VST Industries shares soar over 17% to new high on first-ever bonus issue plan

Shares of VST Industries, backed by investor Radhakishan Damani, surged over 17 percent to reach a new peak of ₹4,850 apiece in intra-day trading on Friday, following the company’s announcement of its first-ever bonus issue plan. This marks a significant rally for the stock, which has climbed more than 53% from its 52-week low of ₹3,159.90 recorded on October 26, 2023.

In an 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.

Over the past year, VST Industries’ stock has appreciated by 15 percent, and it has gained over 42 percent year-to-date in 2024, showing positive returns in 4 of the 7 months this year. The stock advanced nearly 15 percent in July alone, following a 1 percent decline in June. Earlier in the year, it saw a 0.2 percent increase in May and a notable 13 percent rise in April. In contrast, it experienced a 3 percent drop in March and a 0.5 percent decline in February, with an 8.6 percent gain in January.

Investor Radhakishan Shivkishan Damani held a 3.47 percent stake in VST Industries at the end of the June quarter and has increased his holding by 1.52 percentage points during the quarter.

VST Industries, a prominent cigarette manufacturer in India, operates two cigarette manufacturing facilities in Telangana, Andhra Pradesh. The company produces and markets several brands, including 'Total,' 'Charms,' 'Moment,' 'Special,' and 'Edition,' with a direct distribution network reaching over 1.2 million outlets.

According to Centrum Broking's March quarter result update, VST Industries anticipates a gradual recovery in demand, focusing on its core markets — Uttar Pradesh, West Bengal, Bihar, Andhra Pradesh, and Telangana — which collectively account for around 65 percent of its sales. The company aims to boost volumes through strategic efforts, including the launch of the Demislim Edition-Trio priced at ₹10 in the Reduced Smoking Filter Tobacco (RSFT) segment. VST also expects a rebound in rural markets and stable taxation to support this recovery.

It also noted that VST's renewed focus involves expanding direct coverage by increasing its sales force, enhancing trade visibility, and reducing wholesale discounts to bolster the 'Total' brand's market presence.

In the March quarter (Q4FY24), VST Industries reported a 28.38 percent increase in net profit, reaching ₹88.20 crore, compared to ₹68.70 crore for the same period in the previous year. Sales for the quarter also grew by 24.35 percent, totaling ₹374.13 crore, up from ₹300.86 crore a year earlier.

However, for the full fiscal year, the company's net profit saw a decline of 7.77 percent, amounting to ₹301.57 crore for the year ended March 2024, down from ₹326.98 crore in the previous year. Despite this, annual sales rose by 9.85 percent, reaching ₹1,417.20 crore, compared to ₹1,290.11 crore for the year ended March 2023.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.