VST Industries recently witnessed a surge in its stock price after announcing a 10:1 bonus issue, with the share value climbing to Rs 486.70, marking a new high. This rise in stock price came after the company surpassed its previous peak of Rs 447.50 post-bonus adjustment that it had reached on August 27. The surge in stock value happened even as the BSE Sensex experienced a slight decline of 0.23% at 82,014.
Investor Radhakishan Shivkishan Damani held a 3.47% stake in VST Industries by the end of the June quarter, with a combined stake of 33.92% in the company through various entities. VST Industries operates as a major player in the Indian cigarette market, manufacturing and marketing multiple brands including Total, Charms, Moment, Special, and Edition, along with distributing through a vast network of over 1.2 million outlets. Despite facing challenges such as raw material cost inflation and heightened competition, the company has taken steps to improve efficiencies through digital solutions and process restructuring, as mentioned in its FY24 annual report.
The management of VST Industries expressed optimism regarding future sales growth, buoyed by positive rural market trends and expectations of a good monsoon season. Despite a decline in the overall holding percentage post-transaction, VST Industries is navigating industry challenges such as stable tax regimes and intense competition to maintain its market position. The industry as a whole has undergone structural changes with a focus on premiumization, leading to heightened competition from both new entrants and existing players, despite the industry's stable pricing strategies in recent years.