@hitesh2710 Sir are you still holding on this? I havent seen your post on this for a while ?
Disc: Tracking plan to invest if it corrects to 2800
@hitesh2710 Sir are you still holding on this? I havent seen your post on this for a while ?
Disc: Tracking plan to invest if it corrects to 2800
Yes, I do hold this stock.I will prefer buying on dips.To be more specific,I have learnt that one should keep on buying good stocks till itâs reasonably valued,and one should go for additional unitsâ buying whenever there are corrections.I will appreciate the comments of fellow members and seniors regarding the stock and the strategy.
RESULTS AND CONACLL NOTES:
in Crs | Q4FY18 | Q4FY17 | 2018 | 2017 |
---|---|---|---|---|
net sales | 241 | 193 | 763 | 677 |
RM cost | 128 | 90 | 483 | 429 |
% of sales | 53 | 47 | 63 | 63 |
total expense | 202 | 168 | 656 | 591 |
% sales | 84 | 87 | 86 | 87 |
PBT | 48 | 31 | 152 | 115 |
PBT margin | 20 | 16 | 20 | 17 |
PAT | 33 | 21 | 111 | 82 |
EPS( in Rs) | 33 | 21 | 129 | 81 |
sales | ||||
Q4FY17 | Q4FY18 | FY2017 | FY2018 | |
tillers no | 7766 | 2408 | 25515 | 30143 |
tractors no | 2567 | 3574 | 9635 | 11367 |
revenue(in Crs) contribution | Q4FY18 | FY18 | ||
tillers | 130 | 390 | ||
tractors | 97 | 308 | ||
receivables | 186 | 132 | ||
receivable days | 88 | 71 | ||
ROE | 15% | 18% |
Good results by VST. Both top line and bottom has grown decently . VST has achieved highest ever sales no in tillers and tractors. ROE has shown improvement from 15 to 18%. Receivables have increased significantly with increase in tillers sales.
Dividend of Rs. 10 + Rs .35 special dividend
CONCALL NOTES:
**Tractors:
contributed 39% of revenue. Industry to grow by 10 to 15%. VST growth should be in line with industry. May achieve higher growth in compact segment.
VST growth is around 18% while the industry in <30HP tractor segment grew by 25%. VST didnât sell tractor for few months due to techinical issue with 27HP tractor(viraat brand)and Samraat brand tractors. These issue with engine and gear box has been resolved now and reintroduced in market.
Major revenue in tractors comes from 18.5 Hp tractors ( 70%), reaming 30% from 22 and 27 Hp TRACTORS. TN/AP/KA offers subsidy for low HP tractors
_New launche_s: 47HP Branson tractor will be launched by July/August. Around 150 tractors will be imported and sold. After 1.5 to 2yrs it will locally manufactured and sold. Only then company will expect margins from this new launch.
New 30 hp tractor will be launched by end FY19.
Challenge is to scale up higher hp tractor sales. New dealers channel has been setup in states like UP,MP,Haryana and Punjab which are traditional higher Hp tractor markets.
Exports: New EU homologation certificate has been done. In Fy18 exported 133 tractors. Exports no will doubled in FY19.
TILLERS:
Contributes around 56%of revenue. Expected to grow by 4% depending on monsoon and Govt subsidy. Industry size is roughly around 55k. VST has 60% market share.
95% of sales happen throgh subsidy Farmer gets subsidy of 40k to 1lac/tiller. Low HP tractor may cannibalize the tillers market to some extent but still lot of opportunity exists for tillers with focus on farm mechanization which is around 30% now.
VST will maintain market share in spite of new tiller launches by Greaves cotton and Kirloskar.
80% of tillers revenue comes from 12HP tillers.
VST will be launching higher 16 HP tiller in couple of months .
Chinese players have been loosing market share due to poor quality/service.
other points:
Raw materials cost has increased and margins will be impacted from next quarter. May have to increase the price by 5% to maintain the margins. Revised prices only in few states.
Employee cost has increased due to VRS of few employees and increase in bonus/variable salary of employee which is in line with sales growth.
DBT: KA/AP/Assam and NE states yet to implement DBT. All other states have implemented DBT. DBT will not affect the sales as farmers will get loan from banks/nbfc to pay upfront to dealers. Govt will pay subsidy amount directly to farmers within 10 days as seen in few states.
April 2018 sales: company has curtailed sales to manage receivables . It will get compensated by quarter/yr end.
Capex: 240 cr capex planned till 2021. Already completed capec of Rs.129Cr. In FY19 Rs.80Cr will be spent.
New plant at Malur for tillers has been started. It will be fully operational by July . Whitefield factory will be used for assembling higher HP tractors and power reapers.
Rice transplanters: Exclusive sales agreement with Korean company for importing and selling in India.
