Reaping A Rich Harvest - VST Tillers Tractors

VST Tillers Tractors (VST) was recommended in issue 8 dated March 30-April 12, 2009 as our Choice Scrip. The scrip was recommended at price of Rs 132.95. Post our recommendation, the scrip got into good momentum and made a new 52-week high of Rs 278.70. At this price, VST had already given an overall appreciation of 109 per cent. At CMP of Rs 254.00, the scrip is still giving huge appreciation of more than 91 per cent over its recommended price. Sensex during the same period has gone up by 56 per cent.

There are compelling reasons why we had recommended VST as our choice scrip. VST is a niche player in the smaller tractor segment, which is in good demand from farmers with small land holding. VST is a market leader in the power tiller segment with a 45 per cent market share in India. That apart, despite a comparatively smaller market, where it manufactures sub20 horse power tractors, the demand is quite buoyant and still exceeds the supply.

Besides, its power tillers with an extra rotovator attached have now found additional applications in rice fields as well. An additional revenue source for the company, VST would now be tapping the same soon. Hence, it made sense to recommend VST as our Choice Scrip.In fact with the monsoon set to arrive soon and the cultivation activities expected to pick up pace across India, we believe company's products would be in more demand. VST is yet to declare its Q4FY09 results, which are expected by the end of June 2009. However, we believe these results would be good. Though VST is good hold for the long term the scrip has outperformed our expectations in the current rally. Hence, it would be wiser to book full profits and make good money at the current level.