VST Industries Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Revenue (net of excise duty and GST) increased 32% YoY to | 290.2 crore. Volumes increased in excess of 10% aided by the low base in Q2FY18 & stable taxation on cigarettes in the last year. Base quarter was muted with 1% decline in cigarette volume after steep GST increase in July 2017. This, coupled with a change in product mix towards premium priced cigarettes, has aided topline. In Q2FY19E, 64 mm category contributed 40% of volumes whereas 69 mm & King...

ICICI Securities Ltd | Retail Equity Research VST Industries reported strong revenue growth of 25.5% to | 263.1 crore on a YoY basis with the cigarettes and tobacco segment contributing | 227.6 and | 35 crore to revenues. Cigarette volumes grew ~8-9% during the quarter. The contribution of 64 mm & 69 mm and above category cigarettes to the topline was in the ratio of 45:55,...

ICICI Securities Ltd | Retail Equity Research VST Industries reported strong revenue growth of 26.5% to | 279.1 crore on a comparable basis with cigarettes and tobacco segments contributing | 209.6 crore and | 90 crore to revenues, respectively. Cigarette volumes were flat during the quarter and for FY18. The contribution of 64 mm and 69 mm category cigarettes to the topline was in the ratio of 50:50. Premium brands Total and Edition contributed 20% to overall volumes...

ICICI Securities Ltd | Retail Equity Research VST industries reported a revenue growth of 2.1% to | 238.7 crore on a comparable basis with cigarettes and toabacco segment contributing | 196.7 and |60 crore to the revenues. Cigarettes volumes witnessed a growth of ~2% during the quarter however remained flat for 9mFY18. The contribution of 64 mm category cigarettes was 50% compared to 57% in the corresponding quarter. The premium brands Total & Edition' contributes 20% to the volume....

VST Industries reported strong numbers on operating & profitability fronts. Net revenue (net of excise duty for historical quarters and estimates) for the quarter declined marginally by 1.3% YoY to | 219.7 crore due to pressure on volume, against our estimate of | 256.4 crore. Revenue from unmanufactured tobacco remained flat on YoY basis at | 54 crores. Cigarette volumes were down ~1% for H1FY18; < 64 mm cigarettes contributed 54% to the revenue and rest was > 64 mm (Total contributed 15% and Edition less than 5%)...

Subdued Quarterly Earnings: VST Industries Limited has registered moderation in its earnings wherein Q1FY18 revenue of Rs.5622 Mn slumped by 4.2% on YoY basis and 1.0% on QoQ basis.

Gross revenue for the quarter declined 4.1% YoY to | 561.9 crore, inline with our estimate of | 572.4 crore. The company reported 6.0% YoY decline in cigarette volumes ahead of GST implementation. Unmanufactured tobacco sales declined 45.9% YoY to | 46.0 crore (base quarter revenue included one-time order) Due to a volume decline, the excise duty for the quarter increased only 4.4% YoY. Led by lower revenue, EBITDA witnessed a decline of 2.4% YoY to | 65.3 crore, broadly in line with our estimate of | 67.3 crore. Thus, EBITDA margin came in at 11.6%, marginal expansion of 22 bps (I-direct estimate: 11.7%, in Ind-As)...

ICICI Securities Ltd | Retail Equity Research In the review meeting of the GST Council on tax rates, the council has raised the specific cess on cigarettes in all categories below 75 mm. The product mix for VST is currently at 50:50 for below 65 mm: above 65 mm category. We believe this would increase the blended tax incidence per stick from | 2.3 to | 2.9. We believe this increase in tax incidence would compel the company to undertake ~20% price hike to pass on the complete burden to consumers. Due to this sharp increase in the tax...

VST industries would be the bigger beneficiary of the change in the indirect tax structure. With the abolition of excise duty and additional excise duty, net tax incidence for VST industries would come down by 8.3% and to comply with the anti profiteering clause, the company would require taking price cut by 6.0%. State VAT has been replaced by GST and cess would replace specific excise duty. Though, the absolute tax rate on cigarettes has remained same but with the elimination of Tax on Tax' has reduced the tax liabilities for cigarettes companies. We have...

Soaring Demand for Lower Price Range Cigarettes to Further BoostGrowth Momentum: VST Industries Ltd. has witnessed impressive growth in its topline and bottomline during FY17 on the back of soaring demand for lower priceranged cigarettes and arrested growth in total expenses. The topline has grown at 7.4% from Rs.8831 mn in FY16 to Rs.9482 mn in FY17 while bottomline has grown at 9.2% from Rs.1531 mn to Rs.1672 mn during the same period.