VST - a leader in the Tillers and low HP tractors business. VTTL leads the tiller market with a 44% marketshare. It has a pan-India presence and strong market position in states such as Karnataka, Orissa and Tamil Nadu. The company is setting up a 12000-15000 p.a. tractors capacity by 1QCY13 to expand its 1% marketshare in this segment. Tractor market share increase is likely to be a key driver of earnings
Small holdings and NREGS could spur agri-automation. Rising population and stagnant land bank to also drive automation.
VTTL has shown a 17% and 22% CAGR in revenues and profits over FY01-FY11. We estimate revenues and earnings to grow at 20% and 15% CAGR over FY11- FY13E. The balance sheet is currently almost debt free with Cash per share of `67
Motilal Oswal recommend to Accumulate VST Tillers Tractors Ltd. (VTTL) for a 1 yr target of Rs. 650 at 5.5xFY13E EV/EBITDA
