PremiumBillionaire 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.