The Damani playbook: How a reclusive investor built a Rs 2 lakh crore empire

Indian Express

03-05-2025

While most investors chase trends, Radhakishan Damani chases value and lets the world catch up later.
In an era of algorithmic trading, social media hype, and startup billionaires, Damani has quietly built a Rs 2 lakh crore fortune rooted in an old-school philosophy: buy great businesses at fair prices, stay patient, and never compromise on quality.
He began as a stock trader in the 1980s, made significant profits by short-selling during the Harshad Mehta bubble, and then transitioned into a long-term value investor who spotted enduring winners in companies like VST Industries, Gillette, and CRISIL.
But his most iconic move came when he stepped beyond investing to build DMart, a no-frills, cash-generating retail chain that now defines how middle-class India shops.
We look at the Damani blueprint: What allowed him to see value in cigarettes and cement while others looked away? How did his investment philosophy shape how DMart was built, run, and scaled up? And what does his track record teach retail investors about conviction, concentration, and compounding?
The first bets: What Damani saw that others missed
To understand how Damani began buying stocks and why those stocks became multibaggers, you have to first understand what the Indian stock market looked like in the mid-1990s.
The aftershocks of the 1992 Harshad Mehta scam had shaken investor confidence. IPO booms had soured into penny stock busts. Foreign institutional investors were just beginning to test Indian waters, and retail investors were swinging between thrill and trauma.
Momentum stocks, steel, cement, infra, and PSUs were the flavour of the season. The market loved stories, not numbers. Stock prices moved on rumour, not results.
In the middle of this chaos, Damani made a counterintuitive choice: he started buying FMCG stocks.
Gillette. Colgate. HUL. Nestlé
In a noisy market obsessed with 'fast money,' Damani was already thinking in terms of steady compounding. He wasn't looking for stocks that could double in 6 months, but he was looking for businesses that wouldn't lose money in 10 years.
At the time, large consumer companies were viewed as boring. Safe, yes. But slow. Their earnings were predictable, margins stable, but growth wasn't exciting. They rarely made headlines — and rarely attracted traders.
But to Damani, that was the whole point.
These were high-quality franchises with:
Brand monopolies (Gillette had over 70% of the shaving market)
High gross margins and low capital intensity
Cash flows that exceeded capex every single year
And most importantly, pricing power — the ability to pass on inflation without losing customers
They also had deep distribution systems, owned by multinationals, and led by professionally run, non-promoter management. In a market full of promoter-led companies with opaque accounting and debt-fuelled growth, Damani found comfort in governance and stability.
And he understood something that few retail investors did then: India's middle class was expanding. Slowly, yes, but structurally. Urbanisation, consumer credit, and lifestyle upgrades were beginning to shape demand in categories like toothpaste, shampoo, razors, and packaged food.
So while the market obsessed over cyclical sugar stocks or speculative infra plays, Damani quietly bought consumer staples at sensible valuations, content with 12-15% earnings growth, knowing that over time, compounding would do the heavy lifting.
He wasn't chasing alpha. He was underwriting durability.
CRISIL and 3M India: The outsiders
Around the early 2000s, he began adding companies like CRISIL and 3M India. Again, not the kind of names retail investors or even brokerages covered heavily.
CRISIL, at the time, was primarily a credit rating agency, a niche business. But Damani understood that as India's banking and NBFC sector scaled up, so would credit. And wherever credit expanded, rating would become mandatory. This meant CRISIL's revenue was both growing and recurring like a subscription. The costs were low, the moat was regulatory, and the competition was minimal.
3M India, meanwhile, looked like a conglomerate no one could explain. Adhesives, medical devices, car care, Post-it notes, all under one roof. But Damani looked past the complexity and saw the pattern: a premium-pricing business, backed by global IP, in categories where quality mattered more than price. 3M wasn't a volume play, it was a margin play. Again, it ticked the box of low capex, low receivables, and strong brand recall.
HDFC Bank: The 'Pedder Road' of Indian banking
Among Damani's early investments, few were as prescient or as simply explained as HDFC Bank.
At the time he began buying, the bank's market cap was barely Rs 400 crore. It was a fledgling private sector institution in a market dominated by lumbering public sector banks like SBI, which commanded scale, visibility, and retail trust.
