The Economic Times
English EditionEnglish Editionहिन्दीગુજરાતી
| E-Paper
Search
+

    Jhunjhunwala gives away his multibagger hunt formula

    Synopsis

    Jhunjhunwala has about 40 years of experience in equity investing. He became a regular on Dalal Street when the bluest of blue chips would command a market valuation not more than Rs 100-200 crore. Today, the highest market-cap for a stock has risen to Rs 12,00,000 crore!

    A bureaucrat’s son, Rakesh Jhunjhunwala entered the market when he was 18. He says he always believed that capitalism would prevail in India and he saw the stock market as the true temple of capitalism.
    NEW DELHI: Ace investor Rakesh Jhunjunwala swears by Indian equities, even when many of his friends have looked elsewhere – from Romanian real estate to Dubai condominiums and New York commodities.

    “When the food at home is so tasty, why go out and eat,” the ace investor, often referred to as the Big Bull of Dalal Street, told at a Mumbai event. According to attendants of the event, Jhunjunwala said he thought Indian stocks are one of the best places to invest right now.

    Jhunjhunwala has about 40 years of experience in equity investing. He became a regular on Dalal Street when the bluest of blue chips would command a market valuation not more than Rs 100-200 crore. Today, the highest market-cap for a stock has risen to Rs 12,00,000 crore!

    Asked what it takes to identify a 200-bagger, Jhunjhunwala shared a three-point strategy: "First, think individually. Then, give out your opinion. Hold shares for a longer time. It all depends on guts, persistence and attitude of the risk taker. Even in today’s market, I am buying the most battered stocks.”

    The Big Bull said he saw the downward risks and the upside potential in this market. “I am buying the most unpopular, most battered stocks, but then who knows...,” he said.

    The investing veteran, often called Dalal Street’s own Warren Buffett, cited the example of Escorts, which turned a multibagger in just five years. “A lot of people were concerned over the Escorts management. But looking at its balance sheet, I was convinced that the upside potential was far more than downward risks,” he recalled.

    "The price at which I was buying, the downside was protected. The management was going to change. But the tractor business was quite profitable, and it is not an easy market. The more people turned their faces, the more I was convinced. I bought 12.5 million shares and I got a 10 bagger,” he said.

    Jhunjhunwala said all it takes is a gutsy nature and backing of one’s thoughts with conviction.

    The Big Bull also said he bought his first property only in 2005 and always used to reinvest all his stock gains in equity itself. He also said his trading leverage never exceeded 10 per cent, while his general leverage never exceeded 2-4 per cent of his portfolio value.

    He said India is among a few economies in the world where the quantum of growth has been huge. “The share of household wealth in equities is still marginal at 3-4 per cent compared with 33 per cent in the US,” he said.

    The ace investor said since price equals EPS (earnings per share) multiplied by valuation multiple (PE), EPS of Indian stocks will rise as the economy grows and PE (valuation) will move up as new money comes in.

    A bureaucrat’s son, the Big Bull entered the market when he was 18. He says he always believed that capitalism would prevail in India and he saw the stock market as the true temple of capitalism. “I knew the direction, but nothing about the compounding,” Jhunjhunwala recalled.

    “All democratic societies eventually decide what is in favour of them. When the times comes, things do change,” he said. “There are billions, trillions of dollar money waiting to be invested in India.”

    Rakesh Jhunjhunwala said India is a capital-starved nation. “It needs foreign external money for investment. If demand comes back and India's create ease of doing business and rules of law, the money that India will receive will surprise many,” he said.

    “What we need is steps to promote businesses,” the billionaire investor said. He said the challenging economic condition or corporate earnings growth in last five years have been led by many factors. “They included the cleansing of the Indian corporate sector, which put Indian companies on the defensive. Things like coal mine allocation and later banning them affected business sentiment. Besides, India had an over-investment cycle, which needed to be corrected.”

    “I personally feel that the government has now understood the urgency. Labour laws have been changed in many states and public sector disinvestments are going on in a big way,” he said.
    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)

    Also Read

    25 Comments on this Story

    rav t16 days ago
    also add DHFL ,Mandhana retail,where he lost his shirts
    raaj till17 days ago
    along with hard analysis u ned luck also s if u ae stuck with people like Rana . wadhwan ( DHFL) like shadow /shady banking
    Caba San17 days ago
    For 10 year period 2010 -2020.....NPS gave a RETURN..... (1) SBIPF -9.4% (2) LICPF-9.3% (3) UTIPF-9.4%......Which is LESS than SCSS of SBI and PO.....Where are MULTIBAGGERS of Stoxk Market hiding?
    The Economic Times