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Radhakishan Damani Portfolio

Radhakishan Damani Portfolio
by 5paisa Research Team 18/10/2021

In a way Radhakishan Damani’s wealth creation has been synonymous with D-Mart (Avenue Supermarts). That is true and D-Mart alone accounts for  over 97% of the total portfolio value of his holdings. However, Damani is also known to be one of the most astute value investors as some of his recent acquisitions like India Cements have shown.

As of the close of September 2021, Radhakishan Damani held 14 stocks in his portfolio with a market value of Rs.230,830 crore as of 15th October. Here is a snapshot of his top holdings in rupee value terms.

Radhakishan Damani's portfolio as of Sept-21:

Stock Name

Percentage Holding

Holding Value

Holding Movement

Avenue Supermarts

65.2%

Rs.224,747cr

No Change

VST Industries

32.3%

Rs.1,869cr

Increased in Q2

India Cements

21.14%

Rs.1,402cr

No Change

Sundaram Finance

2.4%

Rs.646cr

No Change

Trent Ltd

1.5%

Rs.626cr

No Change

United Breweries

1.2%

Rs.556cr

No Change

3M India Ltd

1.5%

Rs.434cr

No Change

Blue Dart Express

1.5%

Rs.227cr

Reduced in Q2

Metropolis Healthcare

1.6%

Rs.218cr

No Change


Avenue Supermarts alone accounted for 97.3% of the total portfolio and the top 3 stocks consisting of Avenue Supermarts, VST Industries and India Cements jointly accounted for 98.8% of the overall portfolio of Radhakishan Damani

Stocks where Radhakishan Damani added stake in Q2

Let us look at the fresh addition of stocks to the portfolio of Radhakishan Damani in the Sep-21 quarter. There was increase in holdings in just 1 stock during the September quarter. He increased his stake in VST Industries, the Hyderabad based cigarette manufacturer, by 210 bps from 30.2% to 32.3%. At 32.3%, Damani now holds one-third of VST Industries and as much as its global promoters, Raleigh Investments.

Check - Radhakishan Damani Portfolio - June 2021

What stocks did Radhakishan Damani downsize in his portfolio?

Mr. Damani has been a focused long term investor and not known to churn his portfolio too often. In the Sep-21 quarter, There was just one stock in which he cut his stake i.e., Blue Dart Express. He cut his stake in Blue Dart Express by 20 bps from 1.7% to 1.5% during the September 2021 quarter. In all the other holdings, his stakes have remained the same.

Radhakishan Damani Portfolio Performance over different time periods?

In the case of Damani, looking at his portfolio prior to March 2017 may not add much value as the stock of Avenue Supermarts was only listed on the bourses in March 2017. Prior to that, his listed portfolio was very small. We will look at 3 different time periods to evaluate the portfolio of Radhakishan Damani.

a) Over the last one year period i.e., between Sep-20 and Sep-21, the value of his portfolio increased from Rs.97,326 crore to Rs.230,830 crore. This 137% appreciation in one year was largely driven by Avenue Supermarts with India Cements doing its bit.

b) Over a 3 year period i.e. between Sep-18 and Sep-21, the value of his portfolio showed accretion from Rs.63,628 crore to Rs.230,830 crore. That is compounded annual growth in portfolio value of 53.65% over the last 3 years.

c) We also look at his portfolio since the listing of Avenue Supermarts in 2017 i.e. between Mar-17 and Sep-21. The value of his portfolio showed accretion from Rs.30,316 crore to Rs.230,830 crore. That is compounded annual growth in portfolio value of 57% over the last 4.5 years.

Also Read: 

Stock holdings of top Stock Market Investors

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Penna Cements gets Nod for Rs.1,550 Crore IPO

Penna Cements gets Nod for Rs.1,550 Crore IPO
by 5paisa Research Team 19/10/2021

Hyderabad based Penna Cements, which had filed DRHP with SEBI for its proposed IPO about 2 months back, has secured IPO approval from SEBI. It can now go ahead with the IPO and can take up the next steps like filing the RHP with the Registrar of Companies (ROC), doing the road shows and fixing the IPO dates as well as the price band for the issue.

The IPO of Penna Cements will be for Rs.1,550 crore. This will comprise of Rs.1,300 crore by way of fresh issue while Rs.250 crore will be way of offer for sale (OFS) wherein the promoters will hive off part of their stake in Penna Cements to the public. PR Cements, the holding company of Penna Cements, will offer its shares in the OFS.

Out of the fresh issue proceeds of Rs.1,300 crore, Penna will use Rs.550 crore for repaying debt. A sum of Rs.105 crore will be allocate for capex at its KP Line 2 project. Penna will invest another Rs.80 crore in upgrading its raw grinding cement plants. Finally, a total of Rs.240 crore will be used to set up waste heat recovery plants at 2 locations.

