VST Industries falls more than 2.5% after it reports 18% decline in net profits in Q2

 VST Industries (“VST”) announced its results in filings dated 17th October 2023. The Hyderabad-based cigarette manufacturer has reported revenue from operations for the quarter to have increased by 3% YoY to Rs 452 crore and a 18% decline in net profit YoY at Rs 76 crore, with tepid growth in topline, lower profit before tax, and other income. 

Further, in the same filing the company announced shifting of the manufacturing operations of the Company from the Azamabad Industrial Area to Toopran.

This shifting is in line with the strategy of the Company to consolidate its manufacturing operations to derive operational synergies and is likely to be completed before the end of FY25. The Board will consider possible land use options at an appropriate time on the Azamabad property.  

VST Industries

After the government increased the NCCD duty on cigarettes, cigarette stocks, including ITC, have been under pressure. Finance Minister Nirmala Sitharaman stated in her Budget speech before Parliament that the government has decided to raise the NCCD (National Calamity Contingent Duty) on some cigarettes by 16%. For the past two years, the government has not changed this tax in any way.

VST engages in the manufacturing, trading, and marketing of cigarettes, tobacco, and tobacco products in India and internationally. In FY23, revenue grew 7% YoY from Rs. 1561 crore to Rs. 1673 crore.

 

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