VST Industries shares slide 4% after Q1 profit drops 25%, revenue falls 13%

VST Industries shares declined 4.13% to Rs 219.80 during Wednesday's trading session after the cigarette maker reported weak first-quarter FY27 earnings, with both revenue and profit registering double-digit declines amid a sharp increase in cigarette taxation.

The company reported net revenue of Rs 256 crore for the June quarter, down 13% year-on-year from Rs 296 crore in the corresponding quarter last year.

Net profit fell 25% YoY to Rs 42 crore, compared with Rs 56 crore in Q1 FY26. The subdued quarterly performance was primarily impacted by an extraordinary increase in taxes on cigarettes.


Operating performance also weakened significantly, with EBITDA declining 35% YoY to Rs 50 crore from Rs 77 crore a year ago. Consequently, the EBITDA margin contracted to 19.5%, compared with 26% in the same quarter last year.

Higher taxes hit business

The company noted that, effective February 1, 2026, the Government of India reduced the Compensation Cess on cigarettes to nil, while significantly increasing GST and Excise Duty. As a result, the overall tax incidence on cigarettes rose by around 50% on average, putting pressure on the industry's profitability and demand.

Commenting on the quarterly performance, Piyush Srivastava, Managing Director of VST Industries, said: "Given the extraordinary tax increases, a challenging year awaits us. We are adopting a measured pricing approach across our brands to help protect our consumer base. However, growth of illicit trade remains a significant threat to the industry. We are focused on recovering volumes by strengthening our brand portfolio and disciplined in-market execution. In our unmanufactured tobacco business, ongoing geopolitical instability in the Middle East continues to weigh on growth. We remain steadfast in our commitment to creating superior value for consumers and stakeholders."

Stock Performance and Technical Outlook

VST Industries' stock has remained under pressure for an extended period. The shares have fallen 12% over the past three months and are down nearly 19% over the last one year. The company currently commands a market capitalisation of Rs 3,894 crore, while its 52-week high stands at Rs 286.

From a technical perspective, the stock continues to exhibit weakness. The 14-day Relative Strength Index (RSI) stands at 32.2, indicating the stock is approaching oversold territory, with an RSI below 30 generally considered oversold. In addition, the stock is trading below all 8 of its key simple moving averages (SMAs), highlighting a prevailing bearish trend.

The June 2026 quarter shareholding data showed mixed institutional activity. Foreign Institutional Investors (FIIs) increased their stake in the company to 1.79%, up from 1.34% in the previous quarter, indicating selective buying. Meanwhile, Mutual Funds trimmed their holdings to 4.44% from 5.04%.

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