Buy VST Industries; target of Rs 3900: ICICI Direct
ICICI Direct’s research report on VST Industries
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
However, with the improving product mix towards high margin products (contributing ~20% currently to total volumes), EBITDA/stick is estimated to increase to RS 0.47 per stick. We reiterate BUY recommendation on the stock with a target price of RS 3900/share, valuing it at 24.3x FY20E earnings.
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