Investor Radhakishan Damani, known as one of India's top retail investors, has built a substantial stake in VST Industries Ltd, the maker of Charms and Total cigarettes. According to shareholding disclosures from March 2026, Damani holds a 29.1% stake in the Hyderabad-based tobacco company through his investment vehicles, making it his second-largest publicly disclosed holding after Avenue Supermarts.
Why tobacco attracts long-term investors
VST Industries sits at the heart of Damani's portfolio strategy. The company operates as a debt-free business with a high dividend payout ratio. In FY25, the company paid out 75% of its profits as dividends, generating a dividend yield of about 4.7%, well above the industry median of 0.8% for FMCG companies. The company maintains solid operating margins; while down from peaks of 33-37% in FY20-FY22, they remain in the 20-23% range.
The tobacco business shares a structural characteristic that appeals to Damani: demand remains stable through economic cycles. Both VST and peers possess pricing power, regularly passing on government tax hikes through price revisions without losing volumes. This defensive quality translates into steady cash generation without requiring heavy capital investment once plants are operational.
Recent signs of volume recovery
VST faced headwinds from sharp excise duty hikes and illicit cigarette trade, which pressured volumes. But the story shifted in April 2026. The company reported FY26 net cigarette revenue growth of 25%, EBITDA growth of 61%, and net profit of Rs 292.3 crore, signaling volume recovery. The stock rallied close to 19% on a single day following these results.
The company trades at a valuation discount to its own history. The current PE stands at 15x, matching the industry median, but below the company's 10-year median PE of 20x. This valuation gap persists despite VST's debt-free status and high dividend payout, suggesting the market has undervalued the cash generation qualities Damani prioritizes.
Beer as the growth hedge
Damani also owns a smaller but longer-standing position in the beer industry through a 1.2% stake in United Breweries Ltd, held for more than 10 years. United Breweries is India's largest beer maker, commanding over 50% market share across most major states.
The beer opportunity differs from tobacco but shares the same defensive framework. The company posted a 17% sales CAGR over five years, with EBITDA and net profit growing at 16% and 29% CAGRs respectively. Recent momentum shows three-year sales growth of 15% and record sales of Rs 9,240 crore in FY25.
Like VST, United Breweries has proven its ability to raise prices without losing volumes. The company has pushed through selective price hikes and benefited from a better product mix in recent quarters. Management has guided for 6-7% volume growth over the medium term, with an aggressive push toward premium products that could lift operating margins higher.
The valuation, however, sits rich. United Breweries trades at a PE of roughly 93x against an industry median of 32x. Damani has held his position unchanged for over a decade, suggesting he is focused on the long-term volume cycle rather than current valuation multiples.