Something strange that I observed:
Cash decreased roughly by 450 Cr and Fixed assets increased by roughly by same amount in FY23
On further Investigation it looks that company has paid this amount to government to buy Lease hold Land based on Q4 FY23 Results
Isn’t this a huge transaction taking away 50% of the cash company holds? Shouldn’t it be covered by company as to why it was required and if was must?
@Ravindra83 @dd1474 Can you share your views please?
@Amit2saxena
Thanks for seeking my view. My view may be negatively biased due to my exit and investment in competitor ITC.
As correctly pointed out by you, the company spent around Rs 350 Cr for purchase of leasehold land. As per screener data Rs 350 Cr are utilised for purchase of land while around Rs 73 Cr is addition in Plant and Machinery which I assume normal mainteance and growth related expense.
I also gone through Q2FY24 results which has following comments in the covering letter.
From this, it appear that company management intend to integrate its operations at one place and likely gain from synergy. Further, it is likely to release Azamabad property in Hyderabad, which may be encashed in future. Hence, to take a view only on purchase of land and infer that management is misallocating capital may not be correct in my limited understanding. One need to see action of management, specificially about land encashment/utilisation of Azambad in Hyderbad and how it share the benefit with the shareholders. In short term, such action would mean lower other income and hence lower dividend distribution, but in long term, it might be positive for the company.
Disclosure: I have exited from VST couple of years back and continue to remain invested in ITC. Hence, my view may be negatively biased. I have excellent track record in being wrong with my forecast. I am not SEBI registered advisor. I am suggesting any investment action in the company.
Out of the blue, today this stock hits 20% Upper circuit breaker - Nothing on the news though!
There is 4% change in equity
Most probably it’s revaluation of the land they own on the books …
I haven’t gone through AR , just checking via screener
Company converted leasehold land in Hyderabad to freehold land by purchasing (paid around Rs 325 Cr) land from Govt. of Telangana
Why the company invest huge amount to purchase the lease when they already had the lease and also doing business from there.And what incremental revenue this land can generate for the company, any idea?
I am expecting that the market value of the land will be much higher. They can sell the land and move outside the city at a much cheaper cost. The return will be distributed as dividend
Majority shareholder is BAT.
While BAT Selling in ITC is well.known they might want to take as much out of vst as possible too.
BAT has stated publicly on it conference call that it needs to reduce debt. They are monetising non core assets
So this is a possibility for sure
Bonus of 1:10; however results seems bad
https://www.bseindia.com/xml-data/corpfiling/AttachLive//483f3cf3-16a5-47bf-8b24-14c19f2c2f05.pdf
It says Bonus of 10:1 , not 1:10
10 new shares for each share held, isn’t that a massively great deal for all share holders?
Not sure, if this is a very good short term bet.
Top line and bottom line seem to have reduced, vis-a-vis the previous year.
The total number of shareholders has increased significantly in the last quarter. What could this possibly mean.
Looking at reduction of holding by both FIIs and DIIs compared to last quarter, the only assumption is more retailers have bought this stock in the last quarter. (3.77% increase)
@dd1474, request your view on what’s gone wrong with VST Industries, as you were invested in it for quite some time. Their profit has de-grown by 21% in past 12 months. It would need some meticulous planning and execution to mess up a business as simple and sticky as tobacco, that too without any adverse regulation.
Why doesn’t BAT do anything? Same for RKD.
I just can’t understand why there is no accountability for the deteriorating results. Request to help me understand the dynamics of why bad results don’t seem to be causing any kind of shake up in the company.
Thanks
Tobacco prices have gone up a lot due to crop failure globally. This reduced gross margins. This though means that prices will go down a lot in a year as more farmers plant tobacco.
Excluding other income Q3 PAT seems to be de-grown by 10%. Other than high tobacco prices is it something related to new operation facility maybe taking time to stabilise? Or something else if anyone have insight?
SBI MF has sold 65k shares of VST industries.
