This RK Damani-owned stock zoomed 20%; turned ex-date for 10:1 bonus

Shares of VST Industries hit a new high of Rs 486.70, as they locked in 20 per cent upper circuit on the BSE on Friday at 09:21 AM, in an otherwise a weak market.

Shares of VST Industries hit a new high of Rs 486.70, as they locked in 20 per cent upper circuit on the BSE on Friday at 09:21 AM, in an otherwise weak market.

The stock of the cigarette manufacturer has turned ex-date for 10:1 bonus issue. It surpassed its previous high of Rs 447.50 (adjusted to bonus) that it touched on August 27.

A combined 192,000 equity shares changed hands on both the NSE and BSE, and there are pending buy orders for around 330,000 shares on both the bourses.

In comparison, the BSE Sensex was down 0.23 per cent at 82,014.

VST Industries has fixed Friday, September 6, 2024, as the record date for the purpose of determining the shareholders who shall be entitled for allotment of bonus equity shares in the ratio of 10:1, that is 10 new equity shares for every one share held by them.

Investor Radhakishan Shivkishan Damani held 3.47 per cent stake in VST at the end of June quarter. Meanwhile, Damani, along with his flagship investment vehicle, Bright Star Investments, Derive Trading and Resorts Private Limited, and others, had held a 33.92 per cent stake in the company.

According to disclosures made by VST Industries, these entities have offloaded 370,336 equity shares or 2.40 per cent stake in the company via open market sales between July 26, 2024 and September 3, 2024.

Post transaction, their holding in the company has declined to 31.52 per cent, data shows. CLICK HERE FOR FULL DETAILS

VST Industries is a cigarette company in India. It is involved in manufacturing and marketing of cigarettes, along with trading of unmanufactured tobacco. The company has two cigarette manufacturing facilities in Hyderabad.

The company operates five major cigarette brands, inlcuding Total, Charms, Moment, Special, and Edition, along with a direct distribution channel that reaches over 1.2 million outlets.

According to VST Industries, industry volumes grew incrementally in 2023-24 after a higher-than-normal growth the preceding year. The regulatory environment, including taxation, remained largely stable.

With a stable tax regime, the leading brands in the industry have kept prices unchanged for several years, causing structural change of premiumisation in the industry. The industry has witnessed intensified competition, with price-based competition from both new brands as well as existing players.

Moreover, the unprecedented raw material cost inflation and intensified competition has put pressure on the company’s margins in the short run. However, these were mitigated partially through restructuring business processes and leveraging digitisation for efficiency improvements, VST Industries said in its FY24 annual report.

With green shoots visible in rural markets, and the expectation of a favourable monsoon, the management said it is looking forward to greater buoyancy in rural demand for its entire brand portfolio.