VST Industries reported a healthy set of numbers for Q3FY19. Revenue (net of excise duty) grew by 22.6% yoy to Rs293cr. Raw material cost was up 35.2% yoy leading to gross margin contraction of 503bps yoy to 46.2%. Thus, EBITDA growth was restricted to 8.0% yoy to Rs86.3cr. Gross margin contraction was partly offset by lower employee cost and other expenses as a percentage of net sales; thus, the EBITDA margin contracted 398bps yoy to 29.5%. Aided by higher other income, PAT for the quarter rose 11.4% yoy to Rs55.4cr.
We believe that the growth in revenue is a combined result of volume growth (~9% as per our estimate) and favorable product mix (skewed towards high-priced cigarettes – Total and Edition).
Employee cost and other expenses were down 64bps and 41bps yoy, respectively, as a percentage of net sales.
Depreciation was up by 7.6% yoy.
Other income for the quarter jumped 84.4% yoy to Rs10.1cr.
Tax rate for the quarter stood at 35.8% against 34.5% in Q3FY18.
VST Industries Ltd is currently trading at Rs. 3,180.90, up by 45.05 points or 1.44% from its previous closing of Rs. 3,135.85 on the BSE.
The scrip opened at Rs. 3,171.50 and has touched a high and low of Rs. 3,222 and Rs. 3,081.70 respectively. So far 17,606 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 200 DMA.
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