VST Industries Downgraded to 'Sell' by MarketsMOJO Due to Poor Growth and Underperformance

VST Industries, a midcap company in the cigarettes/tobacco industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 14, 2024. This decision was based on the company's poor long-term growth, with net sales only growing at an annual rate of 3.94% and operating profit at 6.68% over the last 5 years.
In addition, the company reported negative results in September 2024, with its operating cash flow at its lowest at Rs 167.02 crore and its profit after tax falling by -29.9%. Its PBDIT (profit before depreciation, interest, and taxes) was also at its lowest at Rs 67.61 crore.

Furthermore, VST Industries has underperformed the market in the last 1 year, with a return of only 9.27%, compared to the market's return of 26.29% (BSE 500).

However, the company does have some positive factors, such as a high management efficiency with a ROE (return on equity) of 32.67%. It also has a low debt to equity ratio (average) of 0 times.

The technical trend for the stock is currently sideways, indicating no clear price momentum. It has also deteriorated from mildly bullish on November 13, 2024, and has only generated a 0.4% return since then.

With a ROE of 21.5, VST Industries is currently trading at an attractive valuation with a price to book value of 4.7. This is considered fair compared to its average historical valuations. However, in the past year, while the stock has generated a return of 9.27%, its profits have fallen by -20.9%. On a positive note, the company does have a high dividend yield of 4.4% at its current price.

It is also worth noting that mutual funds have decreased their holdings in the company this quarter and now only hold 7.48% of the company. This could be a red flag for potential investors.

In conclusion, while VST Industries may have some positive aspects, the recent downgrade to 'Sell' by MarketsMOJO and the company's poor long-term growth and underperformance in the market may make it a risky investment at this time. Investors should carefully consider all factors before making any decisions.