Radhakishan Damani’s Investing Saga and Success with DMart

Success, which is a word for many, is a 'Journey' for some others. Mr. Radhakishan Damani's journey as a successful value investor, stockbroker, trader, and founder of one of India's biggest retail chains, 'DMart,' is an inspiration. Radhakishan Damani made his name in Indian stock markets in the '90s as one of the most successful value investors. Currently, he has a net worth of $ 19.1 Billion.

What is that thing which makes him different from the rest of the world? it's the strategy that separates a successful person from the crowd. When we talk about strategy, the names of some great businessmen and investors pop into our heads. So today we will be talking about the retail king of India Mr. Radhakishan Damani who found his way towards the stock markets and became a very successful value investor. We will start with his life and entry into the markets and then talk about his business as well as investment strategies.

Early life and entry into markets

Radhakishan Damani was born in a Marwari family in Bikaner on 1st January 1954. He was brought up in a one-room flat in Mumbai. His father Shivkishanji Damani used to work at Dalal Street in Mumbai. Radhakishan Damani started his graduation at Mumbai University but dropped out after one year and started his own business of ball bearings. At the age of 32, he lost his father. He left his business and joined his brother Gopikishan Damani in the stockbroking business. He started an investment company called BrightStar in 1989 and in the year 1992, he became a SEBI registered stockbroker. Damani was inspired by a veteran stock market investor Chandrakant Sampat.

Stock Market life

In 1995 when the HDFC bank was listed, Damani became the biggest individual shareholder. When asked about why he invested here when he had other options available at cheaper valuations, he replied “you can’t stay on Peddar Road (one of Mumbai’s most expensive areas) at Dharavi’s (Mumbai’s biggest slum) rates”. HDFC went on to become one of the top multibagger stocks in Damani’s portfolio. 

As a trader, he was mostly on the bearish side and locked horns with Harshad Mehta on various occasions. When Harshad was trying to raise the market he used to bet on the opposite side, eventually when scam 1992 happened and it was found that Harshad was doing it illegally, the market crashed and he generated huge profits. 

Not only this, he used to generate profits by bringing the markets down but he also made value investments on stocks such as the HDFC bank, Gillette India, VST Industries, Crisil, etc. This strategy of his confused the other players in the market and it was very hard for them to identify whether he was a trader or a long-term investor. Let us have a look at the current portfolio of Radhakishan Damani :

Investing Philosophies to become the Retail King

For Damani, the idea of ​​what a company should be is formed by analyzing the company as an investment. RD used his bullish avatar to look at the company’s growth, cash flows, and predictability. He liked the business and there was a strong affinity to start his business in the same sector. We can pretty much figure that out from his quote- “Whatever I learned in life is by investing.”

In 1999, when retail was still a small world in India, he together with Damodar Mall purchased a 5,000-square-foot Apna Bazaar franchise in Nerul and another in Navi Mumbai. Two years later, D-Mart established and took over Apna Bazaar. His career took another turn and he became a retailer from an investor. 

The early days were just learning and gaining the confidence of vendors. Damani used to travel to Vashi to interact with the wholesalers and traders. So the growth wasn't exponential for almost a decade. In the first 8-9 years the company had just 25 stores. But it had grown rapidly and in 2016, he opened 21 stores in a single year. 

The strategy he followed was that he didn't open the stores in the malls but focussed more on opening the stores near the households. The stores aimed to meet most of the daily consumer requirements and offered value for money. The business model of D-Mart was simple. They bought it at a low price but in bulk and sold it cheaply without undercutting. Being an ace investor himself, Damani understood the market very well and it helped him in maintaining healthy sentiment for the company among the investors. His relationship with vendors was his biggest strength. The general payment norm in the FMCG industry was of 12-21 days which D-Mart changed and payment was done on the 11th day to the vendor which ensured good relations with them. Employee relations also have a major part in Damani’s D-Mart. The relaxed and flexible work culture is one of the keys to D-Mart’s growth.

Finally, in 2017, Damani made his retail chain public by listing his company Avenue Supermarts on both the exchanges NSE and BSE. The company was listed at Rs 604.4 and provided a premium of 102% to its issue price of Rs 299 on March 21, 2017. Later that year, the Avenue Supermarts became the most expensive retail stock in the world on various financial parameters.

The Journey from Successful Investor to a Giant Retailer

From Investor to a business tycoon, RK Damani has proved to ace it all. He was the man who founded 'Avenue Supermarkets' in 2000, whose famous supermarket 'DMart' is one of the largest consumer retail supermarket chains in India.

His business acumen made him the retail giant. He launched DMart with a mission of the lowest-priced retailer in its area of operation. As of 2021, there are 234 D-mart stores across India. It is a net-cash company with profit growth of 30% in the past 5 years. Additionally, DMart has brand recognition among its peers.

His vision of DMart has made him the Retail-King.

Read: The Business Model of DMart

Final words

From a ball-bearing businessman to an ace investor to the Retail King of India, Mr. Damani has had a lot of success in his career. His way of moving forward was simple yet very different. His relationship with the middlemen helped him grow to the top. His friends often say “Mr. Damani speaks less but is an excellent listener. He is a simple man with a clear thought in his business approach.”  

From Dalal Street in Mumbai to the retail markets, he has been an inspiration for lakhs of people across the globe. The greatness he achieved in life is appreciable. He has connected the dots between investing and business.