VST Industries – Multibagger Analysis

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In this post we can explore VST Industries as a Multibagger in Warren Buffet way in Indian Stock Market.

VST Industries

NSE Code VSTIND.NS
BSE Code 509966
URL http://www.vsthyd.com/
CMP 2700.00
Free Report Yes
Publish Date Apr-30-2020

About Company

The Vazir Sultan Tobacco Company Limited was incorporated on 10th November 1930.  It was created under the Hyderabad Companies Act No. IV of 1320 Fasli and now governed under the Companies Act 1956/2013. 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 and Toopran (Telangana) and its principal activities are manufacture & sale of cigarettes and unmanufactured tobacco.

Company manufactures the following brands including joined manufacturing for new Brand UNIBEV which is under leadership of Vijay Rekhi (veteran UB Spirits)

vst industries multibagger

Warren Buffet, Value & Growth Checklist

Following are the Checklist parameters:

Capitalization 4000 CR – Can provide good amount of growth like ITC Capitalization bce05 green e1587451073732
History of Consistently Increasing Sales, Earnings & Cash Flow Yes. bce05 green e1587451073732
Durable Competitive Advantage Moderate
Future Growth Drivers / Sector Growth Moderate
Conservative Debt (long term debt < 3 Net Profit) No Debts bce05 green e1587451073732
Debt Equity Ratio, Current Ratio Zero Debt

Current Ratio is 1.8

bce05 green e1587451073732
Return on Equity must be Above Average 36% bce05 green e1587451073732
Low CAPEX required to maintain current operations Moderate
Inventory Turnover Ratio, Debtor Days, ROCE Good bce05 green e1587451073732
Management is holding / buying the stock Promoter holding is at 33% only
Market Price < Intrinsic Value Yes with 60% Discount. Intrinsic Value Calculator bce05 green e1587451073732
Stock Price is consolidating (now) Yes
Stock Price is growing in past years along with EPS growth No, North-South curves exists
Consolidated PE, PB Ratio, PEG Ratio PE 15PB 5 (High)

PEG 1.6 (High)

2d260 red
Cash Flow Positive, Net Profit % greater than 8% Cash Flow: Okay

Profit %: 20%

bce05 green e1587451073732
Paying Dividends, Tax Yes Dividends

Yes Tax

bce05 green e1587451073732
EPS Growth Rate2 20% above past 2 years bce05 green e1587451073732
Jump in Trailing Result EPS Yes bce05 green e1587451073732
Jump in Quarterly Result EPS Yes bce05 green e1587451073732
Expected Gain in 5 Years 300-500% bce05 green e1587451073732
Price Movement Graph, 52 Week High & Low Okay bce05 green e1587451073732
Volume Analysis 15 Thousand Only bce05 green e1587451073732
Power of Brand Moderate
Corporate Governance, Reputation of Leaders Okay
Fraud reported No. bce05 green e1587451073732

Positive Factors

Here are the positive factors regarding VST Industries based on the checklist above.

  • Company is having Steady EPS Growth
  • Company have Zero debts
  • Celebrity Investor Radhakrishnan Damani increased it LINK

Concern Factors

Here are the concern factors regarding VST Industries based on the checklist above.

  • Book Value Ratio is very high
  • Recession Period ahead could Impact Sales

Summary

Based on the above analysis I would like to say that the VST Industries possess Multibagger Stock properties and one can Invest in 2020.  However one should not expect high compounded returns from this stock.  It can be considered as Moderate Risk Moderate Returns investment.

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