Radhakishan Damani is a Stock market Investor, Stockbroker, Trader and the Founder & Promoter of Dmart retail store in India. He is the 8th richest man in India with a networth of more than 10 Billion USD (65000 Crore rupees). Let’s explore and understand the legendary Radhakishan Damani biography.
Radhakishan Damani biography
Let’s get to know about his family background, early life in stock market, battle with Harshad Mehta, a big blow and finally starting of most profitable retail business in India in this Radhakishan Damani biography.
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Radhakishan Damani : a brief introduction
Have you heard of the legendary stock investor Rakesh Jhunjhunwala? You must have. But do you know the man who inspired, who taught, who mentored Rakesh Jhunjhunwala? He is no other than Radhakishan Damani.
Often referred as Mr white and white because of incredible low profile simple life and always wearing a white trouser and white shirt. He is a person who speaks very less and listens with utmost attention. He doesn’t believe in social media, keep distance from media and public appearance. Even when he donates a big sum to a charity, he still hides his identity.
Nevertheless his actions are louder enough to make him go unnoticed. Due to his Midas touch, he has successfully earned the reputation of being one of India’s finest value investors and founder of most profitable retail store in India.
Rakesh Jhunjhunwala describes him as “More then intelligence he has wisdom. He is extremely patient, humble and hardworking. ”
Family background and early life:
In the year 1954 Radhakishan Damani was born to Shivkishanji Damani in a Marwari family in Bikaner, Rajasthan. His father along with his elder brother were working as stock broker on Dalal street. Unlike Rakesh Jhunjhunwal, Radhakishan Damani was not academically sound. He got admission into B-com in Mumbai university. Since no one was well educated in his family he lacked interest in study and left his study after first year of college.
Radhakishan Damani didn’t have any interest in stock market. He was into ball and bearing trading business. After his father’s death family had to face some financial issue. So closed the ball bearing shop and he started stock broking business with his brother. At the age of 32, he invested in stock market for the first time.
Early life in stock market:
Since Mr Damini didn’t have much understanding on stock market so he started a speculating; buying stocks and hoping that it will go up. Unsurprisingly he had to take many hits. Soon he realized that speculation is not the best way to grow capital. Then he tried to learn investing.
Even after started investment he was also actively trading as he didn’t have much capital to invest. As he taught Rakesh Jhunjhunwala, Trading will help you to get capital and investment will help you to grow capital.
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Manu Manek, the cobra and his influence on Radhakishan Damani:
Manu Manek, the dreaded market operator, ruled Dalal Street in the 1980s. The cobra, as Manek was referred to by brokers who disliked him, would run riot pounding and shorting stocks at will. Not that Manek was a ‘perpetual bear’ by choice, but in a market devoid of low interest funding, shorting was probably the smartest winning strategy to adopt.
Bullish traders, who had borrowed money to bet big, would be plagued by calls from money lenders – either to replenish margins or exit the position completely. When loses mount, the bulls pull out cutting huge losses. Manek – the Cobra would walk away with all the gains he made on his short positions.
Radhakishan Damani, then in his late-20s, would stand at the farther end of the raucous trading ring and watch the Cobra in action. It is evident that the young Damani (RD) learnt a lot watching crafty Manek spoiling the bulls’ party time and again. A few years later, RD would employ similar tricks to outgun his bête noire – the big bull Harshad Mehta.
Tripple Rs vs Harshad Mehta: The deadly battle on Dalal Street
The late-80s and the early-90s were dark ages for Indian stock market.Bombay exchange was clearly divided – with Gujaratis on one side and Marwari traders holding fort on the other end.
“They spared no opportunity to bleed one another … So when one group of traders bought, the other group went on an overdrive to spoil the trade,” explains a retired investment manager of the old Unit Trust of India.
Gujarati traders found their voice when Harshad Mehta emerged from the shadows to become the most powerful trader on D-Street in the late-80s. At around the same time, a nondescript group – locally called the ‘triple-Rs’ – cut some real smart deals on the street.
