NEW DELHI: Radhakishan Damani might have had a very humble beginning. But the man who left behind a past that included stints in the ball-bearing business and the stock market - as broker and investor - to start hypermarket chain D-Mart has enjoyed a meteoric rise in recent years.
Tuesday saw the 67-year-old break into the top-100 richest club at the 98th position on the Bloomberg Billionaires Index. A day later, on Wednesday, he moved past Eduardo Saverin, the Brazilian co-founder of Facebook and angel investor, to the 97th position -- his wealth rising further from $19.2 billion to $19.3 billion.
Fuelling this rapid climb has been the surge in the shares of Avenue Supermarts, which runs the D-Mart chain. They have shot up by 491% on the BSE since the company went public in March 2017. On Wednesday, they closed at Rs 3,649.80, marking a 0.43% spike in share price in one day, a 9.55% spike in one month and a 61.03% spike in one year.
In fact, such has been the dizzying rise of Avenue Supermarts on the bourses that its market capitalisation has zoomed from around Rs 40,000 crore in March 2017 to Rs 2.37 lakh crore at the end of Wednesday session.
Radhakishan Damani and his family own a nearly 75% stake in the company (the maximum limit allowed by market regulator SEBI). This has seen their wealth balloon from nearly Rs 33,000 crore when the company got listed to almost 1.80 lakh crore now. According to Bloomberg, 60% of the 75% promoters' stake is owned by Radhakishan Damani and his family (the rest is held by others including brother Gopikishan S Damani and his family).
The surge has lifted Damani's own personal fortune in 2021 by $4.3 billion or 29%.
The other Indians in the top 100 in the Bloomberg Billionaire Index are Mukesh Ambani, Gautam Adani, Azim Premji, Pallonji Mistry, Shiv Nadar and Lakshmi Mittal.
Damani's fairytale run began when he quit the stock market in 2000 to start D-Mart, setting up the first store in Powai in 2002. By 2010, the chain had 25 stores. Then came the high-octane growth phase of the company. By June 30, 2021, Avenue Supermarts was running 238 D-Mart stores across India.
The expansion has been carefully calibrated and the fundamentals remain good.
Avenue Supermarts has witnessed strong growth in sales and profits. Between FY2009 and FY2020, its topline and bottomline grew by double-digit figures.
Last financial year, the company's operations were partially impacted by the Covid-19 pandemic, but the recovery was quick and robust. Avenue reported a jump of 132% in standalone net profit at Rs 115.13 crore for the quarter ended 30 June, 2021 while its revenue from operations rose 31.27 per cent to Rs 5,031.75 crore in Q1FY22.
Analysts at ICICI Securities anticipate store addition trajectory to accelerate in FY22, FY23E and lead to 80 more new stores (anaddition of around 5.0 mn sq. ft). The robust liquidity position and healthy operating cashflows will help add to the pace of expansion, the brokerage firm said. Analysts expect revenue recovery to pick up pace from the second half of FY22 onwards and model revenue, earnings CAGR of 21 per cent, 25 per cent, respectively, in FY2023E.
The brokerage firm in their results update went on to add that despite trading at premium valuations, Avenue Supermarts has been a consistent compounder with stock price appreciating at 31 per cent CAGR in the last three years. We continue to remain structurally positive and maintain HOLD rating.
In layman's terms, the Radhakishan Damani growth story continues to remain a solid bet.