The agency has reaffirmed its ‘Crisil A1+’ rating on the short-term bank facility of the company.

Crisil Ratings stated that the ratings continue to reflect the strong financial risk profile and established market position of VST. These strengths are partially offset by its small market share, regional concentration in revenue, moderation in operating profitability and susceptibility to regulatory changes in the tobacco industry.

Revenues (net of excise) for fiscal 2025 remained flat at Rs 1398 crores as against Rs 1402 crores in fiscal 2024 driven by higher demand for unmanufactured tobacco amid global tobacco shortage. Cigarette sales have degrown (64% of overall revenues) owing to decline in demand for low priced cigarettes (below Rs 10). Operating margins moderated to 20.0% in fiscal 2025 from 24.9%in fiscal 2024 mainly due to higher share of low margin tobacco segment and increased tobacco crop prices.

Over the near term, Crisil Ratings expects the operating margins are expected to remain at 20-21% due to elevated tobacco prices while the revenues are expected to grow at 4-5% driven by unmanufactured tobacco sales. The financial risk profile will remains strong, driven by the company’s debt-free status and superior liquidity.

VST manufactures and markets cigarettes and trades in unmanufactured tobacco. The company is an associate of British American Tobacco Plc, which holds 32.2% stake.

The scrip rose 0.29% to currently trade at Rs 290.60 on the BSE.