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The Indian stock market is passing through a golden era. It has moulded sharp, disciplined, and inspiring investors over the years. Radhakishan Damani is one such individual who has taught us the beauty of value investing. He has applied analytical skills to build India’s largest retail supermarket chain, DMart. From living at a one-bedroom apartment in Bombay to owning 156 rooms at a Radisson Blu resort in Alibaug, his journey is inspiring for all stock market participants. In this editorial, we shall analyse Damani’s investment journey and his current portfolio.

Journey to Dalal Street

Radhakishan S Damani was born on January 1, 1954, into a Marwari family in Mumbai. His father, Shivkishanji Damani, worked as a stockbroker in Dalal Street. It is interesting to note that Damani was not enthusiastic about joining his father’s path. Instead, he pursued a Bachelor’s Degree in Commerce at the University of Mumbai. He always had a strong business acumen, which resulted in him dropping out of college and starting an enterprise in the field of ball bearings. Unfortunately, the passing of his father forced Damani into the world of the stock market in his late 20s.

Investment Journey

Damani was never satisfied with being a stockbroker. He started to analyse trading and investing activities in the Bombay Stock Exchange (BSE). During this period, the Indian stock market was controlled by a few powerful players. It was not open to foreign investors. He started getting exposure and insights from well-known personalities in Dalal Street such as Manu Manek (the Black Cobra) and Harshad Mehta (the Big Bull). Interestingly, Damani entered into short-sell positions in stocks that were manipulated by Harshad Mehta. He firmly believed that the stocks backed by Mehta were highly overvalued and would go through decent corrections.

In the l990s, Damani’s roots in value investing got deeper after meeting Chandrakant Sampat (a legendary value investor, started his investment career during the 1950s). VST Industries, HDFC Bank, Sundaram Finance, 3M India, Gillette, ITC, ICRA, CRISIL, Blue Dart are the stocks that were added to his initial portfolio. Damani found huge potential in HDFC Bank, at a time when public sector undertaking (PSU) banks such as State Bank of India (SBI) ruled the banking sector.

The Birth of DMart

Damani always wanted to start and grow his own venture. At the age of 45, he established a franchisee of Apna Bazar Supermarkets in 1999. After acquiring more knowledge of the Indian retail space and having disagreements with Apna Bazar’s master franchisor, he decided to start a single-store supermarket named DMart in 2002. The company bought parcels of land to commence its operations. Now, DMart enjoys the benefits of land appreciation, which directly makes the balance sheet strong. Damani always focused on building the fundamental aspects of the business. From 2002 to 2010, there were 25 DMart stores across India.

DMart launched its initial public offering (IPO) in 2017 to raise Rs 1,870 crores at an issue price of Rs 299. The shares were listed on the exchanges at Rs 600. Currently, the company has a presence in 238 locations across 11 states in India. DMart is trading at ~Rs 3,970 in the NSE, giving the investors a Compounded Annual Growth Rate (CAGR) of 45% over the past 5 years.

Portfolio Analysis

Now, let us look at Damani’s current portfolio and look for some key patterns.

Damani is the major promoter of DMart. His holdings are worth around Rs 1,66,800 crore, which makes up 97% of his total portfolio. We can exclude it from our analysis as it will make other constituents negligible.

We can see that Damani is a conservative investor. Currently, mid-cap companies contribute 55% to his total portfolio, followed by large-cap at 42%, and small-cap at less than 2%.

Portfolio Diversification

Let us look at the segments he is betting big on:

Stock	Segment
Avenue Supermarkets	Retail – Department Stores
VST Industries	FMCG – Tobacco
India Cements	Cement
Sundaram Finance	Consumer Finance
Trent Ltd	Retail – Apparel
United Breweries	Alcoholic Beverages
3M India	Stationery
Blue Dart	Logistics
Metropolis Health care	Hospitals & Diagnostic Centres
Sundaram Finance holdings	Diversified Financials
BF Utilities	Renewable Energy
Astra Microwave	Communication & Networking
Mangalam Organics	Chemicals
Andhra Paper	Paper Products

Diversification of Damani’s portfolio

He has followed the same principle as his mentor Chandrakant Sampat:

“I will only buy those companies that are in a business that even fools can understand, have very little debt, have free cash flows, or do not have much capital expenditure”

Damani’s portfolio stocks have a low debt-to-equity ratio (debtless companies). Also, most of the mid-cap and large-cap companies mentioned above have a strong moat.

However, his holdings are highly sensitive to market conditions. The portfolio has a beta of just 0.7, which means that if NIFTY500 moves either upside or downside by 1%, his portfolio will react in the same direction with a lower magnitude of 0.7%.

