Billionaire Radhakishan Damani offloads shares worth ₹33 cr in VST Industries


Billionaire investor Radhakishan Shivkishan Damani has offloaded shares worth nearly 33 crore in Hyderabad-based cigarettes manufacturer and distributor, VST Industries. The transaction was carried out in a block deal on December 2. The Avenue Supermarts (DMart) founder has been an investor in VST Industries since December 2019. Damani’s shareholding has stayed unchanged at 1.63% from September 2021 to September 2022.

As per BSE data, in a block deal on December 2, Radhakishan sold 93,000 equity shares at 3,520 apiece in VST Industries aggregating to around 32.73 crore. On the other hand, Damani Estates and Finance bought 93,000 shares in VST Ind at 3,520 in the open market.

On Friday, VST Ind shares closed at 3,505.60 apiece marginally up from its previous day’s print. Its market cap is around 5,413.32 crore.

In a year, VST Ind shares have climbed by nearly 11%. Meanwhile, so far in 2022, the shares have jumped by at least 9.5% on Dalal Street.

As of September 30, 2022, Radhakishan’s shareholding stood at 2,51,484 equity shares or 1.63% in VST Industries.

According to Trendlyne data, Damani’s shareholding in VST Ind as of December 2, 2022, is valued at a little over 88 crore.

VST Industries has a manufacturing facility at Hyderabad and Toopran (Telangana) and its principal activities are the manufacture & sale of cigarettes and unmanufactured tobacco.

In Q2FY23, VST recorded healthy growth in earnings with profitability rising to 92.16 crore compared to 79.88 crore in Q2 of FY22. Revenue from operations also rose to 439.66 crore in Q2FY23 versus 360.86 crore in Q2FY22.

Last month, in a report, ICICI Direct had given a ‘Hold’ recommendation on VST Industries with a target price of 3,725 apiece valuing the business at 15x FY24 earnings.

The stock brokerage highlighted key triggers for future performance in VST Ind share price. These are:

– VST saw 9% cigarette volume growth in H1FY23. However, it is still below pre-Covid-19 levels. The company is focusing on brand building through higher spends at the point of sale, consumer promotions & product innovation.

– High-priced cigarettes ‘Total’ & ‘Edition’ contribute ~50% to volumes. The contribution of high-priced cigarettes is expected to continue to rise. The company is looking to introduce new brands at higher price points.

– Duties & taxes on cigarettes are expected to remain stable given the increasing prevalence of illicit & contraband cigarettes.

– Dividend payout is expected to remain ~70% in the future as well. ICICI Direct estimates dividends per share of 160 and 180 in FY23E & FY24E, respectively, with a dividend yield of ~5%.


Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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