ICICI Direct has given a hold rating to VST Industries with a target price of Rs 3850. The share price moved up by 0.07 per cent from its previous close of Rs 3437.50. The stock’s last traded price is Rs 3440.05.

VST Industries Ltd., incorporated in the year 1930, is a Mid Cap company (having a market cap of Rs 5286.39 Crore) operating in Tobacco sector.

For the quarter ended 30-09-2020, the company reported a Standalone sales of Rs 300.00 Crore, up 22.25 % from last quarter Sales of Rs 245.39 Crore and up .29 % from last year same quarter Sales of Rs 299.14 Crore Company reported net profit after tax of Rs 88.54 Crore in latest quarter.

Investment Rationale
The cigarettes industry has been severely impacted by excise increase & pandemic in the current year. The brokerage expects industry wide volume decline of 15% in FY21E. Moreover, a volume revival would require increase in socialising & prolonged period of stable taxation. However, VST has witnessed several such lull periods in the past and has always altered its sales strategy to drive volumes. It will wait to see the volume revival trajectory in the next few quarters. It downgrade the stock from BUY to HOLD with a revised target price of Rs 3850/share (17x FY23E PE).

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