Ace investor Radhakishan Damani joins the elite billionaire club with D-Mart public offer

Ace investor Radhakishan Damani created history on Tuesday when his company Avenue Supermarts Ltd (ASL), which owns and operates the supermarket chain D-Mart, listed on the bourses at 113.4% premium to its issue price of Rs 299 a piece. The stellar debut on the bourses to raise Rs1,870 crore also ensured the 61-year-old a prominent place in the elite billionaire list with a staggering net worth of over $6 billion.

Prior to the public offer, the Damani family comprising Gopikishan S Damani, Shrikantadevi R Damani and Kirandevi G Damani held around 91% stake (51.29 crore shares) in ASL. The promoter group shareholding post the IPO, which mainly comprised a fresh issue of shares, is set to be 82.2%. While Radhakishan Damani holds 39.4%, his family owns the rest 42.8%.

The value of this stake in ASL comes to over to Rs 32,800 crore. This is based on the company's market cap as per Tuesday's closing price of Rs 640.75 per share.

Interestingly, Avenue Supermarts is the only company, in the last 12 years, to have offered subscribers gains of over 100% on the listing day. According to a compilation by Prime Database, in the list of top five IPOs with over 100% gains on the day of listing (since 2002), ASL stood fifth with 113% gain. The top four comprises FCS Software Solutions listed in September 2005, Indraprastha Gas in December 2003, Nandan Exim in June 2005 and TV Today Network in January 2004, with gains of 200%, 150%, 140% and 121%, respectively.

ASL's market cap of around Rs 40,000 crore at Tuesday's closing price has made it more valuable than five Nifty companies ACC (Rs 26,526 crore), Bank of Baroda (Rs 37,660 crore), Idea Cellular (Rs 33,476 crore), Tata Power (Rs 23,761 crore) and Tata Motors DVR (Rs 9,111 crore).

On Tuesday, Avenue Supermarts opened on the BSE at Rs 604.40 a piece and the stock reached an intra-day high of Rs 650 and a low of Rs 558.75 closing at Rs 640.75 per share offering investors a gain of Rs 341.75 per share over the issue price.

The supermarket chain operator's total revenue witnessed a compounded annual growth rate (CAGR) of 40.28% from Rs 2,222.4 crore in fiscal 2012 to Rs 8,606.1 crore in fiscal 2016. For the nine months ended December 31, 2016, its total revenue stood at Rs 8,803.2 crore. Its net profit after tax increased at a CAGR of 51.56% from Rs 60.4 crore in fiscal 2012 to Rs 318.75 crore in fiscal 2016. For the nine months ended December 31, 2016, the net profit after tax stood at Rs 387.47 crore.

Having opened the first store in Mumbai in 2002, it operates 118 stores (as of January 31, 2017) spread across 3.59 million square feet of retail real estate across the country. The stores are located across 45 cities viz. Maharashtra (59), Gujarat (27), Telangana (13), Karnataka (7), Andhra Pradesh (4), Madhya Pradesh (3), Chhattisgarh (1), NCR (1), Daman (1) and Rajasthan (2).

On the supply chain part, it operates 22 distribution centres and six packing centres (as on January 31, 2017) in Maharashtra, Gujarat, Telangana and Karnataka. The retailer's expansion plans include deepening store network in southern and western India and gradually expand the network in other parts of the country following the cluster-focused expansion strategy.

Of the total money raised, the company will utilise a portion of the net proceeds for setting up new stores aggregating to a built-up area of 21 lakh square feet by 2020. "We intend to further enhance our position in the retail supermarket business in Maharashtra and Gujarat by increasing our market penetration and expanding our store network in these states.

"We also intend to strengthen our store network in Andhra Pradesh, Telangana, Madhya Pradesh, Karnataka, Chhattisgarh and northern India. Through our associate company, Avenue e-Commerce Ltd, we plan to venture into e-tailing business," the company had said in its DRHP adding that new stores have already opened in NCR, Daman and Rajasthan in fiscal 2017.