DMart shares gain 114% on mkt debut
Damani family is now ahead of Anil Ambani, Ajay Piramal, Adi Godrej in billionaire rankings
The listing of Avenues Supermarts Ltd, the parent of retailer D-Mart, lived up to its hype, adding to the Midas-like reputation of founder Radhakishan Damani. Its shares opened 102% higher than the issue price, before closing the day at ₹640.75 apiece, up 114.3%. At the end of trade, D-Mart became India’s most valuable listed retailer and helped the Damani family barrel past Anil Ambani, Ajay Piramal and Adi Godrej in the country’s billionaire rankings.
The effect of the listing was such that other stocks where Damani has significant holdings (either via investment firms or his brother Gopikishan Damani) also rose on a day when the broader market fell 0.11%.
For instance, shares of VST Industries, where Damani owns 25.95% through his firm Bright Star Investments Pvt Ltd, jumped as high as 9.9% on Tuesday before closing 3.8% higher. Apart from VST, Damani owns stakes of at least 1% in 16 other firms across sectors such as cements, television and logistics.
On Monday, Forbes had calculated the Damani family’s net worth at $2.3 billion. At Tuesday’s closing prices, the family’s 82% stake in D-Mart alone is worth ₹32,871.75 crore, or $5.03 billion. Its stake in other listed entities is worth another ₹3,000 crore, besides a property portfolio that includes the 156-room Radisson Blu Resort in Alibag, according to Forbes.
Investors started betting on VST Industries on expectations that Damani’s magic will work on it, said Prakash Diwan, a director at Altamount Capital Management Pvt Ltd. “However, Damani is just a stakeholder in VST Industries whereas he is a promoter of D-Mart. He is a non-operational investor and not running business of VST Industries. That’s the difference.”
The Damani effect had shown up in the demand for the D-Mart stock when it had opened for subscription. The initial public offer was subscribed 103 times when it opened earlier this month. Damani, considered to be the mentor to billionaire stock market investor Rakesh Jhujhunwala, is known to look at fundamentals and have the patience to see his investments through.
“The shares were in high demand as it was a (Radhakishan) Damani stock and a profitable retail, which led to huge oversubscription,” said independent market analyst Ambareesh Baliga. “The company’s model is superb, and the best amongst other retailers, and they stuck to their model through the year.”
“D-Mart’s big strength is its product assortment, competitive pricing and a well managed supply chain which ensures the product is always available on the shelf,” said Rajat Wahi, partner and head, consumer, retail and agri sectors, KPMG in India.
The firm has been focused on what it wants, and its expansion has been measured. In the first nine years of its existence, till 2010, it had just 25 D-Mart stores. Only after perfecting its business model did the company expand to around 118 stores — this too, largely in Western India. The company intends to use the proceeds from the IPO to repay debt of ₹1,080 crore, fund new stores to the tune of ₹366.6 crore, and on general corporate expenses.
The D-Mart listing on Tuesday hit other listed retailers. Shares of rival V-Mart fell 11% while those of Shoppers’ Stop and Future Retail were down 2-3%.