Rakesh Jhunjhunwala - The Man who saw tomorrow
Best Quote: If you find an idea that you are convinced of, take a position which if proved correct makes a meaningful difference to your Balance Sheet
Rakesh started his life as a son of a bureaucrat in a typical middle class marwari family. His first Stock was purchased on borrowed money - Rs. 5,000 from his brother- in-law in 1985. RARE Enterprises Company -- a name that combines Ra from Rakesh and Re from Rekha, his wife. Although Rakesh Jhunjhunwala has been in this market since 1985 his advent into popularity and fame is just about half a decade old.
In 2001 he declared that India was well into a structural bull market, something that the US was in 1982. Jhunjhunwala loves to spot changes. He buys companies that are on the threshold of a structural boom. His major picks have been Nagarjuna Construction a company that he has bought in anticipation of the growth of infrastructure that India is expected to see over the next 5 years. Jhunjhunwala opines " India is like a runner without shows". He bought Lupin betting on the pharma outsourcing story and the real estate. Rakesh also invested in Pantaloon Retail and Titan companies that are expected to gain immensely from the development of the organized retail sector and also from the great Indian consumer boom. Jhunjhunwala says that the total jewellery market is worth Rs 40,000 crores out of which more then 90% is in the unorganized sector thereby leaving huge scope for the organized players like Titan (through its Tanishq brand) to grow.
During 1992 Harshad Mehta led the bull run. Rakesh Jhunjhunwala was able to correctly predict both the turning points of that market. Jhunjhunwala made more money betting on the down side during the Harshad Mehta break down then he did otherwise.
John Templeton, U.S. billionaire Soros, and Hong Kong investor Marc Faber, inspire his strategy of picking stocks early in a growth cycle, he says. His other role model is Berkshire Hathaway Inc.'s Buffet, 74, whose words of wisdom adorn his office walls: "Price is what you pay, value is what you get.'' The two have never met While the world was busy buying the dotcoms he bought huge stakes in the Government of India controlled companies Bharat Earth Movers Ltd ., India's largest maker of excavators, and Bharat Electronics Ltd., the biggest electronics-parts maker. Jhunjhunwala says that the public-sector companies have been his best call in the market.
Jhunjhunwala thins that India is in a structural bull market . While there could be deep-rooted corrections the rally is for real. It is based upon economic fundamentals. Bank deposits in this country is about Rs 13,00,000 crores and the total money available to equity mutual funds in India is hardly 10% of that. Indians pay an insurance premium of more then Rs 75,000 crores The additional flow into equity is about to happen. Jhunjhunwala says that the Indian markets will be driven by Indian investors rather then FII's . With an annual savings rate of Rs 7,00,000 crores the money that flows into the stock market is bound to increase. Presently only 2% of India 's population is invested into equities. This figure is bound to go up in the future.
Jhunjhunwala's bets haven't always paid off. Kolkata's Bata India Ltd. , India 's biggest maker of footwear, New-Delhi's NIIT Ltd., a computer software and training company, both failed to expand as per his estimates.
Source: Mid-day
