3 August 2016
1QFY17 Results Update | Sector: AUTOMOBILES
VST Tillers Tractors
BSE SENSEX
27697
Shares O/s (cr)
52-W H/L Range (Rs)
1/6/12 Month Perf
Market Cap. (INR cr)
Market Cap. (US$ m)
S&P CNX
8544
0.9
2035 /1,274
-7/25/16
1,584
236
CMP: INR1834
YEAR
March
FY15
FY16
FY17E
SALES
A.PAT
(INRCr) (INRCr)
550
645
731
70
110
124
TP: INR2250(+23%)
A.EPS
(INR)
80.5
85.8
102.1
A.EPS
Gr.(%)
-16%
7%
19%
PE
(X)
23
21
18
P/BV
(X)
4.4
3.8
3.2
EV/
EBITDA(X)
15.6
13.8
12.0
(%)
0.8%
0.9%
1.1%
BUY
DIV. YLD
ROCE
(%)
24%
23%
23%
Results Overview- Quarterly blip; Long term story intact, good monsoons bode well for the company
For Q1 FY17, VST's revenue was INR 178.1cr (+6.9% YoY and +0.4% QoQ); EBITDA was INR 24.6cr (-22.3% YoY
and -16.7% QoQ); and PAT was INR 20.0 cr (-4.1% YoY and +2.8% QoQ).
In Q1FY17, power tiller sales volumes grew 8.1% YoY to 7300 units while tractor sales volumes de-grew 4.6% YoY
to 2158 units
EBITDA margins at 13.8% (down 518bps YoY) came in substantially lower primarily on account of higher employee
costs (one time gratuity charge to P&L account and increase employee strength) and higher operating costs (higher
dealer discount's due to change in credit terms).
Other income for the quarter came in higher than expected on account of one time capital gains realised.
Sowing activity has picked up pace with acreages under sowing as of July 27, 2016 at 80 million hectares (MH) vs.
75 MH as of July 27, 2015.
1QFY16
166.6
135.0
31.6
2.5
0.6
2.5
0.0
31.0
10.1
0.0
20.8
19.0%
33%
4QFY16
177.3
147.9
29.5
4.7
0.7
3.2
0.0
30.3
10.8
0.0
19.5
16.7%
36%
1QFY17
178.1
153.5
24.6
5.9
0.7
2.4
0.0
27.3
7.4
0.0
20.0
13.8%
27%
-4%
3%
-12%
-10%
15%
-4%
8%
-24%
yoy
7%
14%
-22%
qoq
FY15 FY16
yoy
17%
18%
13%
21%
33%
9%
16%
7%
0% 551.6 646.7
4% 451.4 533.8
-17%
100.2 112.9
11.9
2.1
9.4
-
31.0
-
69.5
31%
12.2
2.6
12.5
-
35.9
-
74.1
33%
INRCr
Total Income
Expenditure
EBITDA
Other Income
Interest
Depreciation
E/O Gain
PBT
Tax
100.6 110.0
P\L of Associates
Adj. PAT
EBITDA (%)
Tax rate (%)
18.2% 17.5%
Valuation and view
Rainfall in the second half of the monsoon season 2016 is expected at 107% of LPA. A good monsoon bodes well
for the farm mechanisation sector with VST a key beneficiary.
VST is an attractive play on its debt-free status, healthy product pipeline, continuous emphasis on market-share
increase, minimal capex requirements, healthy FCF, and superior return ratios, and resurgence of agriculture income
on the back of above normal monsoon forecasts.
We expect VST to grow its profits at 17% CAGR over FY16-18E. The company trades at 15.5x FY18E EPS. We
maintain our TP of INR 2,250 (19x FY18E EPS) providing an upside of 23%.
Dharmesh Kant (Dharmesh.Kant@motilaloswal.com); Tel: +91 22 30102470
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VST Tillers Tractors
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