💰 Financial Performance

Revenue Growth by Segment

Revenue from operations for FY 2024-25 was INR 994.55 Cr, a growth of 2.74% YoY. In H1 FY26, revenue grew 26% YoY to INR 598 Cr. Segment-wise, Power Tillers contributed 54% and Tractors 24% of revenue in H1 FY25. Power Weeder sales grew 42.4% YoY (4,970 units) and Power Reapers grew 139% YoY (1,512 units) in H1 FY26.

Geographic Revenue Split

Karnataka and Maharashtra are key regions, collectively generating 35-40% of the total revenue as of March 31, 2023. The company is also expanding its export footprint, though export volumes in H1 FY26 were 566 units compared to 776 units in the previous year.

Profitability Margins

PAT for FY 2024-25 was INR 94.46 Cr, a decline of 22.26% from INR 121.51 Cr in FY 2023-24. PAT margins were impacted by MTM losses in Q2 FY26, though PAT excluding fair value gains/losses improved to INR 48.5 Cr in H1 FY26 from INR 28.2 Cr YoY.

EBITDA Margin

Operational EBITDA margin for FY 2024-25 was 11.17% (INR 111.09 Cr), down from 12.83% (INR 124.19 Cr) in FY 2023-24. In H1 FY26, operational EBITDA margin improved to 13.2% from 10.8% YoY, driven by better scale and product mix.

Capital Expenditure

The company plans a moderate capital expenditure of INR 50-60 Cr annually over the medium term, which is expected to be funded entirely through internal accruals.

Credit Rating & Borrowing

The company maintains a strong credit profile with an [ICRA]AA- (Stable) and [ICRA]A1+ rating. It remains debt-free with a net worth of INR 1,003.79 Cr as of March 31, 2025, and cash/liquid investments of INR 457.7 Cr as of September 30, 2024.

⚙️ Operational Drivers

Raw Materials

Input costs include steel, castings, and engine components, though specific percentage breakdowns per material are not disclosed. Input cost inflation and supply chain constraints exerted pressure on margins, causing OPM to contract from 14.8% in FY22 to 12.1% in 9M FY24.

Import Sources

Not specifically disclosed in the provided documents, though the company mentions global supply chain disturbances as a risk factor.

Capacity Expansion

The company is utilizing its Mysore plant for external business, supplying components to the metro rail and aerospace sectors. It is also expanding its dealer network, which currently exceeds 660 dealers.

Raw Material Costs

Operational EBITDA declined by approximately INR 13 Cr in FY25 due to strategic increases in expenditures to support growth and higher input costs. Procurement strategies include cost-optimization initiatives to scale margins back to historical levels of ~14.8%.

Manufacturing Efficiency

The company won the Machinist Super Shopfloor Award for its Mysore plant. It also utilizes Kaizen competitions (Gold award) to drive efficiency in manufacturing processes.

Logistics & Distribution

The company maintains a widespread network of over 660 dealers to support its ~70% market share in the power tiller segment.

📈 Strategic Growth

Expected Growth Rate

26%

Growth Strategy

Growth is driven by a 43% increase in Power Tiller sales (24,829 units in H1 FY26), expansion into the high-horsepower tractor segment (VST ZETOR), and increasing retail finance penetration which rose from negligible to 12-13% in focus states. The company is also diversifying into power weeders, brush cutters, and electric pumps.

Products & Services

Power Tillers, Tractors, Power Weeders, Power Reapers, Brush Cutters, Electric Pumps, and aerospace/metro rail components.

Brand Portfolio

VST, VST ZETOR.

New Products/Services

New product launches include the VST ZETOR tractor range and higher horsepower engines. The company is also launching subsidy-neutral tillers to mitigate regulatory risks.

Market Expansion

Expansion into five focus states for retail finance and increasing revenue share from higher-margin exports. Target regions include domestic markets with low farm mechanization and international markets.

Market Share & Ranking

Dominant market leader in the domestic power tiller segment with approximately 70% market share.

Strategic Alliances

MOU signed with partners for component supply (aerospace/metro) and a partnership with Bajaj Finance for small farm machinery financing.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward increased farm mechanization and retail financing for small farm machinery. VST is positioning itself by diversifying into the Small Farm Machinery (SFM) segment and higher HP tractors.

Competitive Landscape

The tractor segment is highly competitive, with VST lagging behind market trends in recent years (tractor volumes declined 23% in 11M FY24).

Competitive Moat

Moat is built on a 70% market share in power tillers, an established brand, and a wide distribution network of 660+ dealers. Sustainability is supported by a debt-free balance sheet and high cash reserves of INR 457.7 Cr.

Macro Economic Sensitivity

Highly sensitive to agricultural GDP and monsoon performance. Unseasonal rainfall in Karnataka and Maharashtra (35-40% revenue base) led to volume declines in 9M FY24.

Consumer Behavior

Increasing adoption of retail finance (now 12-13% in focus states) is changing how small farmers purchase equipment.

Geopolitical Risks

Global disruptions such as wars or supply chain disturbances are identified as factors that complicate the business landscape and impact input prices.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to government regulations on agricultural subsidies, which significantly impact the power tiller segment. Changes in tax laws and environmental norms for tractor engines also affect the business.

Environmental Compliance

The company reports under Business Responsibility and Sustainability Reporting (BRSR) standards.

Taxation Policy Impact

Average net profit for CSR calculation was INR 110.92 Cr, with a 2% CSR obligation of INR 2.22 Cr.

Legal Contingencies

The company reported no material changes affecting its financial position between the end of FY25 and the date of the report. No specific pending court case values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

Monsoon dependency (high impact on revenue), Government subsidy changes for tillers, and the ability to regain market share in the tractor segment (volumes were flat in 11M FY25).

Geographic Concentration Risk

High concentration in Karnataka and Maharashtra, which account for 35-40% of total revenue.

Third Party Dependencies

Dependence on government subsidies for the power tiller segment and reliance on retail finance partners like Bajaj Finance for sales growth.

Technology Obsolescence Risk

The company is mitigating technology risks through R&D in new engines and electric pumps, and by diversifying into high-tech sectors like aerospace components.

Credit & Counterparty Risk

Debtors turnover ratio was 5.51 in FY25, indicating a slight slowdown in collections compared to 6.36 in FY24.