In any discussion over the success of equity investing in India, the story of Rakesh Jhunjhunwala needs to be told. The man is a stock market legend and is one of the biggest bulls the country has ever seen. A Chartered Accountant by qualification, he is dubbed as the “Piped Pier of Indian Bourses” and has made it to the Forbes’ List of Billionaires in 2002.
He hailed from a simple background of a middle class household and a discussion about stocks had always held a certain charm for Jhunjhunwala. This is his journey.
Since early childhood, the roots of stock trading were borne while listening to his Income Tax officer father discussing about stocks with his friends. He was given the permission to get into stock broking only after finishing his graduation which he did from Sydenham College, Mumbai. He is a self-taught investor and his first learning came from the price of Gwalior Rayon’s stock which his father showed him would fluctuate the next day. This sparked a curiosity and a motivation for a lifetime.
His father had forbidden him from borrowing money from his friends and had also put up a condition that young Rakesh would not receive any money from him for stock investment.
Rakesh borrowed Rs 2.5 lakhs from his brother’s client and made his first investment into 5,000 shares of Tata Tea at a rate of Rs 43 per share which he later sold at Rs 143 per share.
Thus, in 1986, in his early trade itself, he had made half a million rupees and then went on to make Rs 25 lakhs in the course of next 3 years.
After this initial success, there was no stopping Rakesh Jhunjhunwala. He was an early investor in Sesa Goa which he purchased at Rs 28 per share and increased his holding at Rs 35 per share. He finally sold it when it reached Rs 65 per share, thus making handsome gains in the process.
Similar to Sesa, he also purchased shares of Titan Company Limited early at an average price of Rs 3 and still holds it today. Presently, his holding has increased to 7.5 crore shares and 8.5% of the total shares of the company.
His other multi-baggers have been Lupin, Crisil, Aurobindo Pharma, NCC and many others. He is also on the Board of companies like Innovasynth Technologies (I) Limited, Bilcare Limited, Provogue India Limited, Concord Biotech Limited and many others.
He runs his investments through his company called RARE – a combination of his wife’s and his first half of first names – Rakesh and Rekha Jhunjhunwala. He attributes his success to starting early and entering the stock market when the Sensex was 150 and today it is hovering above levels of 35,000! He is a short-term trader as well as a long-term investor. He uses a lot of technical analysis for short-term calls but always bets on well managed companies for long-term investments. As he puts it – Trading is what him the capital to invest into long-term.
He even holds on to overvalued stocks if the company has a sound business plan according to his analysis. His homework is more about when to finally sell the share.
Decoding Trading Style
Many blogs and analysts have tried to assess his approach and rationale behind his successful investments. They read carefully into each of his remarks and interviews to understand his thinking. Some of the things he has revealed about his approach are as follows –
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- “I had no capital when I came to the markets, and no father gifts and no father-in-law gifts. So I had to earn the capital to invest. How do you invest if you don’t have the capital? And I got the capital by doing future trading.”
He has quoted this as an importance of initial capital. He is a day trader as well as futures trader. Understanding the importance of margin and how much capital might be required for your trades.
- “Markets are about money, but markets are also about knowledge. Markets are also about egos; markets are also about the satisfaction of having been proved right. Especially, when that right is from an original thought and not from a guided source or following somebody.”
He has rightly quoted the importance of first hand assessment of the market and stocks without following “profitable tips” blindly. No person has ever become successful without spending adequate time researching the market and making his mistakes. Jhunjhunwala himself admitted in an interview that he reads a lot and makes it a point to read “The Economist” as soon as it is out.
- He has well demonstrated the importance of patience in investments. In the downfall of the stock market in December 2011, his portfolio fell by 30% but he kept his patience and remained disciplined to navigate out of it slowly in the coming years.
- His other strategy is buying and staying invested in small cap stocks which have good potential. He has held on to smaller stocks like Sesa Goa and Lupin when they were really low in price and has kept pursuing his research to exit from them at the right price.
Rakesh Jhunjhunwala’s 2019 Portfolio
As per a website the following 27 stocks are part of Rakesh Jhunjhunwala’s portfolio. His top holdings are Titan, Crisil, and Lupin. His overall portfolio is Rs 19,960 crores. He holds 804.66 lakhs shares in Titan worth Rs 6,456 crores, 78.83 Lakh number of shares of Lupin worth Rs 645 Crores and lastly holds 40 Lakh CRISIL shares worth Rs 762 Crores.
|Company Name||% Holding|
|Agro Tech Foods||7.09|
|D B Realty||2.06|
|Dewan Housing Fin||3.19|
|Geojit Financial Services||1.48|
|Multi Comm Exc||3.92|
|Prozone Intu Properties||2.06|
|Jubilant Life Sciences||1.57|
We hope this short insight into one of the most celebrated investors in India will help in your own investing journey.