.png)
The Harshad Mehta scam concluded with the question of who would take the mantle of 'The Big Bull' and 'sobriquet (Big Bull)'- suited Rakesh Jhujhunwala as he was a keen investor who bought stocks and shares with the firm belief that they were going to grow in value. He was inspired by his father, a tax officer.
When Jhunjhunwala was only 15 years old, he first learned about the stock market by listening to his father discuss it. It piqued his interest, began researching stock price changes through newspaper articles and questions to his father. He read every annual report he could get his hands on. He decided to face the "challenge of making a profession by investing and trading in stocks" after earning his degree and passing his chartered accountant examination. While giving him advice on the market, his father never gave him any funds to invest and forbade him from contacting people for loans.
Career Beginnings & Popular Investments
Rakesh decided to take on the task of turning investing and stock trading into a career in 1984. He finished his Chartered Accountant (CA) education during this time.
Jhunjhunwala began trading stocks in the 1980s, a college student days, starting with a sum of Rs 5,000 and eventually amassing a net worth of Rs 45,000 crore ($5.8 billion). Tata Tea was his first investment and increased from Rs43 to a whopping Rs143 in a short span of three months after he purchased it. He sold this stock and made enormous profits. His shares in Tata Tea generated gains of almost 25 lakhs over the following three years, which was also his first significant profit. In 1986, he made his first profit of 5 lakhs followed by Rs. 20–25 lakh in profit between 1986 and 1989.
In the 1990s, Jhunjhunwala established his legend through the choicest of his investments and inspired millions of Indian investors to participate in the stock market and amass wealth. International investors put him as a benchmark when they anxiously watched the economy open to the world. He had high hopes for India's long-term progress and proved in repeated feats; persuading others to believe in the potential of India.
The 2000s began with the dot-com bubble- he remained optimistic about the consumer pattern of the nation. At this juncture, he bought shares of Titan and later succeeded in the jewelry business. By 2021, his enormous investment in the Titan Company has currently valued at Rs.7,294.8 crore. His investment increased to Rs. 11,000 crores by 2022. Another high-value investment of his remained in Crisil, a firm to assist investors and bankers in determining creditworthiness. He had an 8% stake in Crisil (Rs.1,300 crore).
The 2010s brought with it a new demand in terms of fashion products and online gaming. The rise in per capita income and urbanization resulted in new demand for a young generation. The purchase of shares of Metro Brands (footwear) and Nazara Technologies (gaming) turned successful, while the latter saw a rise in the last few years given the demand for games had increased dramatically.
The Mathematical Equation held sacred
During his investing days, he paid close attention to the formula that changed his life in every aspect.
Earnings per share (EPS) x price-earnings ratio (PER) = Price.
Stock prices skyrocket when both EPS and PER gain, which determine price, are high. He said that it was difficult and more challenging to forecast the formula's second component, or PER compared to the first part of the formula, EPS, which is 'primarily science and partially art.'The most challenging, aspect is understanding/predicting PEs, which is also the most important component of successful investing.
Three factors influence EPS: the accounting principles used, the cash flow profile of earnings, the return on invested capital, or efficient use of capital. He said that internal factors such as reward histories, earnings predictability, risk models, anticipated growth opportunities, and management integrity perceptions all play a role in determining PER.
While EPS differed between companies, PER was influenced by the company and its externalities. Internal factors influence PER include the company's reward track record, profit predictability, risk model, projected growth opportunity, and management's perceived honesty. Understanding the causes and conditions that lead to these profits is more important than projecting absolute profitability.
He thought that while short-term market corrections are possible, they are rare and short-lived in bull markets. He once asserted that before a bull run, markets typically shake up investors.
Other Ventures
He founded Hungama Digital Media Entertainment Pvt. Ltd. (1999) and went on to produce a few Bollywood films like English-Vinglish (2012), Shamitabh (2015), and Ki & Ka (2016).
With a 40% interest ($35 million), he invested in and helped form Akasa Air. In a time of significant industry upheaval, he entered the Indian aviation scene. The past two years have been challenging for the aviation business because of Covid, high fuel prices, and a lack of human resources, leaving players with significant losses and substantial debt loads. Some athletes who were having financial difficulty have already reduced their travel on some routes where they cannot compete. The airline already runs three Boeing 737 Max 8 fleets, and it has made an extra order for 72 aircraft, which are due to arrive by 2027.
During the three decades of economic liberalization, the economy has experienced several local and foreign shocks. It was only natural for investors to give in to uncertainty at each level, take their profits (or losses), and depart. Jhunjhunwala, whose confidence in India's growth trajectory was unshakable to the end, was the champion the Indian markets needed. By doing this, he established an environment where domestic and international investors have come to believe in and support Indian businesses and entrepreneurs. He always believed in "Trying and failing is better than never trying at all".
Rakesh Jhunjhunwala's legacy continues to live on.
Comments