March 22, 2017 17:25
IST
D-Mart’s
Rs 40,000 crore market cap on listing day propels its founder ahead of Rahul
Bajaj and Anil Ambani.
Illustration:
Dominic Xavier/Rediff.com.
Avenue
Supermarts, owner of retail chain D-Mart, made a historic market debut on
Tuesday, with its stock gaining 114 per cent over the issue price of Rs 299 to
close at Rs 641 -- one of the best listing-day performances.
The
stellar debut saw the supermarket chain’s market value soar to Rs 39,988 crore,
more than the combined market capitalisation of the next three big listed
retailers -- Future Retail, Aditya Birla Fashion and Trent.
Its founder
and ace investor, Radhakishan S Damani, and his family, own an 82 per cent
stake in the company after the initial public offering (IPO).
The value
of their holding soared to Rs 32,790 crore, leapfrogging Damani into the
country’s billionaire list and even surpassing stalwarts such as Rahul Bajaj
and Anil Ambani.
Damani,
known to maintain a low profile, made a rare appearance at the listing
ceremony, along with his family and close aides.
Some
stock market veterans, including Enam group founders Nimesh Shah and Vallabh
Bhansali, had gathered to support him.
“Damani’s
success has come from three factors — humility, business acumen and India’s
growth. He has a tremendous amount of honesty and humility. Damani has
demonstrated how one can be successful by doing things in a simple way and not
get carried away with glamour. Also, he has demonstrated that growth can be
endless, if you are able to address the bottom of the pyramid,” said Bhansali.
Analysts
said D-Mart was one of the best players in the domestic retail sector,
estimated to double in size to about $115 billion (organised sector) in the
next three years.
“D-Mart
is a unique player with a sustainable business model, tailor-made for Indian
consumers. It offers great quality even in terms of management and growth
potential,” said Motilal Oswal, chairman, Motilal Oswal Financial Services.
Damani beats many big
boys of India Inc
Avenue Supermarts is now the most valued Indian retail firm, with
a market capitalisation of Rs 39,988 crore on the BSE. This is 3.3 times the Rs
12,000-crore market capitalisation of Kishore Biyani-promoted Future Retail,
which is second on the list.
Avenue Supermarts also became the 65th most valued stock in India,
ahead of Bank of Baroda, Interglobe Aviation (IndiGo), Idea Cellular, United
Spirits, and even prominent FMCG companies such as Britannia, Marico and
Colgate.
The networth of promoter-founder, Radhakishan S Damani (including
his family holdings) has also got a big boost, rising about $2.5 billion or Rs
16,300 crore in a day. Including the value of his holding in Avenue Supermarts,
worth Rs 32,790 crore as of Tuesday, Damani's networth is now Rs 35,734 crore.
This is much ahead of the networth of Pawan Munjal (promoter of
Hero MotoCorp), Rakesh Gangwal (Interglobe Aviation), Anil Ambani, Sajjan
Jindal (JSW Steel), the Burman family (Dabur group), Nusli Wadia, Keshub
Mahindra (M&M group), K P Singh and Ajay Piramal.
In the
run-up to the D-Mart IPO, some of its listed peers such as Future Retail, Trent
and V-Mart had seen their stock prices surge. Industry players said the
domestic consumption theme was a big story and was finally getting its due.
“The
markets are recognising the retail sector. Consumption is a big theme in the
country. Every generation will consume more than the previous one. There is
opportunity for everyone. It is all about building the right models,” said
Kishore Biyani, group chief executive officer at Future Group.
The
listing-day gains follow a tremendous response for the company’s IPO,
subscribed 105 times.
Market
players expect the demand for the stock might continue, as there wasn’t much
free-float. The company promoters had diluted around a 10 per cent stake in the
IPO to raise Rs 1,870 crore. Assuming all the pre-IPO shares would be locked
in, only 10 per cent equity, worth around Rs 4,000 crore, would be readily
available for trading.
D-Mart,
which is focused on value-retailing, derives the bulk of its revenues from
Maharashtra and Gujarat. The company had opened its first store in Mumbai in
2002, and had expanded to 118 stores as of January 31. Unlike other retail
chains, D-Mart owns most of its stores. Some are on a long lease.
For the
nine months ended December 2016, the company reported revenues of Rs 8,803
crore and net profit of Rs 387 crore.
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