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Centrum Broking Report
VST Industries Ltd. reported lower than estimated margins in Q1 FY22.
Net revenue grew 12.1% to Rs 2.8 billion, driven by 35% volume growth. Yet, gross margin contracted 676 basis point to 55.3% due to higher impact of excise rates.
VST Industires' Ebitda margin contracted 706bp y-o-y to 33.3%, as employee cost increased 9.9% and other expenses went up 18.1%.
Management sounded challenging market conditions due to intermittent lockdowns in its key states, resulting in restricted mobility and lower out-of-home consumption.
Further, leaf tobacco export was flat y-o-y. Nevertheless, we expect the new Managing Director (strong marketing background) to provide growth strategy to improve revenues and expand distribution footprint.
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