Most investors saw HDFC Bank as too small, too new, and too conservative to matter. But Damani saw something else: clean books, a conservative culture, and the DNA of compounding.
When asked why he preferred HDFC Bank over the bigger PSU banks, Damani reportedly gave an answer that became legendary among market insiders:
' Dharavi, Dharavi hota hai… aur Pedder Road, Pedder Road. Aage jaake HDFC Bank ka bhaav dekh lena.' (Dharavi is Dharavi and Pedder Road is Pedder Road… just wait and watch where HDFC Bank ends up.)
He wasn't picking based on size. He was picking based on location and long-term livability, such as quality of assets, not quantity. In his view, PSU banks might have more branches and legacy muscle, but they were weighed down by inefficiencies, political lending, and bad governance. HDFC Bank, by contrast, was small but pristine.
He held the stock for years. And true to form, the market eventually caught up to the value. What started at a Rs 400 crore valuation is now a multi-lakh crore giant, widely regarded as one of the finest private banks in Asia.
DMart: The investor who built the perfect stock
By the early 2000s, Damani had done what most public market investors dream of: He had made his money. But more importantly, he had built his worldview.
He now knew what made a business great: predictable cash flows, pricing power, clean execution, capital efficiency, and most critically, trust. So when he began thinking about his next move, he didn't look at hedge funds or flashy tech bets. He looked at something far more basic: groceries.
And just like that, the investor who had quietly accumulated shares in HDFC Bank and Gillette, who had held on to tobacco and toothpaste, now began setting up his retail chain.
But this wasn't a pivot. It was a natural progression — Damani wasn't abandoning investing. He was now applying it.
He launched DMart in 2002 with two small stores and a decade of research. He had spent the late '90s running Apna Bazaar franchise outlets not for profit, but to learn. He understood inventory turns, vendor margins, and customer psychology. What he saw in those years informed what would become the core of the DMart model.
And, like all his investments, he built it to last.
The investment thesis behind a retail business
If you strip down DMart to its core, you'll find that it runs on the same logic as a value stock Damani would buy:
Don't overpay for assets: DMart owns 90% of its stores. It buys land and avoids leases, knowing that rental inflation can destroy long-term margins.
Don't chase growth for optics: It expands slowly, only when unit economics make sense.
Keep capital allocation clean: It has virtually no debt. Cash flows are reinvested, not squandered.
Prioritise efficiency over aesthetics: No glossy showrooms. Just low costs, faster stock turns, and minimal inventory waste.
Create a moat through trust, not tech: Suppliers trust DMart to pay on time. Customers trust it to offer the lowest prices. That flywheel beats any fancy app.
In short, he built DMart like he would invest in it.
And the results speak for themselves. In a sector where everyone else burned cash, DMart made money.
When Avenue Supermarts listed in 2017, it wasn't just the biggest retail IPO in Indian history. It was the ultimate validation of his approach: the investor had built a business that even he would struggle to buy at a fair price today.
VST and India Cements: Two sides of the same Damani coin
Not every Damani investment is a household name like DMart. Some of his most powerful lessons lie hidden in two unassuming, old-economy businesses: VST Industries and India Cements. Both were out of favour when he bought them. But to Damani, they offered what he values most: asymmetry – limited downside, and the possibility of outsized long-term returns.
VST Industries: The dividend machine that everyone ignored
In 2000, cigarette stocks were unloved. The industry faced regulatory overhangs, social backlash, and rising taxes. Institutional investors avoided it. The media ignored it. And retail had no interest in a company that didn't 'grow.'
But Damani didn't buy VST for growth. He bought it for cash flow.
VST, a Hyderabad -based maker of regional cigarette brands, had three things going for it:
Steady volume sales in its core market
High margins, thanks to pricing power and low competition
And most importantly, an 8-10% dividend yield at the time
It had zero debt, limited capex needs, and a parent in British American Tobacco (BAT). Most saw stagnation. Damani saw predictability.
And when a takeover battle broke out between Damani and ITC (reportedly with tacit support from BAT), the stock briefly became front-page news. Damani tried acquiring a controlling stake through an open offer. He didn't succeed. But he walked away with a 20%+ stake in the company.
