Remembering 'Big Bull' Rakesh Jhunjhunwala's insights on stock picking

August 14 marks Rakesh Jhunjhunwala's second death anniversary. The man with a midas touch started off his journey in stock markets while still in college with a capital of just Rs 5,000.

Rakesh Jhunjhunwala was admired by many investors and traders for his astute investing skills and for guiding young traders throughout his life. The ace investor was often referred to as India’s Warren Buffett for his investment acumen and the phenomenal wealth creation from betting on equities.

August 14 marks the second anniversary of the veteran stock market investor's untimely death -- he passed away on this day at the age of 62.

However, Rakesh Jhunjhunwala's investment philosophy continues to guide many aspiring investors in the stock market.

The man with a midas touch started off his journey in stock markets while still in college with a capital of just Rs 5,000. Decades later in 2024, that meagre investment has yielded crores in networth. Rakesh Jhunjhunwala's enterprise, now with his wife Rekha Jhunjhunwala, publicly holds 26 stocks with a networth of over Rs 48,406 crore as of June 30, 2024, as per data from Trendlyne.

In one on his earlier address to investors available with CNBC TV18, Jhunjhunwala had said that while selecting a company, the investors should see if the business has the ability to scale and what kind of profit it can generate over 4-5 years' horizon.

"I find a very big difference in the valuation what I have today and what I can have 4-5 years later. I do a constant re-examination of business model and capital allocation because business models can undergo change," he had said.

He further added, "Titan maybe the market leader but tomorrow intense competition could emerge so you have to constantly examine the opinion or the set of assumption under which you made the investment." His firm publicly held 4.73 crore shares in Titan as of June 30, 2024, as per Trendlyne.

Jhunjhunwala advised investors to examine how companies are allocating capital and distributing profits, and see if they are using surpluses in the right direction.

There can be quarters when a company has very high profit, but investors must examine all the reasons behind the profits and check if those are sustainable. He also emphasized on the choice of asset class for the investors, with an example "if someone invested in gold in 1980, sold it to buy the Nikkei in 1989, and selling it to buy the Nasdaq, the returns would have been multi-fold compounded for three decades," he said.

Full Interview: Rakesh Jhunjhunwala

Born on July 5, 1960 in a Rajasthani family, Jhunjhunwala grew up in what was then known as Bombay, where his father worked as a Commissioner of Income Tax. He had graduated from Sydenham College and thereafter enrolled at the Institute of Chartered Accountants of India.