Two of ace investor Radhakishan Damani’s marquee portfolio stocks – Trent Ltd and VST Industries – have plunged nearly 55% from their all-time highs, triggering concerns among retail investors about their future prospects. Both companies have been among his top long-term bets, with consistent value unlocking stories over the past decade.
This correction comes amid broad-based volatility in consumption and FMCG stocks as valuations appear stretched after years of re-rating. Let us analyse what led to this decline, current fundamentals, and what investors should do now.
Stock Performance Summary
| Stock | 52-week high (Rs) | Current Price (Rs) | Fall from peak (%) |
|---|---|---|---|
| Trent Ltd | 5,270 | 2,375 | -55 |
| VST Industries | 4,500 | 2,050 | -54 |
(Data as of July 2025 closing)
What Led To The Sharp Fall In Trent?
Trent Ltd, owned by the Tata Group and backed by Damani with a significant holding, saw its shares hit lifetime highs in early 2024 on the back of robust quarterly numbers and aggressive store expansions of Westside and Zudio.
However, recent challenges have triggered the sell-off:
- Margin Pressure: Rising input and rental costs have compressed EBITDA margins by over 250 bps in the last two quarters.
- High Valuation Concerns: At peak, Trent was trading at 110x forward earnings, one of the highest multiples among Indian retailers.
- Moderation In Same-Store Sales Growth (SSSG): Growth has slowed from 20%+ to mid-teens as base effect normalises.
- Broader Retail Sell-Off: FMCG and retail stocks saw profit booking after relentless post-Covid rallies.
Trent Ltd Financial Snapshot (FY25)
| Particulars | FY25 | FY24 | YoY Growth (%) |
|---|---|---|---|
| Revenue | Rs 10,540 crore | Rs 8,620 crore | +22 |
| EBITDA | Rs 1,450 crore | Rs 1,210 crore | +20 |
| EBITDA Margin (%) | 13.8 | 14.0 | -20 bps |
| Net Profit | Rs 715 crore | Rs 580 crore | +23 |
| Store Count | 670 | 580 | +15.5 |
(Source: Company filings)
Why Is VST Industries Under Pressure?
VST Industries, the Hyderabad-based cigarette maker where Damani holds over 25% stake, has seen a steep decline for the following reasons:
- Flat Volumes: Cigarette consumption has stagnated over the last 12 months despite price hikes.
- Taxation Fears: Persistent worries of GST hikes on cigarettes dampen investor sentiment.
- Competitive Pressures: Rising market share of ITC in value segments.
- Limited Diversification: Unlike peers, VST has minimal presence beyond cigarettes, raising growth concerns.
VST Industries Financial Snapshot (FY25)
| Particulars | FY25 | FY24 | YoY Growth (%) |
|---|---|---|---|
| Revenue | Rs 1,620 crore | Rs 1,550 crore | +4.5 |
| EBITDA | Rs 510 crore | Rs 485 crore | +5.2 |
| EBITDA Margin (%) | 31.5 | 31.2 | +30 bps |
| Net Profit | Rs 345 crore | Rs 328 crore | +5.1 |
(Source: Company filings)
Damani’s Investment Philosophy
Radhakishan Damani is known for his value-oriented, concentrated bets in consumer, retail, and cigarettes – sectors with high entry barriers and predictable cash flows. He typically:
- Holds stocks for decades, ignoring interim volatility.
- Focuses on cash flow-generating companies with minimal debt.
- Invests heavily in scalable consumption themes like retail (Trent) and cigarettes (VST).
Analyst Recommendations
| Stock | Brokerage View | Target Price (Rs) | Recommendation |
|---|---|---|---|
| Trent Ltd | Jefferies | 2,800 | Hold |
| Trent Ltd | Kotak | 2,550 | Reduce |
| VST Industries | ICICI Securities | 2,400 | Hold |
| VST Industries | HDFC Securities | 2,150 | Neutral |
(Compiled from brokerage research notes July 2025)
Should You Buy, Hold Or Sell Now?
1. For Trent Ltd
- Pros: Strong brand equity (Westside, Zudio), rapid store expansion, strategic location advantage, Tata Group backing, long-term consumption play.
- Cons: Valuations remain high even after correction, margin pressures may persist, retail demand cyclicality.
🔑 Verdict: Hold existing positions if you are a long-term investor. Fresh buying should wait until earnings visibility improves and valuations moderate below 70-75x forward earnings.
2. For VST Industries
- Pros: Zero debt, high ROCE, steady dividend payouts, stable market share in niche segments.
- Cons: Flat volume growth, lack of diversification, regulatory risks remain.
🔑 Verdict: Hold for dividend income (3.4% yield) but growth investors may look at diversified FMCG names for better capital appreciation.
Investor Takeaways
The 55% crash in these marquee Damani stocks serves as a reminder that valuations matter, even for high-quality franchises. Investors with high exposure should:
✅ Review portfolio allocation and rebalance if weightages have risen disproportionately.
✅ Avoid panic selling unless fundamentals deteriorate significantly.
✅ Monitor upcoming quarterly results for margin recovery and volume trends.
✅ Focus on long-term value creation, not short-term volatility – aligning with Damani’s own approach.
Long-Term Outlook
India’s consumption story remains intact with urbanisation, rising incomes, and formalisation of the economy. However, entry valuations, earnings growth visibility, and cash flow consistency should guide buying decisions in these beaten-down favourites of one of India’s smartest investors.
Disclaimer:
This article is based on publicly available financial data, brokerage reports, and market trends. It is for informational purposes only and does not constitute investment advice. Please consult a SEBI-registered investment advisor before making any stock market investments.
