Over the last three years, VSL’s topline and bottomline has been growing at an impressive CAGR of 90% and 160% respectively and it has consistently registered an OPM of over 40% and NPM of 20%. For the first 9 months of FY09, it recorded 50% rise in the topline to Rs.218 cr. but only single digit growth in bottomline to Rs.34 cr. due to dismal Q3FY09. The company is yet to declare its Q4FY09 results. Accordingly, it is expected to clock a turnover of Rs.290 cr. with net profit of Rs.42 cr. for FY09. This translates into an EPS of Rs.20 on its equity of Rs.21.40 cr. For FY10, it may post better numbers on a consolidated basis.
Its EV/EBIDTA stands at just 1.2 times. Ironically, this debt-free company, which generated positive cash flow of Rs.150 cr. through operating activities, is today available at the same market cap of Rs.150 cr. Having a share book value of Rs.127, cash EPS of over Rs.50, dividend yield of 3%, VSL is available reasonably cheap at an EV of Rs.140 cr. Incidentally during March 2008, warrant holders (including promoters) exercised their option and to get 22.50 lakh warrants converted into shares at Rs.241 per share despite the substantial fall in its share price coupled with the bearish sentiment then prevailing in the stock market.
Although the promoters hold only 19% and do not enjoy that good a reputation in the stock market, it’s still a good bet at current levels. Investors are recommended to buy this scrip as it can double even from the current level in the next 12 months.
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