Rakesh Jhunjhunwala: India's Warren Buffet believed positive cash flow was sacred

Known by many sobriquets like Big Bull and India’s Warren Buffett, he started investing in the equity market during his college days in 1980s.
Billionaire investor Rakesh Jhunjhunwala. (Photo | Twitter)
Billionaire investor Rakesh Jhunjhunwala. (Photo | Twitter)

NEW DELHI: It might appear absurd when an established market investor decides to start an airline, given what the sector has done to erstwhile billionaires from Vijay Mallya of Kingfisher Airlines to Naresh Goyal of Jet Airways. But for eternal optimist Rakesh Jhunjhunwala (62), it was a calculated risk. He was sure his ‘Akasa’ would carve a niche for itself in the fiercely competitive civil aviation market.

Much before he decided to ferry air passengers, Jhunjhunwala was moving equity markets and stock prices with his conviction bets, and the loads of money he made trading/investing in the market. Jhunjhunwala passed away at the Breach Candy hospital in Mumbai on Sunday following cardiac arrest.

Known by many sobriquets like Big Bull and India’s Warren Buffett, he started investing in the equity market during his college days in 1980s. Over the next 35 years, he went on to build a portfolio worth over Rs 31,000 crore. He was among the top 500 richest people in the world, according to Forbes, with a net worth of $5.8 billion. He learnt the tricks not in any Ivy League management institute, but by going through the grind of taking investment bets some of which also failed very early in his career. Of course, being a qualified chartered accountant would have come in handy as an investor.

Jhunjhunwala made his first big buck in 1986 when he bought shares worth Rs 5,000 in Tata Tea at Rs 43 apiece. In three months, its price surged to around Rs 143 apiece. His affection for Tata stocks remained intact. Shares of Tata Motors, Indian Hotels Company, Tata Communications and Titan stayed in his portfolio even after the end of June 2022 quarter. His portfolio had about four-dozen companies. Star Health, Metro Brands, Canara Bank, Fortis and Federal Bank shares were some of the other prominent stocks he held.

Jhunjhunwala was an eternal optimist about India’s growth story

Jhunjhunwala owned a private trading company, Rare Enterprises, which derives the first two characters from his name (Ra) Rakesh and the first two characters of his wife (Re) Rekha. Conservative yet secure in his approach when it came to picking companies for investment, Jhunjhunwala believed positive cash flow is a sacred cow, the sanctity of which cannot be undermined in investing.

His time-tested approach and his portfolio are followed religiously by many. Investors tried to follow his buy and sell calls, some even tried replicating his portfolio. Known for his candour and straight talk, Jhunjhunwala minced no words while taking political stands or airing his views on sectors/companies.

He did not try to delve into sectors he did not understand, and he had famously said he did not need to invest everywhere. So, when he decided to give technology IPOs -- the likes of Zomato -- a miss, many thought the Big Bull had lost his Midas touch. Going by the performance of those stocks, we now know he got it right. He was a bigger Bull when it came to the India story.

He was an eternal optimist about the prospect of India and its economy. He had his reasons. When Jhunjhunwala first entered the stock market in 1985, the Sensex was at 150 points; he left when it is close to 60,000. In this long period, he stood firm even as contemporaries and the two other big bulls - Harhsad Mehta and Ketan Parekh - fell.

Jhunjhnwala had his fair share of controversies, too. Last year, he, his wife Rekha and eight others had to settle a case pertaining to alleged insider trading in shares of Aptech by agreeing to pay more than Rs 37 crore. In recent years, his investment in redundant companies such as JP Associates, DHFL, Yes Bank raised eyebrows. In personal life, Jhunjhnwala had a contrasting personality.

Unlike marque investors who are dressed sharply in three-piece suits, he was a guy with simple taste. People who knew him personally said he was keeping unwell for the past few months and was often seen in a private Mumbai hospital. While his immediate cause of death was cardiac arrest, he also was battling chronic kidney disease, high diabetes and obesity.

Jhunjhunwala is survived by his wife Rekha and three children. Jhunjhunwala took his one last bet in the airlines busines s wi th the recent l y launched Akasa Air – a lowcost airline. The airline took off for its first flight from Mumbai to Ahmedabad on August 7. Seven days later, its promoter took off, of course, for a new beginning.

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