On the day I meet him, Rakesh Jhunjhunwala is front-page news. He has just told ET Now, a new financial news channel, that he thinks India’s Sensex index will touch the 19,000-point mark before the end of this year. That would be a 30 per cent rise from today’s prices, even during global economic turmoil, and it has won him the top spot on both the channel and the website of the Economic Times, its sister paper.
This is exactly the kind of call that made Mr Jhunjhunwala the star of India’s bull run between 2003 and last year’s market crash, and the most sought-after commentator on India’s budget unveiled last week. He was one of the few businessmen willing to publicly criticise a budget many felt would be bad for investors.When I am ushered into his office, his bulky frame is propped up in front of three screens of flickering red and green stock prices. His eyes do not leave the constantly updating quotes for more than 15 seconds at any point in the interview. It seems that I am lucky to get even half of his attention.
I ask him what has prompted his new phase of bullishness. “Markets are dynamic, they’re constantly changing,” he says as he watches those markets morph on screen. “They’ve got reversed now. I think that, when at last confidence comes back, a lot of other things will come back.”
In 2005, when the Sensex had tipped above 5,000, Mr Jhunjhunwala declared it could hit 25,000 within five to six years. That brash prediction, not to mention his larger-than-life persona, helped him become a fixture on India’s financial news networks. And he came close to seeing what some considered a ridiculously bullish forecast come true. At the end of the bull run in January last year, the Sensex had passed 21,000.
Since the market crash, the 31 publicly traded stocks of which Mr Jhunjhunwala holds more than a 1 per cent stake lost about 60 per cent of their combined value, even underperforming the Sensex.
I ask him if he ever doubted his judgements on the India story. “Well, I examined my thoughts again,” he concedes. “But I could never lose my conviction about India’s growth. I held on to my stocks, very much so.”
Doing so has resulted in him losing much of the paper wealth that propelled him into the Forbes Rich List last year. “I have much less than what most people think, but much more than I need,” he tells me.
Mr Jhunjhunwala is frequently dubbed “India’s Warren Buffett”, but in many ways the two could not be more different. The Oracle of Omaha is a teetotaller and a non-smoker. Mr Jhunjhunwala constantly alternates between his preferred 555 cigarettes, sweet chewing paan and Indian snacks. He is known for his taste for cigars and Blue Label whisky.
While Mr Buffett still lives in the same house in Omaha he had when he began, Mr Jhunjhunwala has moved his family into a plush flat in Mumbai’s upmarket Malabar Hill neighbourhood. The only time he breaks away from his trading screens is when he shows me a slide show of his mountain-top mansion in the Mumbai hill station of Lonavla, one designed by the Indian architect Nitin Killawala.
Like Mr Buffett, however, Mr Jhunjhunwala is primarily a value investor and both are willing to share their investments and the rationale behind them with the public.
When Mr Jhunjhunwala invests, it is generally in unloved small and mid-cap stocks, such as Geometric, Zen Technologies and Aptech in the software sector, consumer goods companies such as Agrotech Foods and Titan watches, and service companies such as Tops Securities and a school management firm. None is really a household name.
“Rakesh is a classic bottom-up stock-picker, who gets into companies with strong managements and/or compelling long-term stories and then holds them through market cycles,” says Shankar Sharma, the managing director of First Global, who has been seen as the bear to Mr Jhunjhunwala’s bull. “I can’t see too many flaws in his make-up as a long-term investor.”
Mr Jhunjhunwala says his fascination with balance sheets began young. “I had a childhood love for stocks,” he says. “My father used to invest a bit and I used to talk about it with him in the evening. I was a very curious child, so I was always quizzing my dad. He said, ‘Instead of quizzing me all the time, why don’t you find out yourself’?”
This enchantment with profit-and-loss figures continued into his studies as a chartered accountant at Mumbai’s main business school, Sydenham College. He always knew he wanted to be in the market, although it was a business frowned upon by his family.
His father was a bureaucrat, a commissioner in India’s income tax department. The Jhunjhunwalas are from Rajasthan’s Marwari business community, traders in goods rather than on the Bombay Stock Exchange, which at the time was dominated by Gujaratis. “I initially wanted to become a broker, but I didn’t have the capital to be a broker, so I started investing,” Mr Jhunjhunwala says.
He entered the market in 1984, aged 25, with a 5,000-rupee investment (equivalent to about Dh1,000 today) in the iron-ore exporter Sesa Goa. Just three years later, he had turned that into 10 million rupees.
A quarter of a century later, Mr Jhunjhunwala has an office in Nariman Point, India’s financial district, where the walls bear line drawings of Mr Buffett, George Soros, John Templeton, Peter Lynch and other legendary investors, each accompanied by a few of their pithiest quotes written out in italic script. There is also a prayer room occupied by Ganesh, Lakshmi and other Hindu deities. “We pray that this room remains the best used part of our property for our future prosperity,” a sign reads.
Each of them, from Lynch to Lakshmi, have made him the businessman he is today, Mr Jhunjhunwala says. “Markets are my life, they’re my passion.” He does take time off, but not without his BlackBerry. However, he protests that looking at his BlackBerry is the second thing he does every day. The first is kissing his daughter.
Before his partner Utpal Sheth joined in 2004, Mr Jhunjhunwala was a one-man army, operating out of tiny offices in the warren-like streets around Dalal Street, Mumbai’s historic stock market district.
“We’ve gone from being ‘the wild east’ to one of the world’s most developed markets,” he says. “It’s more organised, more regulated. As the size and the breadth of the market increases, it will be more difficult to manipulate.”
Since the dark days of March, India’s Sensex has rallied almost 50 per cent, its biggest quarterly gain in 17 years. It is starting to look as if Mr Jhunjhunwala’s prediction of a long bull run may have been right, albeit one interrupted by a global financial crisis he could never have predicted.
Asked to list his reasons to be positive on India, Mr Jhunjhunwala veers into delphic, almost poetic language: “That India is a tortoise, slow but sure; that the forces that are driving India are irreversible; that in India everything is bottom up, not top down; and that India is biological.”
Asked what he means by “biological”, he says: “What is India? India is organised chaos, and therefore growth has never come through order, always through chaos. What’s driven India’s growth is the democracy, its demographic advantage and the tolerant nature of the Indian people.”
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