Radhakishan Damani Divests Rs.142 Crore Stake in VST Industries

Radhakishan S. Damani, the founder of DMart, made a major move yesterday by divesting a stake worth Rs.142 crore in VST Industries Ltd. The sale was executed through open market transactions by two of his investment arms. Derive Trading and Resorts Pvt. sold a 1.7% stake, translating to 2.62 lakh shares, at Rs.4,102 per share, amounting to Rs.107 crore. Additionally, Damani Estate and Finance Pvt. offloaded 0.9 lakh shares, representing a 0.58% stake, at Rs.3,983.84 per share.

Current Holdings and Ownership

Prior to this sale, Derive Trading and Resorts held a 5.24% stake in VST Industries, while Damani Estate and Finance had a 0.60% stake. After the transactions, Damani’s direct ownership in the company stands at 3.47%. Collectively, through various entities including Bright Star Investments, Derive Investments, and multiple private beneficiary trusts, Damani holds a huge 36.33% stake in VST Industries.

Past Investments

Earlier in April, Damani acquired a 1.51% stake in VST Industries for Rs.86.25 crore. His consistent investments and partial stake sales is helping him manage his holdings well in the tobacco manufacturing firm.

Market Impact & Performance

Following the announcement of the stake sale, VST Industries saw its shares close 16.78% higher at Rs.3,881.65 apiece, contrasting with a 0.16% decline in the NSE Nifty 50. The stock has shown a year-to-date increase of over 18% and around 8% rise over the past 12 months.

Company Overview

VST Industries, known for brands such as Total, Editions, and Charms, operates manufacturing facilities in Hyderabad and Toopran, Telangana. Despite flat revenues of Rs.300 crore in the March quarter, due to a consumer shift towards RSFT cigarettes causing an 11% decline in volumes, the company is focusing on adjustments. Analysts suggest that VST Industries may need to expand its RSFT offerings, increase its presence in new states, and invest in premium brands like Total.

Conclusion: With a potential strategy shift on the horizon, VST Industries aims to address slower growth compared to industry trends. The company’s upcoming board meeting on July 25 might consider issuing bonus shares along with announcing first-quarter results, setting the stage for its future in the competitive tobacco market.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.