VST Industries recorded strong 33.3% growth in topline led by ~70% jump in raw tobacco sales & ~16% growth in cigarette sales. Excise outgo this quarter increased ~13% to | 320 crore mainly due to 10% increase in excise duty in 2016 Budget • Cigarettes volume growth witnessed uptick to 4% mainly on the back significant volume decline in base quarter & moderate excise hike of 10% in 2016 Budget. Volume contribution from 64 mm category was 60% during the quarter. We changed our volume estimate from 2% to 4% in FY17E & from 1% to 2% in FY18E on account of low base effect created by significant decline in cigarettes volumes by 7% in FY15 & 3% in FY16. ICICI Securities Limited value the stock at 18x FY18E EPS of | 135.4 & arrive at a target price of | 2437/share with a BUY recommendation on the stock.