This Is The Only Indian Billionaire Who Increased His Wealth During #Coronavirus Outbreak: How Did This Happen?
The COVID-19 pandemic has led many Indian businesses and startups grappling for air as they struggle to do business amidst the lockdown.
The only business tycoon breezing through this COVID-19 storm is veteran stock market investor Radhakishan Damani controlling the Avenue Supermarts Ltd. Avenue Supermarts operates the supermarket chain DMart.
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Radhakishan Damani Getting richer Amidst Lockdown?
According to the Bloomberg Billionaires Index, the net worth of Radhakishan Damani has surged 5% in 2020 to $10.2 billion, making him the only billionaire with gains among the 12 richest Indians.
As the nation went into a 21-day lockdown, the consumers scrambled for the essentials and hoarded goods leading to the shares of Avenue Supermarts, which contributes to nearly all of the wealth to Damani’s net worth, to shoot up 18% this year. According to some experts the supermarket chain can be placed in a category of a multibagger being a top retail player. It also happens to be among the top picks for many domestic brokerages.
Why is D-Mart Profiting Amidst the Lockdown?
Radhakishan Damani’s wealth swells at a time when the stocks have shaved more than 32% off the net worth of his fellow billionaires Mukesh Ambani and Uday Kotak on fears that the pandemic will gut economic growth. Currently, the company has 196 DMart stores and expects to open 30 stores every year through its cluster approach.
DMart known for its thrifty cost structure, focuses on value retailing and offers a wide range of fast-moving consumer products, general merchandise and apparel. The supermarket chain specialises in its no-frills products, negotiating hard with its vendors and avoiding any advertising expense.The experts say the supermarket chain offers significant discounts compared to e-commerce, modern trade (~6%) and general trade (~18%), which would drive revenue growth.
Angel Broking said in a note, “The DMart chain offers a considerable amount of discount when compared to e-commerce platforms. The operating margin is higher compared to its peers due to the company’s low-cost structure.”
Experts say that the coronavirus outbreak impact will be minimal on Avenue Supermart citing its non-discretionary nature of the business and a capital-efficient business model. Avenue Supermarts’ and Damani’s future looks bright as long as the supply chain for India’s fast-moving consumer goods is not disrupted. With the transportation under lockdown as well, any extension of the lockdown can potentially empty out D-Mart’s shelves.
Big Bazaar, Hyper City Not Profiting As Much?
Vikraman P.N. of Finnoviti Consulting Pvt said that there are very few listed retailers that are better placed than Avenue Supermarts to offer ‘a hedge in this crisis.’ He additionally said, “They cater to the rising demand for consumer staples and they have used their cash flows over the years to invest in a robust supply chain.”
D-Mart’s rivals have not benefited as much under the same circumstances.
Future Group, which runs India’s second-largest retail chains by revenue operates chain stores such as Big Bazaar, Future Retail, Hyper City, Food World among others. The company has over 1,300 stores across the country. The shares of its publicly-traded retail unit nosedive 80% this year amid mounting debt woes.