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Damani's Approach: Seeking Value Through Dividends
Radhakishan Damani isn't just looking for fast growth. His investment strategy also emphasizes the steady income from dividends, which builds wealth over time. Instead of chasing quick gains, Damani picks companies like VST Industries and Advani Hotels that reliably generate cash and pay shareholders, even if their stock prices dip.
VST Industries: Strong Profits and Steady Dividends
VST Industries, which makes tobacco and cigarettes, reported a strong jump in profit for the March quarter, up 120.8% year-on-year to ₹117 crore. Revenue rose 51.4% to ₹689 crore, thanks to steady demand and efficient operations. The company managed costs well, even with rising prices for raw materials like tobacco. It's also integrating its factories to improve efficiency and cut spending. VST Industries has a market value of about ₹25,000 crore and a P/E ratio near 38x (as of April 2026). Although its stock price has fallen 22% in the last year, the company has a solid history of paying dividends, proposing ₹12 per share for FY26, offering a 4.7% yield. This consistent payout, with 26 declarations since 2001, is backed by strong cash flow and low operational costs. For comparison, rival ITC offers a 3.5% yield on its broader business.
Advani Hotels: Seasonal Demand and Debt-Free Operations
Advani Hotels and Resorts (India), running its only property, the Caravela Beach Resort in Goa, adds another angle to Damani's dividend focus. The company had a stable performance in the December quarter, a typically busy season for hotels. Revenue was ₹36 crore and net profit was around ₹11 crore. Importantly, the company has no debt, paying for upgrades and expenses using its own earnings, showing careful financial management. This helps it consistently generate cash. Advani Hotels has a history of paying dividends, giving ₹1.90 per share over the last year for a 3.5% yield. As of April 2026, it's valued at about ₹750 crore with a P/E ratio near 42x. Despite a 13.1% stock price drop in the past year, its steady dividend payments stand out. Compared to larger rivals like Indian Hotels (P/E 55x, 1% yield), Advani Hotels is a smaller, specialized, and debt-free option.
Attractive Valuations and Sector Trends
Both VST Industries and Advani Hotels appear undervalued when compared to their performance and past trading ranges. VST Industries' EV/EBITDA is 8.8, below its five-year average of 11.9 and the sector average of 12.5, alongside strong return on capital (ROCE 28.2%, ROE 21.1%). Advani Hotels has an EV/EBITDA of 13.2, just below its five-year average of 14.2 and sector average of 14.4, with excellent returns (ROCE 45.3%, ROE 34.4%). Their current P/E ratios (VST ~38x, Advani ~42x) don't seem to fully account for their steady cash flow and dividend payouts. The Indian consumer goods sector is managing inflation well, while tourism is recovering but still affected by spending habits. Historically, dividend stocks have offered stability during market dips, providing income when stock prices aren't rising.
Potential Risks and Analyst Views
However, these dividend stocks also face risks. VST Industries operates in a regulated industry where potential tax increases or health policies could affect profits. Its main tobacco business, though steady, faces long-term challenges. Advani Hotels, while debt-free, is highly seasonal, relying solely on its Goa resort. This makes it vulnerable to local issues or changes in travel trends. Its small size also means less competitive power against larger hotel groups. Analysts have mixed opinions, with price targets for VST Industries between ₹2,300-₹2,800 and for Advani Hotels between ₹95-₹115, showing differing views on risks and growth.
What's Next for These Dividend Stocks
Both companies plan to keep focusing on efficiency and consistent dividend payments, rather than rapid expansion. VST Industries will use its integrated facilities to manage costs, while Advani Hotels aims to benefit from busy seasons and careful finances. Analysts are cautiously positive, seeing potential for these dividend yields to become more appealing if investors start prioritizing value and income over speculative growth.