Two zero-debt stocks in Radhakishan Damanis portfolio: big gains possible in 2026?
Radhakishan Damani is one of the ace investors on D Street whose portfolio is always under watch by the common investors and analysts alike. Here we list two companies which have virtually no debt and have high return on capital employed. Both stocks are near their 52-week lows.
Kolkata: The name Radhakishan Damani inspires veneration among common investors in this country. He is one of market's most trusted names. According to analyst, he sets a lot of trust on the intrinsic value of a business and less on market movements. He seems to believe the maxim that one should buy a sound stock and hold it for a long time. The value of this portfolio is about Rs 1.8 lakh crore now. Let's have a look at two of his prominent investments.
Advani Hotels
Advani Hotels and Resorts India is a hotel chain. It has a market cap of about Rs 501 crore and offers a dividend yield of approximately 3.5%. Its average yield over the past five years has been 3%.
Damani seems to like it because the firm is almost completely debt-free. The ROCE of the company is 45%, while the hotel industry average is just 12%. It pays out up to 85% of its profits as dividends. Damani now holds a 4.2% stake in it.
Sales grew from Rs 70 crore in FY20 to Rs 107 crore in FY25, registering 9% CAGR over five years). The EBITDA (operating profit) rose from Rs 17 crore in FY20 to Rs 35 crore in FY25 (16% CAGR). The company suffered a loss of Rs 1.2 crore in Q2FY26. (Q3 of any year is usually the most robust since hotel business is mostly seasonal).
The company's PE is 20x, compared to 38x for the industry. The 52-week low of this stock is Rs 50 and the market price is close to it (Rs 58.20). The management states that the company will continue paying high dividends to shareholders without incurring debt.
VST Industries
VST Industries is a cigarette company which was set up in 1930. Damani first bought shares of this company in 2016 and now holds a 29% stake in the company. The company is free from debts. It offers a dividend yield of 3.94%, which is several times higher than the industry average of 0.6%. The ROCE (return on capital employed) of 21% (on par with industry). The dividend payout ratio of VST Industries is 76%/
Sales of VST Industries grew from Rs 1,239 crore in FY20 to Rs 1,398 crore in FY25 (only 2% CAGR). Operating profits (EBITDA) dipped steadily over five years – from Rs 415 crore in FY20 to Rs 279 crore in FY25 but PAT has been almost flat from Rs 304 crore in FY20 to Rs 290 crore in FY25. The stock price is Rs 255 while the 52-week low is Rs 235 and is significantly down from its all-time high of Rs 487. The PE of VST Industries is 19x, while the industry is at 27x.
In the final analysis, it is clear that Advani Hotels has posted losses in recent quarters but VST Industries has demonstrated slower growth but stable profits. The big plus points for the two stocks is that they are nearly zero in debt but pay high dividends and have high ROCE. Damani seems to be confident that they will generate returns and have held them for a long time.
Disclaimer: This article is only meant to provide information. TV9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, REITs, INVITs, any form of alternative investment instruments and crypto assets.