VST Tillers Ltd
Highlights of Q4 FY18 and FY18 results
Financials
Q&A
VST TILLERS LTD
Earning Cocall
Q4 & FY18
Volume Outlook 10-15 % in Tractors
Launching One new tractor in FY19
Entering into Higher Horsepower Segment , 47HP Branson Tractor will launch now
Challenge is in Launching higher Horsepower tractor
27HP Tractor contribute 30% of revenue while others make 70%
Government Subsidy is Driving the growth
One time impact of Employee cost was 1.7Cr
CAPEX plan of 240 Cr for setting up assembly lines
Company is going to PAN India
Expanding Channel network in Uttar Pradesh , Madhya Pradesh , Punjab , Haryana
Tilles domestic market share of company is 60 %
Custome Hiring Centres are Operational now
-Invested 63 Crore in Equity and 125 Cr in Mutual Funds
Hold 1,25,000 Shares of Rane
Malur Plant will be fully operational by July
Chinese company market share is reducing by 40% yoy and now it remained 20% only
Company is going to Launch 16 HP Tiller and 30 HP tractor in FY19
Disappointing sales no from VST while other players continue to post good sales no.
With additional depreciation/overhead expenses of new plant, increase in raw materials this quarter results may not be good.
Particulars | quarterly | ||
---|---|---|---|
Q1FY18 | Q1FY19 | %change | |
TILLERS | 7119 | 5367 | -24.6 |
TRACTORS | 2555 | 1927 | -24.6 |
While others are posting better results & see better future revising upward guidelines⌠do we really know the reason behind our company lagging behind?
I understand that it should go to other wall (Escort) but as it has significance to our industry⌠wish to have views of other investors after watching the interview of competitor
Notes from AGM /sidelines of AGM. (There may be mistakes from my side while noting down points.)
VST tillers & tractors:
Q1 Sales are affected due to delay in subsidy by few states (KA/AP/MH)
Tractors:
Tractors sales will improve in second half of year. Overall vst will have 10% growth in tractor in fy19.
Overall tractor industry will grow at 10 to 12%/year. Will reach around 9 lac tractors by 2021.
Vst target is to gain around 4% of market share by 2021. Our target is to sell around 30,000 tractor by 2021 from current level of 11,000.
New launches:
47HP BRANSON TRACTORS:
Cmvr approval for Branson brand 47 hp has just come. Delayed due to certain specification required by govt. We will sell 50 to 60 no of imported tractors this year starting from Q3. Royalty of 40$ per tractor sold wll be paid to Kukje ltd. Required technology transfer from Kukje ltd has been going on as planned for indigenization of 47 hp tractor.It will be priced around 8 to 9 lac almost at same level of competitors like John Deere, Escorts,Mahindra.
30 HP tractor :indigenously developed by Vst with the help of external consultant will be launched in December.
Other higher hp tractors(39,45,49HP under Viraaj brand): seeding batch will start from this month. Engine for these will be sourced from Kirloskar. With these launches range of higher hp tractor will be covered.
All these higher hp tractors will be manufactured /assembled at whitefield factory.once we put up platform for higher hp tractors it can be used for range of tractors. Hosur plant even though has capacity for 30,000 tractors, platforms/manufacturing lines are not suitable for higher HP tractors
Compact segment tractors VST facing competition by Mahindra Yuvraj ( 18.5hp) tractors.Gear box problem with existing brand have been resolved. Our viraat brand 27 hp tractor will have better sales.
Exports: last year exported 133 tractors. This year target is around 400âŚalraedy exported ?150 tractors(I am not sure about this no).
New dealers in UP,MP,Punjab,Haryana.itâs not easy to gain market share in these tractors traditionally using higher hp tractors from escorts,mahindraâŚetc. We are launching higher hp for the first time,have to see how market will reacts.
Maharashtra govt also announced subsidiary for lower hp tractors but nothing happened till now⌠Overall around 15% of tractor sales happens through Govt subsidy.
TILLERS:
New plant at Malur is operational. Capacity of 60,000 in two shifts.it will be fully operational by this September. It is high productive line thus requires 60% less workforce for same production.
Tillers growth will not be much in FY19. New 16 hp tiller will be launched in October.
Most of the tillers through subsidiary.Maharashtra,Karnataka and AP states are not clear with the DBT scheme and not released money which has impacted tillers sales.
Chinese competition is there. Recent recommendation by expert committee regarding fixing selling price,mandatory batch testing should help Vst tillers against imported tillers.
Kirloskar tillers are in market from last two years and slowly gaining market share.
OTHER POINTS:
Dealers total no 334. 130 are common dealersâŚ240 tractors and 220 tiller dealers.
Changed to cash and carry model with dealers that also impacted sales no. But we wanted to reduce receivables and cut down the stock at dealer level.