Penna Cements currently has a total of 4 integrated cement plants and 2 grinding units that are spread across the states of Telangana, AP and Maharashtra. Its current cement making capacity is 10 million tonnes per annum (MTPA) and as per its ongoing expansion plan, the capacity will increase to 16.50 MTPA by the year 2024.

For the Mar-21 quarter, Penna Cements had reported top line revenues of Rs.2,476 crore and net profits of Rs.152 crore implying; net margins of 6.14%. The profits had spurted by over 6-fold yoy due to robust cement prices. This is the second major cement IPO in the year 2021 after Nuvoco Cements of the Nirma Group raised Rs.5,000 crore in Aug-21.

Cement stocks have been in the limelight of late due to robust demand and higher cement prices. Cement demand is expected to grow at 7% CAGR over next 5 years and the key to leveraging this opportunity is capacity and reach. Interestingly, Nuvoco was the first cement company IPO after a gap of almost 14 years. We should hopefully see more of them now.

Also Read:-

List of Upcoming IPOs in 2021

List of Upcoming IPOs in October 2021

Upcoming IPOs to raise Rs.45,000 Crore in Oct-Nov

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Reliance Allowed to Seek Creditor Nod for Future Group Deal

Reliance Allowed to Seek Creditor Nod for Future Group Deal
by 5paisa Research Team 19/10/2021

In an interesting development, the NCLT Mumbai Bench permitted Reliance Retail Ventures to call for an Extraordinary General Meeting (EGM) to seek approval of its creditors and shareholders for the Future group merger deal. The NCLT Mumbai Bench also ruled that the objections raised by Amazon were premature and could be dealt with later.

The Rs.24,713 crore merger deal between Future group and Reliance Retail Ventures had run into legal wrangles after Amazon had objected to it. Amazon has an indirect stake in Future Retail due to its 49% stake in Future Coupons. Amazon’s contention was they should have been given the first right of refusal on account of the non-compete clause.

Check - Reliance Takes Over Future Group; So What is the Big Deal?

This ruling of the NCLT is all the more interesting because on 28-Sep, the NCLT had permitted six of the Future group companies to seek approval of creditors and shareholders via EGM for the proposed restructuring of companies ahead of the merger with Reliance Retail. However, since the Supreme Court final order on the subject is still pending, the NCLT has underlined that this is just a preparatory step ahead of the final Supreme Court order.

As the next step, the Future group companies will hold their respective EGMs between 10-Nov and 14-Nov while RRVL will hold its EGM on 30-Nov. The merger will still be subject to the final verdict of the Supreme Court in this subject. Future group companies and Amazon are parties to the litigation, which is pending with the Supreme Court.

Post the merger deal announcement in Aug-20, Amazon had approached the Singapore International Arbitration Centre (SAIC), which had asked for the merger to be put on hold till the final verdict. Future had objected to the jurisdiction of the SAIC, but the Supreme Court has set that debate to rest by ruling that Future group is bound by the SAIC decision.

Under the terms of the merger deal, Future Retail, Future Consumer, Future Supply Chain and Future Lifestyle Fashion will first merge into Future Enterprises. While the retail and wholesale business will be transferred to a subsidiary of RRVL, the logistics and warehousing business will be directly transferred by Future group to RRVL. 

Post the deal, Future group will repay its debt, but will be only left with a handful of businesses, including the 2 insurance joint ventures.

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Domestic Air Passenger Traffic Grows by 5.45% in September 2021

Domestic Air Traffic Grows by 5.45% in September 2021
by 5paisa Research Team 19/10/2021

If Aug-21 seemed like a good month with over 67 lakh passenger flying domestically, Sep-21 has done even better. The Sep-21 figure was higher than the August figure by 5.45% at 70.66 lakh passengers. These numbers were reported by the Directorate General of Civil Aviation (DGCA), which puts out monthly passenger traffic numbers.

On a YoY basis, the passenger traffic for Sep-21 was up by 79%, but that may be a tad misleading as the corresponding month of Sep-20 was an exceptionally tepid month wherein the flying percentage was much lower. In September, flights were allowed to operate at 85% of pre-COVID capacity as compared to just 72.5% in Aug-21.

There have been a number of factors for this surge in passenger traffic, apart from the higher flying ratios permitted and the higher PLF. One reason was the pent-up demand or the revenge spending as it is called. Also, the festival travel has shown a surge in the month of September and flying for non-business purposes was quite robust in Sep-21.

If you consider the 9 months period between Jan-21 and Sep-21, then the total passengers ferried stood at 531 lakhs. This is about 20.5% higher than the passenger traffic in the first 9 months of year 2020. Again, this is not strictly comparable since the period between March 2020 and May 2020 was a virtual aviation washout due to flying restrictions.

