Tuesday, March 21, 2017

D-Mart listing bolsters Radhakishan Damani's wealth, reputation | Tv6 Updates

Posted by Babji Shaik  |  at  10:56 PM No comments

D-Mart listing bolsters Radhakishan Damani's wealth, reputation

Mumbai: The list of Avenues Supermart Ltd, the father of retailer D-Mart, lived up to its hype, adding to Midas's reputation as its founder Radhakishan Damani. Its shares were opened 102% more than the issue price, before closing the day at Rs640.75 each, a 114.3%. At the end of the negotiation, D-Mart became the most valuable retailer in India and helped the Damani family barrel beat Anil Ambani, Ajay Piramal and Adi Godrej in the country's multi-millionaire rankings.
The effect of the stellar list was such that other shares where Damani has significant holdings (either through investment firms or its brother Gopikishan Damani) also rose on a day when the broader market closed down 0.11%.
For example, shares of VST Industries, where Damani owns 25.95% through its Bright Star Investments Pvt. Ltd company, rose to 9.9% on Tuesday before closing 3.8% higher. Apart from VST, Damani owns at least 1% stake in 16 other companies in sectors such as cement, television and logistics.

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On Monday, Forbes had estimated the Damani family's net worth at $ 2.3 billion. At Tuesday's closing prices, the 82% share of the family in D-Mart alone is worth Rs32,871.75 crore, or $ 5.03 billion. His stake in other listed entities is worth another Rs3,000 crore, as well as a portfolio of properties including the 156-room Radisson Blu Resort in Alibag, according to Forbes.

Investors began betting on VST Industries on expectations that Damani's magic would work, said Prakash Diwan, director of Altamount Capital Management Pvt Ltd. "However, Damani is only an actor in VST Industries, while he is a promoter of D-Mart. He is a non-operating investor and does not run the VST Industries business, that's the difference, "Diwan said.

The Damani effect had appeared in the demand for D-Mart shares when it had opened for subscription. The initial public offering was subscribed 103 times when it opened earlier this month. Damani, considered the mentor of billionaire investor Rakesh Jhujhunwala, is known to consider the basics and have the patience to see his investments through.

"Shares were in high demand as it was a stock of Damani (Radhakishan) and a profitable retail, which led to a huge overwriting," said independent market analyst Ambareesh Baliga. "The model of the company is excellent, and the best among other retailers, and they maintained its model throughout the year."
br /> The success of D-Mart has lessons, not only for rivals in the bricks and mortar space, but also for e-commerce companies struggling to make a profit, experts said.
The company has focused on what it wants, and its expansion has been measured. In the first nine years of its existence, until 2010, it had only 25 D-Mart stores. Only after perfecting its business model did the company re-expand to around 118 stores-this too, largely in western India. The company intends to spend the proceeds from the IPO to repay Rs1,080 crore, finance new stores with a melody of Rs366.6 crore, and general corporate expenses.

Their numbers are good because the retailer does small things consistently and repeatedly, CEO Neville Noronha said in the past.
D-Mart has been selective about the products it stores; It does not have the widest range of products. It avoids rebates, the nightmare of brick and mortar retailers and e-commerce markets. It does not intend to follow a discount model in the future either, its brochure said.

"The great strength of D-Mart is its assortment of products, competitive pricing and a well-managed supply chain that ensures the product is always available on the platform," said Rajat Wahi, partner and chief consumer, retail And agro-industrial activities of KPMG in India. .

D-Mart's announcement on Tuesday hit other retailers on the list. Shares of rival V-Mart fell 11%, while Shoppers Stop and Future Retail fell 2-3%.
That said, with its 114% increase, the stock is trading at a rich 80 times its estimated earnings for fiscal year 2017.

"The stock definitely seems expensive now, but it is the story of the new India and the growth potential is unlimited," said Raamdeo Agrawal, managing director of Motilal Oswal Financial Services Ltd.


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