VSt Tillers and Tractors limited


(Hitesh Patel) #121

Yes excellent results from VST Tillers. And the Statement of accounts shows a good clean balance sheet.

FY 15 with the tractor capacity up and running should be a good year. Plus stock is bound to be re rated from a one trick pony to a company with multiple offerings.

disc: hold it and remain bullish.


(Naman) #122

Totally exceptional results, with the fruits of tractor business clearly showing…

Between Q4FY14 and Q4FY13 - Gross margin up from 32% to 37%; EBITDA margins up from 15% to 21%; and Net margins increased to 11% to 15%…with ROE of 27% for FY14 from 20% for FY13…

As Hitesh bhai mentioned…balance sheet is clean with no debt…interestingly the cash conversion cycle has improved significantly this year from 140 days to 77 days…Inventory and receivable days have declined freeing up operating cash, with payable days increasing significantly from 25 to 60 days…

Business should generate significant cash in FY15, and continue to grow on the back on the expanded tractor capacity…

Hold the stock from lower levels, and bullish


(Chintan) #123

The other tractor manufacturers like Escorts keep saying that they are not interested in the low HP range as it’s not very profitable, but VST has been increasing OPM - now at 19%. If there are buyers of low HP tractors at such prices, then is it just a matter of time before other manufacturers become interested in this segment?


(Dhiraj Dave) #124

Hi,

Today ICRA has sector call on Tractor. I attended same. ICRA expects demand growth of 5% in FY15 vis-a-vis 18% in FY14. Lower rainfall is unlikely to affect majorly as per ICRA estimate for tractor demand, as Northern region would face most deficient rainfall and significant area is irrigated.


(Dhiraj Dave) #125

Dated report from Kotak, but very good understanding about tractor industry in India. Important to note that VST Tiller demand growth in 3 years is highest (due to base). However, if same likely to continue with, Southern having lower than average India penetration, with recent capacity addition, VST Tiller has good time. I believe VST Tiller has another 3 years of good run. Views are invited.


(Dhiraj Dave) #126

Dated report from Kotak, but very good understanding about tractor industry in India. Important to note that VST Tiller demand growth in 3 years is highest (due to base). However, if same likely to continue with, Southern having lower than average India penetration, with recent capacity addition, VST Tiller has good time. I believe VST Tiller has another 3 years of good run. Views are invited.


(Dhiraj Dave) #127

Apology for missing link for Kotak report. Here it is

http://http://www.team-bhp.com/forum/commercial-vehicles-india/130919-kotaks-report-tractor-segment-india.html


(Rohit Kotewale) #128

http://www.thehindubusinessline.com/markets/commodities/rubber-research-body-develops-machinery-to-arrest-leaf-fall-disease/article6201450.ece

We need to find out how much can this thing contribute to revenues going forward.


(Rohit Kotewale) #129

Ringa, request you to post tractor sales data for months of April, May & June if you have received it from your friend.


(Hemant V Bhatia) #130

Regd 1st quarter, mail sent by co to BSE;

http://www.bseindia.com/xml-data/corpfiling/AttachLive/VST_Tillers_Tractors_Ltd_170714.pdf


(Hitesh Patel) #131

Picture doesnt look too rosy for vst tillers for next two quarters atleast. I think a lot of positives are factored into current price.

disc: exited during last month.


(Naman) #132

Q1 not expected to be great for VST Tillers in terms of sales (slight degrowth possible), though based on improvement in net profit, the EPS should improve by 20%.

Q2 is expected to be flat, so stock may see slight correction from current levels, but long term story looks intact based on tractor sales growth and profitability improvement.
Below is my estimate for Q1FY15 based on the circular to BSE today -




Q1FY14 Q1FY15
155000 (price) Tillers 6802 6383
250000 (price) Tractors 1726 1953
Sales 149 148
PAT margin 12% 15%
PAT 18.30 22.16
NOSH 86,39,528 86,39,528
EPS 21.18 25.65
Have assumed 15% PAT margins due to Q4 FY14 PAT, which may be slightly influenced by subsidies received in Q4. Overall, the next quarter performance is expected to remain flat or lower, so stock may correct slightly or consolidate...
Disclosure : Invested

(Sunil) #133

Pardon me for naive question.

