Rakesh Jhunjhunwala: The incorrigible India optimist

Ace Investor Rakesh Jhunjhunwala Passed Away

Despite a net worth of over $5 billion in assets, he would call himself a middle-class investor, as Rakesh Jhunjhunwala never forgot his past. The son of a civil servant came to the market in 1985 with almost nothing and turned it into a fortune.

A Forbes India story had last year traced the journey of the man known as the Warren Buffett of India. It traced how he made a killing by investing in Titan. And how he planned to give away a large portion of his wealth to charity from 2025 onwards.

It is the authenticity of this story that made it so powerful. Investors hung on to every word he said on markets and the economy. Company managements regularly pitched to him in the hope that he would invest with them. They knew only too well the value of having him as an investor. As a market watcher had once said: “One listens to him and comes away thinking, ‘If he can do it why can’t we?’”

Jhunjhunwala confessed he was not as infallible as people thought he was. His mistakes are less well-known than his successes. “I am not afraid of taking a loss. I only learn from mistakes,” he said sitting in his sea-facing 15th floor office at Mumbai's Nariman Point.

It’s a simple office where the walls are peppered with investing aphorisms. “The market can remain irrational longer than you can remain solvent,” says one by economist John Maynard Keynes. The coasters have imprinted on them sayings from the likes of value investing legend Benjamin Graham.

Inside people pour over trading charts, spreadsheets and incoming result announcements. To a casual observer, there’s a sense of camaraderie that fosters collaboration. Occasionally someone would enter to show Jhunjhunwala something or to take his approval.

With his wealth more than doubling to $5.5 billion, Jhunjhunwala moved 18 spots on the 2021 Forbes India Rich List to rank 36. His large holdings, Titan and Tata Motors, did well. But even these moves were eclipsed by his trading gains. “I’ve had the best trading months of my life in the last 18 months. I hope it continues,” he said last year. What he left unsaid was that given the India story, ‘his best was probably yet to come’.

BULLISH ON INDIA

While investor appetite waxed and waned over the years, the Big Bull remained an incorrigible India optimist. Over the years, he’s been out there talking about what makes him so bullish — the skillset of its population and its favourable demographics being the two main reasons. Now, more than any time in the past, he believes India’s time has come. “India’s economic story could go into a burst,” he said once. “We have $1 trillion in savings and only 8 crore demat accounts. Where will money from the remaining 90 crore go?”

The economic reforms of the last few years — the introduction of the RERA, GST and the Insolvency & Bankruptcy Code — have given India a solid base to take off from. One result of these reforms is the clean-up of the business environment and the premium placed on business done without cutting corners. Promoters have seen first-hand the premium placed on good business in the form of increased valuations.

In addition, Corporate India balance sheets have deleveraged considerably and now have the ability to spend. “We have a credit cycle behind us and a capex cycle ahead of us. Tax collections will go through the roof,” he said. Add to that a reformed public sector and a privatisation push and the India story remains strong.

A Narendra Modi supporter, Jhunjhunwala had made a presentation to the prime minister where he outlined a few suggestions for reforms. “He (Modi) understands business and I believe he is determined to do reforms,” he said, adding that his continuation is key to India achieving high rates of growth. When reminded that the last decade has seen disappointing growth, he dismissed it. “The past is not an indication of the future.”

Sceptics would wonder if they have discounted too much. But not Jhunjhunwala. “We have gone from 7,500 to 18,500 in one stretch, so we can always have a correction, but I don’t think we will have a reversal,” he said. “Remember the Dow never had a more-than-10 percent correction in the 1990s. It is possible we could be in the same situation.” He conceded that there could be a few, very few, pockets of the market that could have discounted too much. But then again he said, “Who are we to judge overvaluation? It is an intangible.”

To dispel any notion that he was becoming cautious, he said with his trademark bullishness: “I am still investing. If you give me Rs 500 crore today, I will invest it in a day.”

One such trade happened a little over a month before the story was written last October when, on the morning of Invesco asking for an extraordinary general meeting at Zee Entertainment, Jhunjhunwala scooped up a large stake in excess of Rs 200 crore, according to a filing on the National Stock Exchange. “A merger at a good valuation results in consolidation and that is always good,” he said.

GIVING IT AWAY

Jhunjhunwala started thinking about what to do with his vast fortune after he turned 60. He postponed his plans of giving it away to 2025, but said, “The intention to give it away has now expanded.”

He planned to donate Rs 5,000 crore to his foundation, RARE Family Foundation, between April and December 2025. Thereafter, he would value his portfolio on March 1 every year and give away 2 percent till he gets to Rs 25,000 crore. He wanted his foundation to work in various areas—nutrition, surgeries for children with heart problems and a sports academy.

The foundation, as he had planned, would have a team with a chairman and the Jhunjhunwala family as the principal donor. “Ten percent (of donations) will be spent as per the discretion of the Jhunjhunwala family, while 90 percent will have to be passed by the advisory board and then spent,” he put it down.

Towards the end, Jhunjhunwala sounded more philosophical about end and his role in the world. He was more conscious that success was transient and temporary, and that he had to make an attempt to lead a healthier life.

He had started spending more time with his family and children, vacationing at various places, and at home, reading and watching movies. While his workday would begin when the markets opened, he started going to office around mid-day. In the past, he had said several times that he would wind down his trading activities. “I am always thinking about it, but haven’t done it. I think it should happen in a year or two,” he had said a year before he breathed his last.