Ace Rakesh Jhunjhunwala investor journey, views on startup valuations

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Veteran stock market investor Rakesh Jhunjhunwala died on Sunday morning after suffering cardiac arrest.

Often referred to as “Indian Warren Buffett” and the “Big Bull” of Indian markets, Jhunjhunwala’s net worth was $5.8 billion, according to Forbes.

He had recently teamed up with former Jet Airways CEO Vinay Dube and former IndiGo director Aditya Ghosh to launch Akasa Air, India’s new budget carrier. The airline began commercial operations this month with an inaugural flight from Mumbai to Ahmedabad.

Opinions on the evaluation hangover

Rakesh Jhunjhunwala has often said that startup valuations are absurd.

In 2019, while addressing the TiECON Summit in Mumbai, addressing a gathering of startup founders eager to understand how one can become a billionaire investor, Jhunjhunwala said, “Focus on the long term and create value for investors and employees. He added that Indians need to be more original in their thinking when setting up businesses.

During an interview with Bloomberg Quint in July last year, Jhunjhunwala pointed out that the current enthusiasm around startups is temporary and that the future holds something completely different.

Asked about skyrocketing startup valuations, he said, “I don’t want to go to the startup party because the hangover only lasts two days.” According to him, business models and sustainability matter more than valuations.

Its portfolio includes companies such as Star Health, Titan, Rallis India, Escorts, Canara Bank, Indian Hotels Company, Agro Tech Foods, Nazara Technologies and Tata Motors.

In total, he held a stake in 47 companies at the end of the June quarter. Titan, Star Health, Tata Motors and Metro Brands were among its largest holdings.

He suggested that startups need to focus on a business model that produces money.

Emphasizing the sustainability of a business, he said capital is not important; it’s about the business model. “I’m only interested in business models,” Jhunjhunwala said.

“If the race is on, the tortoise wins, not the hare,” he said.

Turning to investors betting on startups, Jhunjhunwala said investors were misled by the valuation numbers. “People are ‘way too far’ too optimistic about how quickly these companies will make money,” he said.

He also believed that it is not investors who build the great companies of the world. “A business needs opportunities for corporate governance, technology, frugality, the ability to change,” he added.

A billion dollar ride

Born on July 5, 1960, Jhunjhunwala grew up in Bombay, where his father worked as an income tax commissioner. He graduated from Sydenham College and later enrolled in the Institute of Chartered Accountants of India.

He then chose Dalal Street instead of verifying the accounts. In 1985, Jhunjhunwala invested Rs 5,000 in capital. By September 2018, this capital had swelled to Rs 11,000 crore.

The veteran investor made his first big profit in 1986 when he bought 5,000 shares of Tata Tea at Rs 43 and the stock rose to Rs 143 within three months. In three years, he earned Rs 20-25 lakh.

Jhunjhunwala was chairman of Hungama Media and Aptech and served on the board of companies such as Viceroy Hotels, Concord Biotech, Provogue India and Geojit Financial Services. His private equity trading company, Rare Enterprises, is named after the first two initials of his name and that of his wife, Rekha, who is also a stock investor.

An investor with a Midas touch, Jhunjhunwala was the 36th richest man in the country.

(With PTI entries)

Edited by Affirunisa Kankudti
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