Is is possible that management have put forward subdued projection for next 2 quarter so that there can be correction in price immediately and promoters can increase holding?


(Prasanna Sankaranarayanan) #134

Sunil - That is illegal and VST has shown in the past to be a very ethical management.

Historically if you see, the management has always been overly cautious and has given depressing projections. I’ve heard from Ayush that when they met with the management (Donald, etc) they felt like the management gave such a bad picture of things that they din’t feel like investing. The company has been a 4 bagger in the past year alone.

But yes, there are some real problems with Power Tiller sales.

Positives

)- On the other hand tractor sales are growing at a decent rate and are more than compensating for the tiller’s issues. You can gauge how negative the tone of the report was, even though the EPS is probably going to grow the next two quarters.

)- The company’s capacities have been expanded by 60% and the impact is yet to be felt.

)- Mutual fund ownership has increased steeply this year. The stock went from ‚Äėundiscovered small cap‚Äô to ‚Äėemerging in discovery‚Äô

http://www.moneycontrol.com/mf/user_scheme/mfholddetail_sec.php?sc_did=VST01

I feel there was heavy mutual fund buying today when the stock hit lower circuit, with unusually high volumes, providing downside support.

@Seniors: Is there some way to figure out if Mutual Funds increased stake today?

Cheers,

-Prasanna


(shak) #135

i am bullish on this scrip and adding at every dip, i like the management, they are honest and very ethical, infact i feel money here is safer than a fixed deposit in bank.

p.s. invested in vsttl for the long term


(Ashwini Damani) #136

Shak, VST is a cyclical so its not like a FD. Please see past stock history, the stock had crashed like anything just last year


(ricky76) #137

The market sometimes misprices short term cyclicals but long term growth stories. I believe this is the bucket VST TILLERS falls into.

However I do agree with Hitesh’’ assessment that a lot has been priced into VST during the recent run up and we are likely to see weakness in the share price till the time the market starts discounting a good q3&4 ( assuming monsoons/subsidies don’t play spoil sport)


(Rajeev Jawahar) #138

The AR for 2013-14 is out. The mgt. seems pretty bullish about the outlook, indicating 40% growth in tractors n 12% growth in Tillers for 14-15. This coming from a mgt. that is ultra conservative! The Co. is sitting on liquid mutual fund investments in excess of 100 Crs.


(Rajeev Jawahar) #139

Disc: I am invested in VST Tillers & Tractors.


(Sagar Saxena) #140

Good work Naman. :slight_smile:

VSTT is quiet notorious when it comes to forward projections.Investors would remember,how after a stellar Q2,the management’s cautious stance had kept the price bottled up. http://www.bseindia.com/xml-data/corpfiling/AttachHis/VST_Tillers_Tractors_Ltd_151113_Rst.pdf
However,when the Q3 results were announced,the markets were caught by surprise,& the stock had a big rally from 720 levels.

It is no secret that in Q1,the rains had been poor.Markets had enough time to look into the matter,& I am pretty sure that a sedate Q1 is almost factored in the price(apart from a knee-jerk reaction) Though,we must also be mindful that the stock has had a terrific run over the past 2 quarters,& this consolidation augurs well.The higher P/E is to be expected…VSTT is gaining some insttl. interest & stocks can always run higher on a pure P/E count.Recent examples would include: Alembic Pharma,Mayur Uniq.,Balkrishna(Alembic,at CMP,trades at 27-28x TTM!) Let’s not forget that VSTT had one of its best years in Fy14,in terms of growth.Exports will rise quiet fast,owing to low base,& 2-3 quarters down the line,the product(hopefully,of good quality),will start to give a positive rub-off on the PAT margins.For Q1,I expect a 20-25% rise in PAT(like Naman)