This Radhakishan Damani-owned stock has zoomed 16% on bonus issue plan

Shares of VST Industries hit a 52-week high of Rs 4,784.45, rallied 16% after the company said its board may consider issue of bonus shares in the forthcoming meeting on Thursday, July 25, 2024.

Shares of VST Industries (VST) hit a 52-week high of Rs 4,784.45, as they rallied 16 per cent on Friday, recording its sharpest intra-day rally in recent past after the company announced a maiden bonus issue plan.

In exchange filing, VST informed that a meeting of the board of directors of the company will be held on Thursday, July 25, 2024 inter-alia to consider and approve the unaudited financial results of the company for the quarter ended June 30, 2024 (Q1FY25). The board may consider issue of bonus shares in the aforesaid board meeting, VST said.

At 10:15 AM, VST was trading 15 per cent higher at Rs 4,733.85, as compared to 0.30 per cent decline in the BSE Sensex. The stock surpassed its previous high of Rs 4,522.45 touched on June 13, 2024. It had hit  a record high of Rs 4,856.45 on January 22, 2020.

Investor Radhakishan Shivkishan Damani held 3.47 per cent stake in VST at the end of June quarter. Radhakishan Damani has increased its holding in the company by 1.52 percentage points during the quarter.

On April 15, 2024, Radhakishan Damani had bought 233,766 shares, or 1.5 per cent stake, in VST for Rs 86.26 crore. Radhakishan Damani purchased shares of the cigarettes & tobacco products company at a price of Rs 3,689.96 per share on the BSE, bulk deal data shows.

Meanwhile, Damani's flagship investment vehicle, Bright Star Investments, meanwhile, held a 25.95 per cent stake. Derive Trading and Resorts Private Limited held 5.24 per cent holding in the company, at the end of June 2024 quarter, data shows.

VST Industries is a cigarette company in India. It is involved in manufacturing, marketing cigarettes & trading of unmanufactured tobacco. The company has two cigarette manufacturing facilities in Hyderabad, AP. It has five major brands, which includes, 'Total', 'Charms', 'Moment', 'Special', & 'Edition' and a direct distribution reach of over 1.2 million outlets.

The company expects gradual recovery in demand to be led by, focus on core markets - UP/WB/Bihar/AP/TG (~65 per cent of sales) to improve volumes, launched Demislim Edition-Trio priced at Rs 10 in the RSFT segment,  expects rural markets to bounce back, and stable taxation, analysts at Centrum Broking said in March quarter result update.

“We have been highlighting that the renewed focus for VST was driven by,  expanding its direct coverage by investing feet-on-the-street, improve trade visibility, and cut wholesale discounts to strengthen its ‘Total brand’ perception in the trade,” the brokerage firm said.

However demand recovery in rural is underway, its dominant business in DSFT segment saw weaker growth, yet VST is now building its RSFT portfolio launching Demi-slims under Edition brand. The brokerage firm expects rural demand to bounce back with a lag and expect VST to launch more products in RSFT segment.

Though, near-term demand would improve gradually, higher leaf tobacco exports and packaging material prices put pressure on margins. To mitigate cost pressure, VST has already rationalised trade discounts to settle for slower volume growth in FY24, it added.