“My strike rate is not high. I would have made 20 private equity investments by now, but 10 of them would be duds, dead and written off,” the Big Bull told market veteran Madhu Kela and ETNOW’s Nikunj Dalmia at the Times Network India Economic Conclave 2021.
Jhunjhunwala, often referred to as India’s own Warren Buffett, said five of his private equity investments delivered beautifully while another five performed moderately.
Jhunjhunwala is a Partner & CEO at Rare Enterprises. His equity portfolio of listed companies, where he owns over 1 per cent stake, is worth over Rs 16,300 crore at current market prices. Forbes pegs his fortunes at $4.2 billion.
“I made investments in Metro Shoes in 2006, Concord Biotech in 2009 and in Inventurus Knowledge Solutions in 2009. I started investing in small companies, but my investment horizon was far longer. For example, Metro’s turnover then was just Rs 80 crore. Last year, it was over Rs 1,400 crore,” he said.
Jhunjhunwala said he also did some difficult deals, which nobody could ever do, including the Star Health Insurance, which took 18 months to go through. “There were some problems with the promoters, and the valuations too were high,” he said.
The Big Bull said he did not accept a job and plunged into the stock market with just Rs 5,000 to invest. “What I made was because of risk taking, which is in my habit now,” he said.
Dalal Street veteran Madhu Kela, who runs India-focused boutique investment vehicle MV Venture, recalled a day last year when he had called Jhunjhunwala to ask his view on BHEL, only to find the Big Bull had already bought the stock in hefty volumes.
“Never go against the trend,” Jhunjhunwala said. “If you know that the capital cycle is going to pay off, you look for opportunities. And when you have one such in a battered stock, do not wait and seize the opportunity,” he said.
Jhunjhunwala said one must leverage extremely only when the market is giving you unbelievable opportunities. “But remember one thing: leverage has no mother, no emotion and no sympathy,” says he.
“In March, I sold Rs 400 crore worth of shares in four trading days. I was leveraged and my instruction to the dealer was don’t come back without selling the stocks,” he recalled.
The Big Bull is betting big on India. He said the reforms undertaken in the last 3-4 years would give India double-digit growth.
After 12-13 per cent of GDP growth projected for next year, India would start off with 6-7 per cent a year after and will probably add one percentage points growth every year thereafter.
“What evolves biologically is permanent,” the Big Bull said, adding that “India is at the threshold of second generation reforms and is one rare spot of growth. Low cost of capital will lead to dollar inflows into the country,” he said.
Jhunjhunwala said India’s ‘muhurat’ for growth has come and not just this decade, but this century will belong to India. “I will be disappointed if India does not reach double-digit growth in the next 5 years. The Indian market is recognising this fact very well,” he said.
The Big Bull said 98 per cent of his wealth is in equity and he is looking for returns in the 15-24 per cent range over the next 3-5 per cent. “We may see a strong commodity bull run that may last 5-7 years. I am positive on steel,” he said.
Jhunjhunwala said that the cyclical upturn will last 5-7 per cent and it would be like a buffet party, where every sector will perform. The Big Bull also believes PSU bank stocks have the potential to multiply over the next 5-10 years.
He said he is bullish on PSU banks as valuations are attractive and fundamentals are supportive of growth. “PSU privatisation is very important and holding on to reforms is key,” he said.
The ace investor said he does not support the farmers’ agitation and felt that whatever reforms are decided, one should go ahead with it despite the political opposition or western interest.
He advised grooming entrepreneurs to be in an industry that is growing and stay alert to the size of opportunity. “Have good corporate governance, technology, be frugal and patient,” he said.