1. At a Glance
Third-largest cigarette manufacturer in India with a solid 8% market share, VST is now facing falling sales, CEO exits, and market-share erosion. But it remains nearly debt-free, pays out 80% of profits as dividends, and has a cult following for its consistency—if not its growth.
2. Introduction with Hook
Think of VST Industries as that reliable but aging rockstar from the ’80s—still performing, still drawing loyal fans, but the hits aren’t charting anymore. While ITC and Godfrey Phillips reinvented themselves, VST just lit another Classic. Now with sales stagnating and a fresh leadership change, one must ask: is the fire still burning?
- Market Cap: ₹4,974 Cr
- FY25 Net Profit: ₹290 Cr
- Dividend Payout: 80%
- 1-Year Price Fall: –30%
3. Business Model (WTF Do They Even Do?)
- Core Business: Cigarettes under brands like Total and Charms.
- Geographical Edge: West Bengal, AP, Telangana, Bihar, and UP.
- Market Share: 8% by volume (behind ITC and Godfrey).
- Other Activities: Real estate monetisation (e.g., 2.7-acre land sold for ₹102 Cr in FY25).
- No diversification into FMCG or other segments.
In short: No frills, pure smokes.
4. Financials Overview
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | EPS | OPM % | ROE % |
|---|---|---|---|---|---|
| FY22 | 1,178 | 320 | ₹18.85 | 35% | 20% |
| FY23 | 1,292 | 327 | ₹19.25 | 30% | 18% |
| FY24 | 1,420 | 302 | ₹17.75 | 25% | 16% |
| FY25 | 1,398 | 290 | ₹17.10 | 20% | 16% |
Margins and profits are steadily declining while revenue growth is stalling. Not ideal.
5. Valuation
Let’s cut through the smoke:
- EPS (FY25): ₹17.10
- P/E: 23.5x
- Dividend Yield: 3.4%
- Book Value: ₹77.9
- CMP: ₹293
Fair Value Range:
- Bear Case: ₹250 (15x EPS, 3.5% yield)
- Base Case: ₹330–₹350
- Bull Case: ₹400+ if growth returns (new mgmt, exports, or tax breaks)
Valuation is reasonable, but lacks growth triggers.
6. What’s Cooking – News, Triggers, Drama
- CEO Resigned (Apr ’25)
- New Directors Appointed
- Bonus Issue (10:1) Approved
- Land Sale: ₹102 Cr from Hyderabad property
- Dividend of ₹10/share declared
- Sales falling, margins down, but dividend consistent
- Retail Shareholding up from 49% to 59.8% in 1 year
The business? Boring. The stock? Still somehow buzzing.
7. Balance Sheet
| Year | Equity Cap (₹ Cr) | Reserves | Borrowings | Total Assets |
|---|---|---|---|---|
| FY22 | ₹15 | ₹1,059 | ₹0 | ₹1,591 |
| FY25 | ₹170* | ₹1,153 | ₹0 | ₹1,816 |
(*Post 10:1 bonus issue)
- Debt-free for a decade
- Strong reserves, clean asset base
- Investments of ₹532 Cr and zero leverage—management plays it ultra-safe.
8. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | FCF (Est.) | Net Cash Flow |
|---|---|---|---|
| FY23 | ₹181 | ₹140 | ₹5 |
| FY24 | ₹167 | ₹120 | ₹16 |
| FY25 | ₹193 | ₹150 | –₹18 |
Strong operating cash flows, but outflows for high dividends + capex = negative net.
9. Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 38% | 32% | 21% |
| ROE | 19% | 17% | 16% |
| OPM | 30% | 25% | 20% |
| Working Capital Days | –4 | 118 | 122 |
Falling margins. ROE is still decent but lower each year. Working capital days rising = concern.
10. P&L Breakdown – Show Me the Money
| Quarter | Sales (₹ Cr) | Net Profit (₹ Cr) | OPM % |
|---|---|---|---|
| Jun ’24 | ₹321 | ₹54 | 23% |
| Sep ’24 | ₹360 | ₹48 | 19% |
| Dec ’24 | ₹367 | ₹136* | 19% |
| Mar ’25 | ₹349 | ₹53 | 20% |
(*Includes ₹108 Cr Other Income = land sale proceeds)
Actual ops profit is declining, but FY25 numbers look artificially padded by one-offs.
11. Peer Comparison
| Company | CMP (₹) | Sales (₹ Cr) | PAT (₹ Cr) | ROE % | CMP/BV | Dividend Yield |
|---|---|---|---|---|---|---|
| Godfrey Phillips | ₹9,355 | ₹5,611 | ₹1,153 | 24% | 9.3x | 0.6% |
| VST Industries | ₹293 | ₹1,398 | ₹290 | 16% | 3.8x | 3.42% |
| NTC Industries | ₹172 | ₹60 | ₹11 | 7% | 1.2x | 0.0% |
VST = conservative, yield-focused bet. Less volatile, but also less exciting than peers.
12. Miscellaneous – Shareholding, Promoters
- Promoters: 32.2%
- FIIs: ~1.6%
- DIIs: Falling from 17% → 6%
- Retail/Public: Up from 49% to 60%
- Shareholders count: Jumped 5x in 1 year
- Why? Likely due to the 10:1 bonus and “cheap” post-bonus optics.
13. EduInvesting Verdict™
VST is a cash-rich, slow-declining tobacco giant with a shrinking business and fat dividends. The fundamentals are intact, but growth is missing and succession risks are real.
It’s the Tata Salt of tobacco: trusted, respected, but no one’s clicking “Add to Cart” anymore.
A dividend lover’s dream. A momentum trader’s nap.
Metadata
– Written by EduInvesting | 20 July 2025
– Tags: VST Industries, Tobacco, Dividend Stocks, FMCG Slowdowns, Bonus Issue, CEO Exit, Hyderabad Real Estate
