Radhakishan Damani has increased stake in these two sin stocks; should you follow?

Consumption of tobacco and alcohol both are injurious to health. For well-known investor and D-Mart promoter Radhakishan Damani the space seems an opportunity to create wealth.

The latest shareholding data showed that the market maven along with his investment arms further increased his stake in two sin stocks including VST Industries, which manufactures and distributes cigarettes and related products, and beer maker United Breweries during the January-March quarter. Sin stocks are shares of companies operating in gambling, tobacco, alcohol and cannabis, among others.

Of late, United Breweries reported a 67.92 per cent rise in its consolidated net profit to Rs 163.78 crore for the fourth quarter ended March 2022, led by a volume-based growth. Brokerage Nirmal Bang Securities is positive on United Breweries with a target price of Rs 1,665.

“United Breweries saw a continued recovery in demand in Q4FY22. The quarter started in January 2022 with muted demand due to the Omicron variant scare, but it ended with a record month in March 2022. This was driven by a continued recovery in demand, which was seen across nearly all the markets. The company also saw share growth, both in the quarter as well as in the year-to-date performance,” Nirmal Bang Securities said.

Shares of VST Industries traded at around Rs 3,240 in the afternoon trade on April 29, while United Breweries was at Rs 1,607.

Commenting on VST Industries, Centrum Broking in an earlier report said that growing demand for the value segment could provide strong tailwinds to VST in gaining market share.

Elara Capital believe that United Breweries is estimated to post a strong Q1FY23, led by a positive seasonality impact, as April-July accounts for around 40-45 per cent of annual volumes for the company.

Damani, Bright Star Investments and Derive Trading and Resorts together upped their stake in VST Industries to 32.34 per cent in Q4FY22 from 32.26 per cent in the preceding quarter. Likewise, his holdings together with Derive Trading and Resorts also increased to 1.21 per cent from 1.20 per cent earlier.

On the other hand, he offloaded some shares in Blue Dart Express and Metropolis Healthcare during the same period. Overall, Damani held more than 1 per cent stake in at least 12 companies as of March 31, 2022.

With a net worth of $20.70 billion, Bloomberg Billionaire Index showed that Damani is the 5th richest individual in India after Gautam Adani ($124 billion), Mukesh Ambani ($104 billion), Azim Premji ($31.4 billion) and Shiv Nadar ($27 billion).

Damani, who is also known as Mr White in the financial world, kept his stake same in companies like 3M India, Astra Microwave, BF Utilities, India Cements, Andhra Paper, Trent, Avenue Supermarts and Sundaram Finance Holdings.

Also read: Radhakishan Damani raises stake in this cigarette maker in Q4

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