Shares of VST Tillers rose as much as 18% to Rs 2,575 in intraday trade on the BSE on Wednesday after the company announced its manufacturing plant in Malur-Benguluru, Karnataka, had crossed the production milestone of 5 lakh units of power cultivators. The market is underperforming.

At 11:07 am, VST Tillers was up 12% at Rs 2,434, while the S&P BSE Sensex was up 0.05%. The average over-the-counter volume on the NSE and BSE jumped tenfold, with 80,000 shares changing hands.

Currently, India’s overall power cultivator industry scale is about 60,000 units, and it is expected to grow to 1 lakh units by 2025. VST is the leader in this field, with over 65% market share in the country.

VST focuses on small farm mechanisation and has launched a series of smart agricultural machinery for small and marginal farmers. The company has launched electric start power tillers in 16 HP and 9 HP categories, a range of electric weeders from 3.5 hp to 8 hp, brush cutters, and multi-crop harvesters for this segment.

VST smart agricultural machinery is suitable for all stages of agriculture, for applications such as water pits, intercropping, embankment, soil turning, and weeding, and is ideal for crops such as sugar cane, rice, cotton, vegetables, horticulture, turmeric, ginger, etc.

The organisation is India’s largest manufacturer of Tillers and 4WD Compact Tractors and one of the leading producers of other categories of Tractors, Engines, Transmissions, Power Harvesters and Precision Components. VST also exports products to European, Asian and African markets.

However, VST Tillers has underperformed the market over the past year, falling 2%, while the S&P BSE Sensex gained 0.25%. The stock touched a 52-week high of Rs 2,896 on April 29, 2022.

In the first nine months (April-December) of the current fiscal year 2022-23 (9MFY23), VST’s turnover rose 7.6% YoY to Rs 683.82 crore from Rs 635.50 crore in the corresponding nine months fiscal year. Net profit fell 28% year-on-year to Rs 552.2 crore. The company’s performance was weak due to a sharp drop in EBITDA margin due to higher raw material prices and other operating expenses.

VST Tilers is well positioned to maintain their dominant market share in the micro tillage machine market. Market share gains driven by new product launches across brands will expand the company’s addressable market. In addition, the company is strengthening its distribution network across the country. The company has technical partnerships with Pubert (France) and Zetor (Czech Republic) for product development. VST Tillers has invested in California-based Zimeno Inc, maker of driver-selectable, inherently electric tractors under the Monarch brand.