The ‘triple-R’ group comprised Radhakishan Damani, a chartist named Raju and a young greenhorn, who later became a big name in Indian stock market.
According to old-timers, Harshad and the ‘triple-Rs’ first locked horns over Apollo Tyres. Harshad was long in the counter, but triple-Rs could not digest such high valuations for the tyre company. As was the practice of the day – and what they had learnt from the likes of Manu Manek – triple-Rs went on shorting the stock, without really knowing the source of Harshad’s endless funding.
But this was just the beginning of a long war that spanned for nearly two years – until the scam was unearthed in 1992. The War was over and RD and his commanders won it.
A birth of a value investor:
Several years later, RD is believed to have told a few of his friends: “Agar Harshad saat din aur apni position hold kar leta, toh mujhe kathora leke road par utarna padta.” (Had Harshad held his position for seven more days, I’d have taken a begging bowl and walked on the road).
“Till 1992, RD was a punter like others of those times… He cleaned up after the Mehta scam. He turned a long-term investor after 1992,” said a watcher. “Perhaps, he came too close to bankruptcy then. He was scared of losing money after that,” he added.
After meeting his Guru, he started pay attention to fundamentals of the company. He focused on investing for long term. That was the beginning of the value investor Radhakishan Damani.
Then he started investing in MNC and banking companies. He had always fascinated in consumer business companies and invested in those as well.
A second battle with Harshad Mehta
In 1998,once again the battle continued between RD & MR Mehta, same speculation,but on three stocks namely Videocon, BPL & Sterlite. Again the prices fell by more than 60% within few day’s & Mr Damini made a killing profits.
Some brokers say exchange authorities even tried to bring together Mr Damani and Harshad for a compromise but the talks failed.
When Mr Damani came to know that some small shareholders were left with positions they could not exit, he covered up a part of short positions by buying shares from these investors at a negotiated price.
When a payment crisis loomed, Mr Damani responded to a request from authorities and offloaded a part of his holding at a discount. He was among those probed by regulators for suspected price hammering, but was eventually given a clean chit.
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A taste of failure
Towards the fag end of 1998, the overall market sentiment began to improve. Before long, the market was in the grip of a bull run led by technology stocks, which would peak out in February 2000.
Some players say that Mr Damani found himself a bit out of depth during the technology boom of 1999-2000. He stuck to the classic rules of trading, short selling shares that he felt were over valued and going long on the under valued ones.
But stocks from the sectors that he had an sound understanding of, cement, automobile, steel, were out of favour. Technology was the buzzword at the bourse, and irrespective of whether those companies were making money or not, investors were falling over each other to buy into them.
And Ketan Parekh had now taken over the as the reigning Big Bull, and carved out a reputation for himself as a champion of new economy stocks. Mr Damani’s old school strategies did not work well for him in this period.
D-mart: Starting of most profitable retail stores
I liked the consumer business and I invested in such stocks too,” he says. “So, there was this strong affinity to start something in the same sector.”
In 1999, Damani and Damodar Mall, who is currently the CEO of Reliance Retail took Apna Bazaar franchisee. Two years on, D-Mart was set up and it took over Apna Bazaar.
All of D-Mart’s stores are in, or close to, residential areas and not in malls. Since it owns 90% of its stores, it ends up paying more upfront but insulates itself from rising rentals or relocation risk. That works for it because D-Mart can use its capital steadily.
DMart raised Rs. 1,870 crore by offering 6.23 crore shares priced between Rs 290-299 when opened its IPO. After the IPO listing, it made a record opening on the market on NSE and made Radhakishan Damani top 20 Indian billionaires.
Final word on Radhakishan Damani:
If you compare Radhakishan Damani with Rakesh Jhunjhunwala, you can safely say RD is RJ minus gambling plus entrepreneurship.
Let’s end Radhakishan Damani biography here without including much details further.
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