Then he did what very few investors do after a failed control play: he held on. For over two decades.
The result:
VST's dividend income alone more than paid for the stake.
The stock went from under Rs 100 to over Rs 3,000.
Damani's stake compounded quietly to over Rs 1,000 crore — all without him ever running the business.
VST was classic Damani: no hype, no rush — just quality, mispriced.
India Cements: When he played the cycle, then walked away
Fast forward to 2019.
The cement sector was in trouble. Demand was sluggish, capacity was underutilised, and India Cements, a once-formidable South India player, was struggling under debt and falling margins. Most investors were staying away.
Damani, however, started buying. Quietly, and then aggressively. By mid-2020, as Covid crashed markets, he owned over 20% of India Cements.
Why? Because even in its worst years, India Cements had real assets — functioning plants, limestone reserves, and physical infrastructure that would cost multiples to rebuild. More importantly, Damani knew that cement is a cycle. And when capacity tightens, prices jump. Operating leverage kicks in. Margins swell.
He wasn't betting on a turnaround led by management brilliance. He was betting on mean reversion, asset value, and the chance that someone bigger might want in.
And that's exactly what happened.
In mid-2024, after holding the stock for just over four years, Damani sold his entire 23% stake, not to retail, not on the open market, but in a strategic block deal to UltraTech Cement, India's largest player.
Estimated exit value: Rs 1,900 crore+
Damani had turned a deep-value, low-visibility asset into a blockbuster special situation – timed entry, quiet accumulation, and a clean, premium exit to a strategic buyer.
India Cements showed another side of Damani — the opportunist who doesn't need permanence, just clarity.
What retail investors can learn from Damani
Look closely at the way Damani's built wealth across public markets, real estate, and consumer retail, and you'll find a surprisingly replicable blueprint.
Not in scale. But in principle.
Whether it was buying Gillette in the '90s, HDFC Bank in its infancy, holding VST Industries for over two decades, spotting the asset value in India Cements, or building DMart from the ground up. His decisions followed the same compass: clarity over complexity, patience over panic, and quality over narrative.
Here's what stands out:
1. Buy simplicity, not sophistication
Damani didn't bet on moonshots. He bet on toothpaste, cement, savings accounts, and groceries — categories with deep demand and shallow hype. He understood that businesses serving basic human needs tend to endure, and that endurance matters more than excitement when it comes to compounding.
2. Invest like an owner — even if you're not one
He studied businesses like an insider. He held them like a promoter. In VST, he collected dividends like he ran the treasury. In India Cements, he read the cycle like an industry veteran. Even before launching DMart, he ran Apna Bazaar franchises, just to learn. That owner mindset is what gave him the conviction to hold when markets moved on.
3. Size up when the odds are tilted
Damani doesn't take 0.3% positions in his high-conviction bets. He owns 67% of DMart. He owned over 20% in VST and India Cements. But these bets came after years of thought, research, and price discipline. He reminds us that concentration without preparation is gambling but with preparation, it becomes focus.
4. Let compounding work — Don't interrupt it
The real secret in Damani's style isn't stock picking. It's holding. He sat on the winners long past the first 2x. He gave businesses the time to prove his thesis right — and to let time multiply the returns.
5. Exit without emotion
When the thesis broke, he walked. Quietly. No averaging down, no press conferences. That was true with some of his PSU bets, and it was true when he sold India Cements to UltraTech. For him, an exit isn't a mistake, it's just a completed bet. The clarity to leave is as important as the conviction to enter.
He didn't just buy stocks. He understood businesses. And then perhaps more importantly, he waited. Because the secret to getting rich in markets isn't just knowing what to buy. It's knowing what to hold, what to avoid, and how long you're willing to sit with clarity while the rest of the world panics.
That's the Damani blueprint. And for investors willing to learn, it's quietly revolutionary.
Note: This article relies on data from the annual report and industry reports. We have used our assumptions for forecasting.
Parth Parikh has over a decade of experience in finance and research and currently heads the growth and content vertical at Finsire. He holds an FRM Charter along with an MBA in Finance from Narsee Monjee Institute of Management Studies.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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