Thursday, February 2, 2023
HomeBusinessBillionaire Radhakishan Damani offloads shares worth ₹33 cr in VST Industries

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

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

According to BSE data, Radhakishan sold 93,000 shares in a block deal on December 2 at 3,520 each in VST Industries combined to approx 32.73 crores. On the other hand, Damani Estates and Finance bought up 93,000 shares of VST Ind 3,520 on the open market.

On Friday, VST Ind shares closed 3,505.60 each, slightly more than the previous day. The market capitalization is round 5,413.32 crores.

In one year, VST Ind shares are up nearly 11%. Meanwhile, shares are up at least 9.5% on Dalal Street so far in 2022.

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

As of December 2, 2022, Damani’s stake in VST Ind is valued at just over 88 crores.

VST Industries has a production facility in Hyderabad and Toopran (Telangana) and its main activities are the production and sale of cigarettes and unmanufactured tobacco.

In Q2FY23, VST posted healthy earnings growth with profitability rising to 92.16 crore compared to 79.88 crore in Q2 of FY22. Operating income also increased 439.66 crore in Q2FY23 vs 360.86 crore in Q2FY22.

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In a report last month, ICICI Direct issued a ‘Hold’ rating to VST Industries with a price target of 3,725 each, valuing the company at 15x FY24 revenue.

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

– VST saw cigarette volume grow 9% in H1FY23. However, it is still below pre-Covid-19 levels. The company focuses on brand building through higher point-of-sale spend, consumer promotions and product innovation.

– Expensive cigarettes ‘Total’ & ‘Edition’ contribute ~50% to the volumes. The contribution of expensive cigarettes is expected to continue to rise. The company is looking for new brands at higher prices.

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

– Dividend payout is expected to remain around 70% going forward. ICICI Direct estimates dividends per share of 160 and 180 in FY23E and FY24E respectively, with a dividend yield of ~5%.

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

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