How did Rakesh Jhunjhunwala make his billions?

The Big Bull of Dalal Street, India’s Warren Buffett, Man with the Midas Touch, the Eternal India Optimist, King of the Stock Market – the legendary investor Rakesh Jhunjhunwala carried many nicknames. His death on Sunday at 62, prompted an outburst of tributes from businesspersons, politicians and investors big and small who followed his insights and stock bets.

Jhunjhunwala’s investing career started in 1985 with 5,000 rupees of borrowed money. At the time of his death, his net worth is estimated at $5.8 billion or 46,000 crore rupees.

His first big profit came from the 5,000 shares of Tata Tea he bought in 1986. In three months, Jhunjhunwala tripled his money. There was no looking back after that.
In the late 1980s, the qualified chartered accountant made a leveraged bet on iron ore exporter Sesa Goa which brought him his first crores. He bought the stock at 25-26 rupees and sold the holding in tranches, riding the stock till it reached 2,200 rupees. His investment in Tata Power also paid off at the time.

Jhunjhunwa’s affinity for Tata group stocks continued. In fact, Tata’s Titan Company made him the most wealth. He first purchased the jewellery and watch maker’s shares in 2002.

His other stock holdings from Tata group were Tata Motors, Indian Hotels Company and Tata Communications. He also multiplied his investments several times in stocks such as Lupin and CRISIL.

His biggest holding at the time of death remained Titan, accounting for over Rs 11,000 crore or one-third of disclosed portfolio value.

Although famous for his bets in listed stocks, Jhunjhunwala did not shy away from taking bigger risks through private market investments He reaped a windfall when three of his portfolio companies, Nazara Technologies, Metro Brands and Star Health and Allied Insurance, hit the public markets last year.

A Business Standard analysis showed that 76% of the value of Jhunjhunwala’s disclosed portfolio emerged in the last seven years after he turned 55 and the biggest gains came in the past two years. The value of his disclosed portfolio rose from 8,431 crore rupees in March 2020 to 30,652 crore rupees in August 2022.

Raamdeo Agrawal, Chairman & Co-Founder, Motilal Oswal Financial Services says, he was an ‘economic philosopher’, liked making predictions. Jhunjhunwala was a terrific bargain picker and he always tried to help his friends, be it with money or guidance, says Agrawal.

Rakesh Jhunjhunwala was astute not just as an investor who picked stocks for long-term holding but as a trader too.

In 2018, he said he made a lot of money by shorting stocks and one of his biggest fortunes came from short selling in 1992 when the Harshad Mehta scam roiled the markets.

Rakesh Jhunjhunwala had his misses too in stocks, like Dewan Housing Finance Corporation, DB Realty and Mandhana Retail

While some of his private investments paid off handsomely, In March last year, he acknowledged that half of his 20 private equity investments by then had turned out to be duds.

His last bet was Akasa Air, in which he held a 40% stake. Motilal Oswal’s Agarawal described this bet as the ultimate bargain, as Jhunjhunwala made the most of the discounts offered by the aircraft manufacturer.
Jhunjhunwala made his last public appearance at the inaugural flight of Akasa, on August 7th.

Among India’s notable philanthropists, Jhunjhunwala’s faith in the India story and bullish commentary on the economy and markets was visible till the very end.

Such was his infectious optimism for India that Jhunjhunwala told a business news channel six days before his death, that regardless of global developments, Indian markets will grow, but at a slower pace. According to him, India was entering a golden age.