How D-Mart made Radhakishan Damani Rs 20,000 cr richer in a day

Avenue's stellar opening on listing day has propelled the Damani family ahead of Anil Ambani, Ajay Piramal, Adi Godrej and Rahul Bajaj in the billionaires’ ranking
Avenue-founder Radhakishan Damani holds 82 per...
India TV Business Desk Mumbai March 22, 2017 12:48 IST

On Monday, Forbes magazine calculated Radhakishan Damani and his family’s net worth at $2.3 billion or a little over Rs 15,000 crore. By the time trading on bourses ended on Tuesday, Damani was worth over $5.3 billion or Rs 35,000 crore. While his wealth more than doubled within a span of 24 hours, his net worth catapulted him in the list of India’s Top 20 billionaires.

The remarkable jump retail investor Damani saw was owing to Avenue Supermarkets marking the best opening on listing-day by any offering in the last 13 years. Avenue's shares listed at Rs 604.40, a whopping 102 per cent premium to the issue price of Rs 299. The stock rose as much as 117 per cent to an intraday high of Rs 650, giving the company a market cap of Rs 40,000 crore.

61-year-old Damani, who founded Avenue Supermarkets in early 2002, holds 82 per cent stake in the venture along with his family. Avenue operates D-Mart value stores that have targeted the suburban and non-metro cities of India. The stellar opening of Avenue on listing day has propelled the Damani family ahead of Anil Ambani, Ajay Piramal, Adi Godrej and Rahul Bajaj in the billionaires’ ranking.

The supermarket chain, with a focus on value-retailing, opened its first store in Mumbai in 2002, and had expanded to 118 outlets as of 31 January, 2017.

The bull run that followed its initial public offer (IPO) to raise Rs1,870 crore being subscribed more than 100 times earlier this month has had a ripple effect. Not only did Avenue’s bull run result in other stocks where Damani has investments soaring, it also made D-Mart the most valuable listed retailer in India.

At the time of closing on Tuesday, D-Mart was worth substantially more than the combined Rs 24,000 crore market capitalization of its BSE-listed peers-Future Retail, Trent, V-Mart Retail, Shopper's Stop and Provogue. Avenue's market cap of Rs 39,988 crore — based on the stock's Tuesday closing — also makes it the 65th most valuable Indian company ahead of Britannia Industries, Marico and Bank of Baroda.

VST Industries, where Damani owns 25.95 per cent through his firm Bright Star Investments Pvt. Ltd, jumped as high as 9.9 per cent on Tuesday before closing 3.8 per cent higher. 

Damani holds equity stakes in VST Industries, Blue Dart, Sundaram Fastners, TV18 and 3M India, valued at $400 million (Rs 2,650 crore).

Who is Radhakishan Damani

A rookie broker in the late-1980s, Damani’s sharp analysis and cool composure is still remembered by D-Street veterans today. Analysts who saw him at the time remember him as a soft-spoken investor who was brilliant and a legend on the street, reports Times of India.

Damani’s family was in the ball bearings business, but he joined his brother's stockbroking business at the age of 32 following their father's death, built his fortune by buying multinational stocks during the late '80s and early '90s. A dropout of commerce college after his first year, Damani is  known for his penchant of dressing in ‘White and White’.

Damani withdrew from active trading after derivatives replaced the ‘vyaj badla’ form of financing in the early-to-mid 2000s, and refocused his energies on long-term investing. It was around that time that he also launched his first entrepreneurial venture in the form of D-Mart.

According to the Economic Times, the high point of Damani's career came when he began shorting stocks owned by Harshad Mehta after they soared during the Mehta-inspired bull run. The astronomical stock valuations convinced Damani that something was wrong. When the market collapsed after Mehta's scam was exposed, Damani made a killing and name for himself.

Unlike the flamboyant Rakesh Jhunjhunwala, also known as the ‘Warren Buffet of India’, Damani is known to be a ‘silent operator’. However, he is equally aggressive and his strategies have paid him well. Around 20 years ago, Damani took ITC head-on for control of Hyderabad-based VST, the makers of Charminar. His 25 per cent stake in the cigarette company, acquired at a cost of about Rs 63 crore, is now worth about Rs 1,200 crore.

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