Brokerage house HDFC Securities expects VST Tillers Tractors Revenue / EBITDA / PAT to grow at a CAGR of 16/27/18% from FY 2011 to FY 2011, owing to new product launches, increase in exports and continued import restrictions which Can drive at high volume.
“We believe investors can buy stocks in the band of Add on 2,790-2,830 more dips Band 2,510-2,540 for a reasonable price for the base case 3,045 and the fair value of the bull case 3,345 in the next 2 quarters,” recommends HDFC Securities while retaining its buy tag auto stock,
VST Tillers is a debt free company with good near term cash flow and low capex requirement. In the medium term, the company has set an ambitious target of becoming a 3,000 crore company, brokerage highlights in diversified farm mechanization products and solutions by 2025.
Rising farm income due to better production and higher MSP bodes well for the demand for farm equipment at a time when labor availability is becoming scarce. Better reservoir levels across the country and forecast of normal rainfall for the current year mean better timing for kharif and later rabi crops.
“Apart from the ion tiller and tractor segment, it is also banking on the expansion of precision equipment business volume and range over time. ICRA has grown the tiller market from Rs 1350 crore in FY 2011 to Rs 3150 crore in FY 2015. Estimated to do Rs. Brokerage note added.
Apart from tillers, the company also manufactures and sells compact tractors. Now it is focusing on export and sell more (36-50) HP Tractors.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.