We would like to share with you a detailed report on VST Tillers Tractors (NSE Code – VSTTILLERS).
It’s one of the leading companies in small farms mechanization space as the company manufactures Power Tillers and small 18-22 HP tractors.
Despite the fact that VST Tillers has to collect subsidy from the government which gets delayed, the company has managed its working capital well and is debt free with ~100 crores surplus cash.
Download Here: VST Tillers Tractors Ltd (NSE Code – VSTTILLERS) – Katalyst Wealth Alpha Recommendation for Dec’11
While good/bad monsoon is a key determinant of tractor and tiller sales in any particular year, we believe the long term prospects of the industry and VST Tillers are bright on account of the following factors:
- Shrinking human resource and land for agriculture.
- Government’s focus on food security and high minimum support prices for farm produce.
- Under-penetration of farm mechanization in India.
- Increasing financing from Private Sector banks and NBFCs as the NPAs are low. Today 50-55% financing is done by NBFCs and Private Banks against almost 0% a few years back.
- Schemes such as NREGA which are diverting people away from farm labor to government projects
- Shorter replacement cycle – The conventional markets such as Punjab, Haryana and western Uttar Pradesh have been saturated for years, however the shrinking replacement cycle of tractors (from 10-12 years to 8-9 years) has resulted in strong replacement demand in these markets
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