@sarthakkumar19_
Thanks for your kind message. Please note that I have exited from the company Post AGM and I am investor in ITC (a competitor to VST Ind). My view may be biased and I am not SEBI registered advisor.
As an investor, I generally invest in the company with 3-5 years horizon. While I do keep track on quarterly performances, One to two bad quarters are not really worrisome unless there is fundamental change in industry dynamics. On positive side for management, the company have issued media release after Q2 results. On Negative side, despite decline in RM cost as per cent decline by 400 bps (compared with Last Sep 2020 results, source screener: VST Industries Ltd financial results and price chart - Screener), Operating margin remained stable at 38% which indicate almost 400 bps jump in Overheads. In my view, on need to understand whether same is due to promotion of product in new territory like Gujarat or new variant launches. If increase in overheads are for new product launches in new geography, I would not be much concerned.
Second point which need more attention is decline in Sales over Q2FY21. As per media statement issued by the company, it was due to COVID related issues as per my interpretation.
While VST Indicate that market situation was not great, ITC has seen improvement in Cigarette sales YOY of around 10%.
ITC press release also indicate that market in Eastern and Kerala was relatively subdued. VST Industries have major market share in Southern India in my understanding and hence that could explain the subdue performance.
Going forward, as in investor, I shall look at sales growth, operating margin and overheads as per cent of sales. If sales continue to grow at lower than other players consistently for say 2-3 quarters, then It may be concern.