Shares of VST Tillers zoomed 18 per cent to Rs 2,575 on the BSE in Wednesday’s intra-day trade in an otherwise subdued market after the company announced that it had crossed a production milestone of 500,000 power tillers from its manufacturing plant at Malur – Benguluru in Karnataka.
At 11:07 AM; VST Tillers was up 12 per cent at Rs 2,434, as compared to 0.05 per cent rise in the S&P BSE Sensex. The average trading volumes at the counter jumped 10-fold with a combined 80,000 shares changing hands on the NSE and BSE.
Currently, overall power tiller industry in India is around 60,000 units and it is expected to grow to 100,000 units by the year 2025. VST is the leader in the segment and holds a market share of over 65 per cent in the country.
VST is focusing on small farm mechanization and has introduced a wide range of smart farm machines for small and marginal farmers. The company has introduced the electric start power tiller in 16 HP & 9 HP category, range of power weeders, which start from 3.5 hp to 8 hp, range of brush cutters, multi-crop reaper, for the segment.
VST smart farm machines are suitable for all stages of farming and are apt for applications like puddling, inter-cultivation, bund formation, earthing up & de-weeding, and it is best suited for crops like Sugarcane, Paddy, Cotton, Vegetables, Horticulture Turmeric, Ginger etc.
The organization is the largest Indian manufacturer of tillers, and 4WD compact tractors, and amongst the leading producers of the other category of tractors, engines, transmission, power reaper, and precision components. VST also exports products to European, Asian, and African markets.
However, in past one year, VST Tillers has underperformed the market by falling 2 per cent, as compared to 0.25 per cent rise in the S&P BSE Sensex. The stock hit a 52-week high of Rs 2,896, touched on April 29, 2022.
For the first nine months (April to December) of the current financial year 2022-23 (9MFY23), VST’s turnover grew 7.6 per cent year-on-year (YoY) to Rs 683.82 crore from Rs 635.50 crore during the corresponding nine months of last financial year. Net profit was down 28 per cent YoY to Rs 55.22 crore. The company’s performance was weak, driven by a sharp fall in EBITDA margin led by raw material inflation and increase in other operating expenses.
VST Tillers is well-positioned to maintain its dominant market share in the power tiller market. Market share gains driven by new product launches across brands would increase the company’s addressable market. In addition, the company is strengthening its distribution network across the country. The company has technological tie-ups with Pubert (France) and Zetor (Czech Republic) for product development. VST Tillers has invested in California, US-based Zimeno Inc, a manufacturer of driver optional born electric tractors under the Monarch brand.
With increasing demand for small farm machines, the Company is favourably positioned to reach its operational targets. With the growing demand for energy-efficient and environment-friendly equipment for the agriculture sector, products like the electric tractor are gaining prominence. To be on the forefront of these transformations, company has made investment in Zimeno Inc, b/d/a Monarch Tractor and is also working on other strategic alliances, VST Tillers said in FY22 annual report.