Buy VST Industries, target price Rs 4026: Centrum Broking

Centrum Broking has buy call on VST Industries with a target price of Rs 4026. The current market price of VST Industries is Rs 3030.

VST Industries, incorporated in the year 1930, is a Mid Cap company (having a market cap of Rs 4706.62 Crore) operating in Tobacco sector.

VST Industries key Products/Revenue Segments include Tobacco Unmanufactured, Scrap and Other Operating Revenue for the year ending 31-Mar-2022.

Financials
For the quarter ended 31-12-2022, the company has reported a Standalone Total Income of Rs 457.95 Crore, down -3.10 % from last quarter Total Income of Rs 472.62 Crore and up 3.80 % from last year same quarter Total Income of Rs 441.18 Crore. Company has reported net profit after tax of Rs 78.98 Crore in latest quarter.

The company’s top management includes Mr.Naresh Kumar Sethi, Mr.Aditya Deb Gooptu, Mr.S Thirumalai, Ms.Rama Bijapurkar, Mr.Sudip Bandyopadhyay, Mr.Rajiv Gulati. Company has BSR & Associates LLP as its auditors. As on 31-12-2022, the company has a total of 2 Crore shares outstanding.

Investment Rationale
Management of the company indicated, despite challenging macro condition and changing consumer preferences to RSFT, VST needs to ramp up its offering in the core markets of UP/Bihar in addition to AP/Telangana.

Further, rising input RM/PM could weigh high on margins in Q4 in our view. Considering weaker Q3, the brokerage slashes its earnings and retain BUY rating, with a revised DCF-based TP Rs4,026 (implying 18.3x avg. FY24E/FY25E EPS).