VST Tillers Tractors Limited (NSE:VSTTILLERS), a ₹18.00b small-cap, is a machinery manufacturing company operating in an industry, which faces increasing demand of capital equipment and machinery from developing economies in Asia, Latin America and the Middle East. Capital goods analysts are forecasting for the entire industry, a positive double-digit growth of 15.74% in the upcoming year , and a massive growth of 37.29% over the next couple of years. the growth rate of the Indian stock market as a whole. Today, I’ll take you through the sector growth expectations, as well as evaluate whether V.S.T. Tillers Tractors is lagging or leading in the industry.
What’s the catalyst for V.S.T. Tillers Tractors’s sector growth?
Machinery manufacturers face the challenge of managing a plethora of new data so that it becomes useful, adapt technology to run their supply chains more efficiently. In the previous year, the industry saw growth in the twenties, beating the Indian market growth of 19.57%. V.S.T. Tillers Tractors leads the pack with its impressive earnings growth of 29.23% over the past year. However, analysts are not expecting this industry-beating trend to continue, with future growth expected to be 0.98% compared to the wider machinery sector growth hovering in the teens next year. As a future industry laggard in growth, V.S.T. Tillers Tractors may be a cheaper stock relative to its peers.
Is V.S.T. Tillers Tractors and the sector relatively cheap?
The machinery sector’s PE is currently hovering around 25.86x, above the broader Indian stock market PE of 20.66x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry returned a similar 11.59% on equities compared to the market’s 10.08%. On the stock-level, V.S.T. Tillers Tractors is trading at a lower PE ratio of 18.33x, making it cheaper than the average machinery stock. In terms of returns, V.S.T. Tillers Tractors generated 16.46% in the past year, which is 4.87% over the machinery sector.
V.S.T. Tillers Tractors is machinery industry laggard in terms of its future growth outlook. This is possibly reflected in the PE ratio, with the stock trading below its peers. If the stock has been on your watchlist for a while, now may be the time to dig deeper. Although the market is expecting lower growth for the company relative to its peers, V.S.T. Tillers Tractors is also trading at a discount, meaning that there could be some value from a potential mispricing. However, before you make a decision on the stock, I suggest you look at V.S.T. Tillers Tractors’s fundamentals in order to build a holistic investment thesis.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Historical Track Record: What has VSTTILLERS’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of V.S.T. Tillers Tractors? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.