The performance of VST Industries stock, a major tobacco product producer, has far outperformed the Sensex over the last one year. Solid net sales and profit growth of 22.5 and 35 per cent respectively to Rs 578 and Rs 95 crore respectively in FY11 aided the performance.
On the volumes front, VST posted a strong eight per cent increase in its core product segment — cigarettes. The company has also outperformed peers such as ITC and Godfrey Phillips which posted one year returns of 25 and 83 per cent respectively.
The company has also benefitted from the ability to pass on the excise duty hikes to the end user. Case in point, cigarette prices were hiked in the months leading to the budget. However, the FM left excise rates untouched which enabled the company's operating margins and profits to receive a significant bump up.
This along with flat tobacco prices which is among the company's key inputs helped the bottom line immensely. The company's stellar performance on the bourses has also reflected this strength.
The company enjoyed a stellar start to FY12 with net sales and profits rising by 15 and 90 per cent respectively to Rs146 and Rs 34 crore respectively. This was largely due to sedate tobacco prices and the sector's stellar pricing power.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.