Recent Purchases

Damani added a few stocks to his portfolio after the stock market crashed in March-April 2020 due to the Covid-19 pandemic. India Cements, Sun Pharma, Vodafone Idea, HPCL, Delta Corp, and DLF were purchased in March 2020. He also added Cochin Shipyard, India’s leading shipbuilding company in October 2020.

Portfolio Performance

It is interesting to see how Damani’s portfolio has performed over the past year. Let us take NIFTY500 as the benchmark to do a comparison.

Over the past year, NIFTY500 has surged 56%, while Damani’s portfolio grew 40%. Interestingly, the benchmark and portfolio have performed identically over the last 5 years.

Conclusion

There are a lot of takeaways from Damani’s journey in the stock market. He is conservative, patient, and disciplined. With the knowledge he acquired from large investors, he has been able to accurately analyse the financial performance and other fundamental aspects of companies. He has developed skills for identifying multi-bagger stocks. We can compare his portfolio with ours, and adopt essential features such as diversification and position sizing.

However, never jump into buying a particular stock just because Damani has added it to his holdings. Instead, we should understand the logic and reasoning behind why he chose that company and find its true potential. This will help us become intelligent investors.

Is your portfolio similar to Damani’s? Let us know in the comments section of the marketfeed app.

India has its fair share of inspirational and highly successful stock market investors. One such ace investor is Vijay Kedia, who has developed unique skills and expertise to pick stocks over his 30-year career. Kedia and his investment firm, Kedia Securities Pvt Ltd, are the largest shareholders of several listed companies in India. His success story can be a motivation for all aspiring investors out there. In today’s article, learn more about Dr. Vijay Kishanlal Kedia and his journey in the stock market so far.

Vijay Kedia – A Brief Profile

Kedia was born into a family of stockbrokers based in Kolkata. He is part of the Marwari community, an ethnic group well-known for its strong business acumen. At the age of just 14, he started to develop a passion for trading and learnt several strategies from his grandfather. Kedia joined his family’s stockbroking business after his father passed away. He was 19 at the time. However, he was never really interested in stockbroking and thus, decided to leave the business after working for three years. He began to focus on his trading career.

Initially, Kedia was able to make sufficient profits from several trades. He built the confidence to increase his capital gradually. Unfortunately, he started incurring huge losses that ultimately ate up all realized profits and some part of his capital. Highly relatable, right? After analysing the mistakes he made, Kedia decided to make a transition towards investing. This would turn out to be one of the most important decisions in his life. He began to learn the different concepts behind fundamental analysis and growth investing. Around the same period, he moved to Mumbai to try his luck in conquering Dalal Street.

Since the early 1990s, Vijay Kedia had developed the ability to identify numerous multi-bagger stocks. In 1992-93, he bought ACC shares at Rs 300 per share and sold them at ~Rs 3,000/share within a year and a half. Similarly, Atul Auto, Aegis Logistics, and Cera Sanitaryware are some of the stocks that gave him a return of over 1,000% each within 10-12 years. He could analyse and pick a stock way before the market realised its true potential. In 2012, Kedia rightly predicted the beginning of the structural bull run in India, at a time when most analysts were bearish. The Economic Times has described him as a “market master”.

As per corporate shareholdings filed for June 30, 2021 (Q1 FY22), Vijay Kedia and his firm publicly hold 16 stocks with a net worth of over Rs 810.6 crore.

Important Lessons from Vijay Kedia’s Life & Career

Vijay Kedia’s initial losses or failures in his trading days are what drove him to become one of the most successful investors in India. He was able to learn from his mistakes, as well as observe the success and failures of those in the same field. He keeps himself updated by reading newspapers, business magazines, and annual reports of listed companies. Kedia often watches interviews of CEOs and managers to frame an idea about a firm’s future plans and growth targets.

To become a successful investor, Kedia says one must acquire the knowledge to search for the best stocks and have the courage to purchase them at a sufficient cost. Most importantly, one must develop the patience to hold stocks until the market finds its real value. “Invest like a bull, sit like a bear, and watch like an eagle (mantra for long-term investing)”.

Kedia adheres to the SMILE principle of investing, which refers to Small in size (small-medium market cap), Medium in management experience, Large in Aspiration, and Extra-large in market potential. He has time and again emphasized the importance of a strong management team while selecting a stock to invest in. He believes that the best businesses can be ruined by bad management and bad businesses can be revived by the best management. An experienced team will protect your investment in order to safeguard their own wealth and reputation. Investors must carefully analyse the future projection of a company, and check whether its management is ambitious towards achieving its goals.

Here is an inspiring quote from Vijay Kedia. “One must understand that the stock market is a ‘high risk-high gain’ business. It is a full-time business which has its own rules which need to be strictly followed. One has to fall in love with the market. The market rewards you as per your perception of it. If you treat it as a gambling den, it will prove a gamble for you”.