The Rise Of D-MART || How Mr. Radhakishan Damani became 2nd richest person in India - YouTube

So, today we are going to talk about Rakesh Jhunjhunwala's mentor and a billionaire, Mr Radhakishna Damani

Prior to investing in the stock market, Radhakishan Damani used to run a ball bearing business

In the beginning, he made a profit through trading and by investing in the MNCs.

During the '90s, when Harshad Mehta was ruling the stock market, Damani created wealth through short selling.

Those who don't know about short selling, let me tell you that generally, we first buy shares, then sell them.

Short selling is the complete opposite. In short selling, firstly shares are sold and then they are bought.

Generally, we know that as the share's price rises after buying it, then you make a profit.

However, in short selling, you make a profit when the share price falls.

If you haven't watched our video on Harshad Mehta yet, then do watch it so that you can understand this topic even better

We have put the link to that video in the description

So, if a trader feels that the certain stock might fall, he opts for short selling of that stock

We will talk about the concept of short selling in another video in detail.

In Harshad Mehta Scam, we learnt how Harshad Mehta used Bank's money for manipulating the stock market

Harshad Mehta made heavy purchases in some stocks and took them to higher price levels.

In just a few months, Harshad took the stock price of ACC from Rs. 200 to Rs. 9000

But the fundamentals of those stocks didn't justify their increasing price even a little bit

Despite any changes in the companies' fundamentals, their stock price was skyrocketing.

Observing those stocks trading at such higher prices, Mr Damani was totally taken aback

He very well knew that Harshad Mehta is manipulating the stock price and that they won't last long at such high valuations.

And as soon as Harshad Mehta runs out of the fund, the stock price of those stocks will fall down

So, Radhakishan Daman began short-selling the stocks in which Harshad Mehta was investing

While Harshad Mehta was continuously buying the stocks, Radhakishan Damani, on the other hand, was short selling in the same stocks

But Radhkishan Damani didn't know about Harshad Mehta's funding

He didn't have any idea about the funding resources of Harshad Mehta

Harshad Mehta was extracting funds continuously from Banks and was making heavy purchases in stocks

The prices of such stocks were surging continuously and didn't seem to come down at any cost

Due to this, Mr Damani faced one or two big losses in the stock market

However, when Harshad Mehta scam was exposed, those stocks fell enormously

And Damani made a big profit out of it and as a result, his net worth increased to a great extent

Just a few years later to this, the value investor, Mr Chandrakant Sampat who succeeded employing value investing method

Inspired by him, Radhakishan Damani shifted his focus toward value investing method for long term investment Considering the recent events, he invested in Gati and TCI- two logistics companies at the beginning of 2014

Following value investing method, whenever stocks with strong fundamentals got bottom out .i.e became available on cheap valuation

Mr Damani used to buy them and be patient to keep them on hold for quite a long term

This was when both these stocks were fundamentally strong and completely bottom out

And he earned quite significant returns from both stocks

We will talk about Value Investing in the next lecture in detail

Mr Damani made most of his profits through long-term investment

However, whenever he gets a short-term opportunity, he surely does trade

In 2000 and 2001, when Ketan Parikh came up with a scam and made the stocks prices go higher by manipulating them

Even back then, Mr Damani managed to earn hefty money by employing the short-selling method

Mr Radhakishan Damani bought a lot of shares of VST industries, in the year 2000, at an average price of Rs. 85

And now these stocks are trading above Rs. 3600

Damani earned multiple returns in HDFC Bank, Gati, Blue Dart, Sundaram Finance, Gillette, India Cement and other such stocks

He prefers to hold his stock for 5 to 10 years

Mr Radhakishan Damani always had a great interest in the consumer business

Even he invested in the consumer business companies

Before establishing D Mart, he bought the Franchise of Cooperative Store Chain- Apna Bazar at Nerul, Navi Mumbai

He got to learn a lot about the retail businesses from that franchise

Later in 2002, he established the retail Chain- D Mart

Whether it a business or investment, Mr Damani always thinks of long-term

In FY 2001-2002, prices of real estates fell down completely and Mr Damani took complete advantage of that

From that very moment, Mr Damani started buying properties for D Mart at different places

At that time, he bought some properties in the outer area of Thane and Navi Mumbai

Where the rates of properties were quite cheap

Thinking that, in the future, when Thane and Navi Mumbai will develop, these properties will come under the main areas

And today, those D Mart stores are situated in the main and most populated areas of the town

This way the risk of stores relocation has completely mitigated and the cost of rent has been also saved

This let Damani stay quite profitable

This way the long term thought of Mr Damani helped D Mart a lot in the growth

None of D Mart store is in any Mall and mostly, D Mart has its own stores everywhere

This reduces the expense cost and as a result, they are able to offer amazing discounts to their customers

Mr Damani follows his philosophy both at the business and investment

And he doesn't give any importance to what people have to say about it

When all the investors were hugely after the expansion, following his philosophy, Mr Damani looked at the profitability of D Mart instead

He cracked the template first and then he started the speedy expansion of D Mart

In the first 9 years of D Mart .i.e until 2011, D Mart only had 25 stores

And in the last 5-6 years, he opened more than 100 D Mart stores with the rapid expansion

Even if he has enough fund to open the new store, he doesn't open it until he is assured that it would be as profitable as the existing store

This is the reason why none of the D Mart stores is kept closed today

When the e-retail trend started, retail experts would advise him to go e-commerce

But Mr Damani concentrated entirely on his Brick and Mortar model and kept trying his to make his business better

And the results are pretty apparent in front of you

Today, D Mart is India's most profitable retail company

Similarly, in 1995, when Mr Damani was a big shareholder of HDFC Bank, some investors asked him that

Why are you consistently investing in HDFC Bank's shares while many banking and other stocks are available at cheap valuations in the market

After a few years, that share became multi-bagger

Ultimately, those investors got their answer to their question

Likewise, Mr Damani has always followed his philosophy

Mr Radhakishan Damani, himself isn't well-educated and neither he belongs to a well-educated family

He is a college drop out. After completing B. Com 1st Year from University of Mumbai, he left college

Despite not having any formal degree, he is still known as one of India's most successful investors

And he is one of India's top entrepreneurs

He proved that determination and passion are more important than the qualification

Mr Damani too accepts his mistakes just like other investors

While analysing companies and stocks, he learnt how an ideal business must look

Stock market investors are supposed to discover high-performing businesses

But Mr Radhakishan Damani, along with finding good businesses, showed how to do a good business

This not only generated wealth just for him but for other investors as well

He says that he has learnt a lot of things in life just by investing

Despite managing such an amazing business, he still gives his time to investing

Mr Rakhesh Jhunjhunwala- India's most successful investor says that

"If he didn't have his father and Mr Radhakishan Damani by his side to advise him

then I won't have become so successful"

Both Mr Damani and Rakesh Jhujhunwala hold the investment in companies like Aptech Ltd and Crisil Ltd

Mr Radhakishan Damani stays pretty simple and always wears a white shirt and a white trouser

And hence, he is also known as Mr White & White

Mr Damani prefers to stay away from media and public events

He surely does stay aways from media, but his action speaks louder than words

Mr Damani works so quietly but his success speaks it all

You can learn so many and such things from Mr Damani that you will rarely find in any book

Many people, instead of learning from such successful investors, focus more on buying stocks that these investors have bought

According to Forbes, in July 2017, the net worth of Radhakishan Damani and his family was $7.7 billion (Rs. 50,000 crores)

and he is still among one of India's richest person

Radhakishan Damani is also a philanthropist and while donating, he prefers to keep his name secret

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