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    Buy VST Industries target Rs 4,130: ICICI Direct

    Synopsis

    ICICI Direct has a buy call on VST Industries at a price target of Rs 4,130

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    ICICI Direct has a buy call on VST Industries with a target price of Rs 4,130.

    The current market price of VST Industries is Rs 3,733.55.

    Time period given by analyst is 12-15 months when VST Industries price can reach defined target.

    VST industries would be the bigger beneficiary of the change in the indirect tax structure. With the abolition of excise duty and additional excise duty, net tax incidence for VST industries would come down by 8.3 per cent and to comply with the anti profiteering clause, the company would require taking price cut by 6 per cent.

    State VAT has been replaced by GST and cess would replace specific excise duty. Though, the absolute tax rate on cigarettes has remained same but with the elimination of ‘Tax on Tax’ has reduced the tax liabilities for cigarettes companies.

    ICICI Direct has increased its volume growth estimate from 2.5 per cent to 6 per cent for FY18E and from 3 per cent to 5 per cent in FY19E. This would translate in to EPS increase by 5.9 per cent to Rs 134.6 in FY18E and 9.1 per cent to Rs 164.6 in FY19E.
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