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http://www.icicidirect.com/mailimages/ICICIdirect_VSTIndustries_Q4FY12.pdf
I n l i n e w i t h e x p e c t a t i o n s …
VST Industries’ Q4FY12 results were in line with our expectations. The
company reported net sales of | 195.6 crore (I-direct estimate: | 188.8
crore) and growth of 24.3% YoY against | 157.4 crore in Q4FY11. EBITDA
margins improved ~400 bps YoY from 27.9% in Q4FY11 to 32% in
Q4FY12 on the back of lower employee and manufacturing expenses.
Higher revenues and margins led VST’s earnings to jump ~36% YoY
from | 26.9 crore to | 36.7 crore (I-direct estimate: | 36.7 crore).
ƒ Full year performance
VST’s sales for FY12 stood at | 680.1 crore, up 17.6%, against | 578.4
crore in FY11. The company’s cigarette sales volume in FY12 increased
~12% to ~9200 million sticks from 8162 million sticks in FY11. With a
softening of raw material (RM) prices (un-manufactured tobacco) in FY12,
the company’s RM cost to sales ratio dipped ~400 bps to 45.3%. Also,
further rationalisation in employee cost (10.5% in FY11 to 9.1% in FY12)
and other manufacturing expenses (16.5% in FY11 to 15.4% in FY12)
helped the company to improve its EBITDA margins significantly from
23.6% in FY11 to 33.2% in FY12. Hence, net profits jumped 49.4% YoY in
FY12 to | 142.5 crore. VST has declared an annual dividend of | 65/share
for FY12, thereby increasing the company’s yield to 3.3% as at CMP.
V a l u a t i o n
At the CMP, the stock is trading at 3.7x and 3.3x its FY13E and FY14E
sales/share of | 521.2 and | 596.2, respectively. With the company’s
volume growth being robust at ~12% YoY, margins witnessing
significant improvement and a higher dividend/share, we believe the
company’s earnings and return ratios would continue to rise until FY14E.
Going ahead, the stock would also command further premium in trading
multiple as it is currently trading at a significant discount to its peers (ITC
is trading at 5.6x FY14E sales/share of | 43). Hence, we have valued the
stock at 3.6x its FY14E sales/share of | 596.2 and arrived at a target price
of | 2146.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://www.icicidirect.com/mailimages/ICICIdirect_VSTIndustries_Q4FY12.pdf
I n l i n e w i t h e x p e c t a t i o n s …
VST Industries’ Q4FY12 results were in line with our expectations. The
company reported net sales of | 195.6 crore (I-direct estimate: | 188.8
crore) and growth of 24.3% YoY against | 157.4 crore in Q4FY11. EBITDA
margins improved ~400 bps YoY from 27.9% in Q4FY11 to 32% in
Q4FY12 on the back of lower employee and manufacturing expenses.
Higher revenues and margins led VST’s earnings to jump ~36% YoY
from | 26.9 crore to | 36.7 crore (I-direct estimate: | 36.7 crore).
ƒ Full year performance
VST’s sales for FY12 stood at | 680.1 crore, up 17.6%, against | 578.4
crore in FY11. The company’s cigarette sales volume in FY12 increased
~12% to ~9200 million sticks from 8162 million sticks in FY11. With a
softening of raw material (RM) prices (un-manufactured tobacco) in FY12,
the company’s RM cost to sales ratio dipped ~400 bps to 45.3%. Also,
further rationalisation in employee cost (10.5% in FY11 to 9.1% in FY12)
and other manufacturing expenses (16.5% in FY11 to 15.4% in FY12)
helped the company to improve its EBITDA margins significantly from
23.6% in FY11 to 33.2% in FY12. Hence, net profits jumped 49.4% YoY in
FY12 to | 142.5 crore. VST has declared an annual dividend of | 65/share
for FY12, thereby increasing the company’s yield to 3.3% as at CMP.
V a l u a t i o n
At the CMP, the stock is trading at 3.7x and 3.3x its FY13E and FY14E
sales/share of | 521.2 and | 596.2, respectively. With the company’s
volume growth being robust at ~12% YoY, margins witnessing
significant improvement and a higher dividend/share, we believe the
company’s earnings and return ratios would continue to rise until FY14E.
Going ahead, the stock would also command further premium in trading
multiple as it is currently trading at a significant discount to its peers (ITC
is trading at 5.6x FY14E sales/share of | 43). Hence, we have valued the
stock at 3.6x its FY14E sales/share of | 596.2 and arrived at a target price
of | 2146.
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