CAPEX: Out of planned 250Cr. 146 Cr spent on new product development like single cylinder tractor,reapers,30 HP tractors and for new series of engines from the upcoming EURO VI norms which will come after few years but export market is already demanding those reforms.
Commodity price will impact our margins by 2 to 3% âŚwith certain rationalisation/ price increase ultimately it may impact our margin by1%
Rice transplanters target is to sell 600 this year.
Reapers target is 700 to 800. These are indigenously developed and manufactured at Whitefield factory.
Thanks for the above info buddy.
Poor Q2 results came with below note.
This is really bad on top of poor sale volumes already reflecting in Q1 & Q2 results. Seems we are ready to loose more ground for other competitors.
A little bit clarity on Management Guidance for H2 & reported fraud of 3.56 Cr by an employee in accounts dept. They expect SAP from next year will save them from such frauds.
VST Tillers Ltd
Highlights of Q2 FY19 and H1 FY19 Results
Financials
Key Highlights
Q&A
eb4a8065-9992-4267-8baf-68732de3dd19.pdf (158.8 KB)
VST Tillers CEO resignation. He was upbeat on VST gaining market share in higher HP tractors in next few years and recently launched higher hp range tractors also. From last few quarters tractor sales were not good compared to other tractor players.
With so many farm loan waivers, shouldnât it be good for the tractor/tiller sector in general? A friend who works in this sector says VST Tillers may be a good buy at these price. Any opinions, people?
Yes,I agree with your opinion.I think,this stock is a good buy for 3-4 year horizon,and can bring in good returns if accumulated at dips.For this stock,I got both the results favorable i.e.products being used & liked by farmers (my observations and discussions with a few farmers),and fundamental stock analysis including ratios,competitor analysis,mutual fund holding,brokerage reports etc.
poor sales no continues for VST:
Particulars | quarterly Sale no | Year to date sale no | ||||
---|---|---|---|---|---|---|
Q3-FY18 | Q3-FY19 | %change | UPTO Q3 -18 | UPTO Q3-19 | %Change | |
TILLERS | 7003 | 4507 | -35.6 | 20018 | 15269 | -23.7 |
TRACTORS | 2111 | 2063 | -2.3 | 7793 | 6075 | -22.0 |
Recently company has organised shareholders visit to new tillers factory.Few points from factory visit and interaction;
New tiller factory spread over 10 acres of land allotted by KIADB.
Manufacturing started from April. Tillers manufacturing exclusively happens here instead of Whitefield factory.
Lot of automation in each and every process, so workforce which is down to 1/3 now compared to same amount of work at old factory.
Existing employees with experience given extra salary hikes to come here from Whitefield.Some local contract workers also employed.
Total 4 engineers at plant and 62 workmen.
Dedicated area for storing components in one area and shifted to manufacturing/assembly area. Casting comes from Belgaum,Coimbatore. Existing problem with sourcing cast has resolved now.
Testing done before dispatching. Dispatch area is huge for storing.
Presently have around 3000 finished tilers as inventory against normal inventory of 500 to 1000 tillers. Market is low with lack of subsidy release from Govt. Sales expected to pick in next 3 months as state Govt"s release subsidy.
Sometimes inventory gets cleared immediate. We can not suddenly overproduce when required. Need to maintain adequate inventory.Target is to sell 27k tillers by FY end.
Capacity to produce 70k tillers per yr on two shifts. Presently doing one shift. 100 to 120 tillers per day. 3000 per month.
New 16 HP tillers is ready with sample batch. Not launched yet.
After shifting tillers manufacturing here we have outsourced some work,as its situated in industrial area with adequate services available .Eg: components painting outsourced saving 8% cost in that. Some material also outsourced.
Raw material cost was high in June but has come down now.
No replacement for CEO as of now.
Also, the promoter is buying continuously for past 1 week from open market.
Does anyone have any idea about the release of subsidy in Maharashtra, Karnataka and Andhra Pradesh or where one can get that info?
Management during the Q2 call had mentioned that the situation would get resolved in 2HFY19 but the Q3 numbers are still down. Power tillers down 36% y/y while tractors are down only 2%.
Thanks in advance!
Promoter has bought 19901 shares from open market valued approx 3.15 Cr. It shows the confidence of promoter despite slow down in sales. The sales are southward for the sector itself as even leaders are struggling, could be the right time for long term investors to get in for very long term.
Promoter holding has increased from 20.9% to 21.24% now
reviving this thread with few queries -
despite lower level of mechanization in agri space in India, why is growth of tillers elusive?
any ground level feedback of higher HP launches in tractors?
does VST have capability to be a successful company in higher HP category where big players dominate?
Supporting answers will be helpful, thanks.
best - rajat