Mumbai: Radhakishan Damani, the promoter of D-Mart parent Avenue Supermarts Ltd, will sell 1% stake in the company or 6.2 million shares to ensure that the firm meets the minimum public shareholding norms.

In reaction to the news, D-Mart shares tumbled 5.24% to Rs1,416.85—the biggest loss since 18 April 2017.

The stock has jumped 373.86% from its offer price of Rs299 since its debut in March 2017. Mutual funds had trimmed their stake in the company last month, and it was one of their top sells as they locked in some gains after the stellar run.

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The fantastic stock performance has meant that Damani ranked 168 in the global Bloomberg Billionaire Index, and would be the ninth-richest man in India, after people such as Adani Group chairman Gautam Adani and Serum Institute of India founder Cyrus Poonawalla.

“Avenue Supermarts is a structural story, in fact the best in the industry. It may look very expensive right now," said R. Sreesankar, co-head of institutional equities at Prabhudas Lilladher Pvt Ltd.

“However, it is the stock to play the retail story in India. This may not be the best price to enter it but it has always been expensive," added Sreesankar.

Under rules prescribed by the Securities and Exchange Board of India (Sebi), a publicly listed company is required to maintain a minimum public shareholding of 25%. The listed companies have to ensure the minimum public shareholding in three years from the time of listing.

Apart from promoters selling through secondary market, a company can also adopt other methods to meet this requirement such as issuing shares to the public through prospectus, offer for sale of shares held by promoters to public through prospectus, and institutional placement programme.

The 1% stake sale in the D-Mart parent by Damani will take place between 21 May and 14 June, the company said in a notice to BSE.

Promoters held 82.2% stake in the company at the end of March, while the public held 17.8% stake in the company. Of this, Damani held the most—53.56% stake—while his brother Gopikishan Damani had a 39.41% shareholding.