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VST Tiller Tractors Ltd (VST): Reports impressive EBITDA margin profile of 16.4%

News: The company reported healthy results in Q2FY22. Net sales for the quarter came in at Rs.234 crore, up 6% YoY. EBITDA in Q2FY22 was at Rs.38 crore with corresponding EBITDA margins at 16.4%, up 330 bps QoQ (17.1% in Q2FY21 and 13.1% in Q1FY22). PAT in Q2FY22 stood at Rs.32.3 crore, up 7% YoY (vs. Rs.24 crore in Q1FY22).

Views: The power tiller sales volume for Q2FY22 were at 8,626 units, up 9% YoY while tractor sales volume at 2,325 units, down 15% YoY. Resurgence of  healthy high double digit EBITDA margins is encouraging, however the monthly volumes reported by the company in the recent past have been below expectations. With import restrictions in the power tillers segment and new product launches particularly in the higher hp tractor domain, we expect healthy volume led growth to resume at VST in H2FY22E, going forward.