Rakesh Jhunjhunwala's biggest investments that made him the Big Bull of Indian stock market.

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Often referred to as India’s own Warren Buffet, Rakesh Jhunjhunwala is a self-made billionaire and a perfect example of a common man with exceptional wisdom and knowledge who made it big in the stock market.

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Born in Mumbai on the 5^th of July, 1960, Rakesh Jhunjhunwala developed his early interest in the stock market by listening to the conversations between his father and his friends regarding the stock market. His father, an income tax officer, noticed the curiosity of his son and gave him adequate knowledge of the stock market.

After graduating from Sydenham College, Rakesh Jhunjhunwala entered Dalal Street with a small sum of Rs 5,000 in the year 1985, and by September 30, 2018, that small capital had swelled to Rs 11,000 crore. Rakesh Jhunjhunwala came to be known as the ‘Big Bull’ of Dalal Street and he founded RARE Enterprises – a privately owned stock trading firm named from the first two initials of his and his wife Rekha Jhunjhunwala’s names.

The intellect and risk-taking ability of Rakesh Jhunjhunwala earned him huge profits in the stock market and his bets on certain stocks made him good profits as well as earned him the title ‘Big Bull’ of Dalal Street. He is also a certified charted accountant. Let us see some of the main stocks that put Rakesh Jhunjhunwala on top.

Also read our article on Top 5 Big Bulls of Indian Stock Market.

Some Stocks That Made Rakesh Jhunjhunwala

The Tata Tea Share

The first profit of this ‘Big Bull’ was when he bought 5,000 shares of Tata Tea at Rs 43 per share and their price rose to Rs 143 per share just within 3 months, giving him over three-times profit, which earned Mr. Jhunjhunwala Rs 5 lakhs in the year 1986.

Early Investments That Made the Difference

Let us talk about blue-chip stocks for a minute. These are the stocks of well-established, financially sound corporations, which give guaranteed returns but are a little expensive.

Between the years 1986 to 1989, Jhunjhunwala made some pretty big investments in some of the blue-chip companies one of which was Tata Power Ltd. The share value of Tata Power Ltd rose to Rs 1,200 during those years, and altogether these blue-chip stocks doubled the assets of the big bull from Rs 20 Lakhs to Rs 55 Lakhs.

The first highly successful bet of the big bull was the iron mining company Sesa Goa (now Vedanta Ltd). Rakesh Jhunjhunwala bought 400,000 shares of Sesa Goa in two lots, 1^st lot of 250,000 shares for Rs 65 each and the 2^nd lot of 100,000 shares for Rs 150 each. 

We call it a bet because at the time there was a massive fall in the prices of iron ores and all the iron ore companies were under a lot of stress, but Rakesh Jhunjhunwala choose to invest and the gamble paid off as the value of each share rose to Rs 2,200!

Familiarize yourself with the world of the stock market by reading our article on Stock Market Basics for Beginners.

Titan Company Ltd

Around the year 2003, Rakesh Jhunjhunwala identified Titan Company Ltd and bought around 6 crore shares at an average price of Rs 3, the current share value of which is Rs 1558 (as of 1^st Jan 2021). The fact that he is still holding on to 7.5 crore shares of the company hints at his belief in long-term investment. Mr. Jhunjhunwala currently has an ‘overall’ holding of 8.45% in Titan Company Ltd.

Why did Rakesh Jhunjhunwala invest in Titan?

Titan at the time had Rs 396 crores worth of assets. Accounting for a 25% discount on the net assets, the discounted NCAV (net current asset value) per share was amounting to Rs 70.38 per share. This means that by liquidating just the NCA at a 25% discount, an investor would end up with a profit of 17%. 

Titan’s track record of revenue was exceptionally good except for the years 2001-02 and 2002-03 when the net margins dipped due to excesses and wasteful expenditure, the big bull spotted this pattern and made his huge investment which is yielding him profits till day.

LUPIN, CRISIL, and Other Top Holdings

Rakesh Jhunjhunwala bought shares of LUPIN, a multinational pharmaceutical company for around Rs 150 in 2006, the value of which now is Rs 1,002. He is currently holding roughly 70 lac shares of LUPIN Ltd.

What made the big bull invest in LUPIN Ltd?

There are several factors one has to consider before investing any kind of money and Mr. Jhunjhunwala did exactly that, he studied the company and its history thoroughly. LUPIN Ltd offered high ROE (return on equity) of 20.1% which was a very good number at the time in the market.

The other factor that caught the big bull’s attention was the company’s high revenue growth. Its revenue had grown from Rs 750 crores in the financial year 2001 to Rs 806 crores in the financial year 2002 and showed promises to continue this trend. Some other factors such as the high net current asset value per share improving the free cash flow of the company contributed to Rakesh Jhunjhunwala ’s case.

CRISIL which stands for Credit Rating Information Services of India Limited is a subsidiary of S&P Global and has been a favorite stock of Mr. Jhunjhunwala. He owns around 40 lac shares of CRISIL Ltd and the stock has generated returns of more than 3000 percent for the big bull.

The big bull has placed his top holdings in the stocks such as Mandhana Retail in which he holds a little over 12 percent and Viceroy Hotels in which Mr. Jhunjhunwala has about 12.2 percent holdings, and he has also invested 9.1 percent in Escorts.

Some of the current stocks in his portfolio include Anant Raj Ltd, Aptech Ltd, Agro Tech Foods Ltd, Autoline Industries Ltd, Crisil Ltd, D B Realty Ltd, Delta Corp Ltd, Edelweiss Financial Services Ltd, Escorts Ltd, Federal Bank Ltd, Fortis Healthcare Ltd, Firstsource Solutions Ltd, Geojit Financial Services Ltd, and some others.

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Words of advice from the big bull

Rakesh Jhunjhunwala emphasizes that his greatest knowledge of the market is gathered by making mistakes and learning from them. Here is a quote from his interview with ET:

“Short-term trading is for short-term gain. Long-term trading is for long-term capital formation. Trading is what gives you the capital to invest. My trading also helps my investing in the sense I use a lot of technical analysis for trading at times.

If the stock is overpriced, I should sell but my trading skills tell me that the stock can remain overvalued or get more overvalued. Hence, I hold on to my investments.

So, I think they complement each other in many ways but they are two distinct compartments totally.”

Rakesh Jhunjhunwala advises the investor community to not judge a stock by a one-day correction or one bad quarter but to see and analyze its performance in the long run.

Also Read: Investing expectations vs. reality: can stocks make you rich overnight?

Conclusion

Though there are a lot of Indians investing in the stock market, only a few people like Rakesh Jhunjhunwala have been able to produce consistent returns. His agenda of buying right and keeping that particular stock in his portfolio for a long time has paid him consistent profits.

Rakesh Jhunjhunwala like his investments brings his bullishness even to philanthropy. His philanthropic portfolio includes nutrition and education. He contributes to many causes such as St Jude, which runs shelters for cancer-affected children, Agastya International Foundation, and Arpan, an entity that helps create awareness among children on sexual exploitation and many other causes.

Even though the big bull has made huge profits in the stock market, he has incurred huge losses too. Detailed analysis and gathered experience have made Rakesh Jhunjhunwala stable in the market now.

Overall, the story of Rakesh Jhunjhunwala and how he came to be known as the ‘Big Bull’ of Dalal Street is really inspiring for the novice as well as veteran investors. Let us end this article with an amazing quote by Rakesh Jhunjhunwala:

“Whatever you can do or dream you can begin it. Boldness has genius, power, and magic in it.” - Rakesh Jhunjhunwala.