It may be recollected that in Jun-21, the flights were forced to reduce the flying to just 50% of pre-COVID capacity to limit the spread of COVID 2.0. However, that has now been raised to 100% in October. That should result in the PLF or passenger load factors getting back to the 85% plus levels, which is where airlines can once again hope to return to profitability.

Check - Ministry of Civil Aviation allows Airline Companies to Fly with 85% Capacity

The overall aviation industry is likely to benefit from this demand surge. For Sep-21, Indigo Airlines had a commanding market share of 56.2% while Air India, Go Air, Spice Jet and Vistara all had market share of 8-9% each. Air Asia had a share of around 5.5% in Sep-21. The big challenge for other airlines will now be to take back their market share from Indigo.

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Policybazaar gets SEBI Approval for its Rs.6,017 Crore IPO

Policybazaar gets SEBI Approval for its Rs.6,017Crore IPO
by 5paisa Research Team 19/10/2021

SEBI has given its approval for the Rs.6,017 crore IPO of PB Fintech. Incidentally, like in most cases, this is another case of the digital brand being better known than the promoting company. PB Fintech is the company that owns and operates some of the marquee digital brands like Policybazaar and Paisabazaar. The IPO is expected around the last week of October with Post Diwali listing.

PB Fintech is targeting valuation of around $7 billion for the entire property. In rupee terms, that would translate into a starting IPO market cap of around Rs.53,000 crore. Policybazaar is a digital platform that allows uses to select the insurance policy that is best suited to them based on a variety of parameters that customers can specify. 

Policybazaar not only offers a digital platform to research and compare insurance policies from different originators, but it also enables transaction fulfilment through the portal itself. Paisabazaar, another property of PB Fintech, is into arranging of loans from leading financiers for customers based on a digital evaluation of credit needs and credit scores.

The Rs.6,017 crore IPO will comprise of a fresh issue of Rs.3,750 crore and an offer for sale of Rs.2,267 crore. Out of the total OFS size of Rs.2,267 crore, nearly Rs.1,875 crore worth of shares will be offered by early investor, Softbank Vision Fund Python. Tencent of China owns 9% in Policybazaar but will not be participating in the OFS. The founders of Policybazaar will also be looking to monetize part of their holdings via OFS.

Check - Policybazaar file for IPO

The digital business is an upfront spend-heavy business and requires a lot of investment in customer development, branding etc. Policybazaar will use a large part of the fresh issue proceeds towards enhancing the visibility and awareness of the brands as well as for customer acquisition. The company will also explore organic and inorganic expansion.

Among the major early investors in Policybazaar, Softbank of Japan owns around 15.76%, Tencent of China holds 9% and Claymore Investments owns 6.26%. Interestingly, Info Edge, owns a 14.56% stake in Policybazaar. It may be recollected that Info Edge was also the largest investor in Zomato although it had only sold a small part of its holdings in the OFS.

Also Read:-

List of Upcoming IPOs in October 2021

List of Upcoming IPOs in 2021

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China’s GDP Growth Slows and What it Means for India

China’s GDP Growth Slows and What it Means for India
by 5paisa Research Team 19/10/2021

The global markets were up against negative data flows on 18th October. For the third quarter ended Sep-21, China reported GDP growth of just 4.9%. That is a full 300 bps lower compared to 7.9% GDP growth reported in the Jun-21 quarter. The two major reasons for the fall in growth were stringent anti-COVID measures and a massive power shortage.

There were some positives like the retail sales of consumer goods in China inching up to 4.4% in Sep-21 as  compared to 2.5% in Aug-21. However, this is still well below the double-digit growth in consumer good sales till the month of June. In the midst of all these news flows, Evergrande is teetering on the brink of insolvency, with global ramifications.

Check - How China’s Evergrande Could Create a Major Crisis?

The real crisis that China is up against is the power crunch. To an extent, the situation is similar to India. Both, India and China depend heavily on thermal power generation to the extent of 70% of their power needs. That means, their ability to generate power is largely dependent on coal supplies. Two things changed in the last few months.

Firstly, China has been reducing its dependence on Australian coal due to its proximity to the US and their plans for creating a QUAD alternative. Secondly, the coal prices globally have gone up 4-fold in the last 5 months due to global shortage of coal caused by surge in power demand. As China recovers, this power crunch is proving to be the stumbling block.

The Chinese government has, meanwhile, come down heavily on a number of businesses in China including chemicals, pharmaceuticals, digital plays, education industry etc. All these have dampened sentiments and impacted growth.

For India, this has some key implications. Firstly, if the slow growth is combined with the Evergrande crisis, China could be up against a hard landing. That would mean a sharp fall in demand for metals, alloys and minerals. That would turn the tables against India’s robust commodity plays and impact India’s GDP growth as well as stock market valuations.

The other side of the story is what happens to the Yuan. With Evergrande and a likely hard landing, PBOC may be inclined to let the Yuan weaken. As we have seen in 2015, that can have a deep impact on the INR.

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