Buy VST Industries; target of Rs 1812: Firstcall Research

Written By Unknown on Selasa, 07 Oktober 2014 | 14.02

Firstcall Research is bullish on VST Industries and has recommended buy rating on the stock with a target of Rs 1812 in its September 29, 2014 research report.

Firstcall Research report on VST Industries

"The Vazir Sultan Tobacco Company Limited was incorporated on 10th November, 1930, under the Hyderabad Companies Act No. IV of 1320 Fasli and now governed under the Companies Act, 1956. It shares collaboration with British American Tobacco group of the United Kingdom. The name of the Company was subsequently changed to VST Industries Limited on 30th April, 1983. The Company has its Registered Office at Azamabad, Hyderabad. The Company has a manufacturing facility at Hyderabad (A.P) & its principal activities are manufacture & sale of cigarettes and unmanufactured tobacco. As on 31st March, 2014, Company has strength of 885 employees, with 291 management staff and 594 workmen. Company has leveraged the opportunities arising from the introduction of 64mm cigarettes in 2012-13 by launching 64mm variants of key brands. The Company's key brands Moments, Special & Charms have registered growth in volumes when compared to last year in Uttar Pradesh, North Bengal and Bihar respectively."

"At the current market price of Rs. 1647.60, the stock P/E ratio is at 12.98 x FY15E and 11.20 x FY16E respectively. Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.126.89 and Rs.147.08 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 22% over 2013 to 2016E respectively. On the basis of EV/EBITDA, the stock trades at 7.18 x for FY15E and 6.25 x for FY16E. Price to Book Value of the stock is expected to be at 7.41 x and 7.07 x respectively for FY15E and FY16E. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend 'BUY' in this particular scrip with a target price of Rs.1812.00 for Medium to Long term investment," says Firstcall Research report.  

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