining closed for nearly 40 days. Further, the company has a wide presence at lower price point cigarettes. With a continuous increase in taxes & duties, the consumer market now has been largely concentrated at 64 & 69 mm cigarettes, which is likely to aid the company, the brokerage said.

Additionally, "the gap between ITC & VST’s (at lower end) prices led to market share gains for the latter and the possibility
of curbs on illicit cigarettes due to supply disruptions could also help drive volume growth for the company," it said in a result review note. 

The brokerage maintains its positive stance on the stock with the target price of Rs 4,450/share and BUY recommendation.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel