What is Rakesh Jhunjhunwala’s investment strategy?

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Story Of Rakesh Jhunjhunwala: The Warren Buffett Of India

FinnovationZ Convey

7 Min Read    |    May 04, 2021

Rakesh Jhunjhunwala is a famous Indian businessman, investor, trader and owner of Rare enterprisesAlso known as “Warren Buffett of India” he is one of the most famous and respected investors of India. 

According to Forbes,  in 2020 he was the 54th richest person in India.  The story of this investor with a Midas touch is even more interesting. 

So, hop on to read about Rakesh Jhunjhunwala, his life story and most importantly the investment strategies he chooses to follow. 

Rakesh Jhunjhunwala Story 

Rakesh Jhunjhunwala was born on 5 July 1960 in a very middle-class family in Mumbai. His father was an Income tax officer who had a keen interest in the stock market. As a child, Rakesh Jhunjhunwala used to hear the conversations of his father and his business partners about the stock market and investment. Soon he started to find those conversations intriguing and started to ask questions to his father out of curiosity. For instance, he too used to ask his father- why shares go up-and-down? His father always clarified all those doubts in detail. 

After completing his schooling he went on to complete his graduation from Sydenham College of Commerce and Economics, Mumbai. After securing a degree in Chartered Accounting in 1985, he asked his father about starting a career in the stock market. His father welcomed his decision but told him a few important things that continue to help him in his career till today. 

His father said to him to remember the following 3 majors lessons:

  • Always do what you are interested in.
  • Never come to my friends and me to ask for money.
  • Be fearless. 

When Rakesh Jhunjhunwala started his career, he had only Rs 5,000 in the pocket. Around the same time his brother, who was practising as a chartered accountant landed a great deal and client. The lady (client) had huge capital and wanted to use it to gain significant returns through some kind of investment. 

But, at that time, the bank used to give 10% returns on a deposit. On the other Rakesh Jhunjhunwala offered to give 18% returns per year to the lady and he got Rs 2,50,000 from her to proceed with the investment. He also took Rs 5,00,000 from another person, and that’s how one by one he arranged the initial capital. In the beginning period of his career, Rakesh earned Rs 8 to Rs 10 lakh rupees by trading.

But, everything was not a cakewalk, he faced hurdles too. 

Turning Point of his Career

The year 1988-89 was special for him.  In 1988, he bought 2.5 lakh Sesa Goa shares at a price of Rs 28 each and another 2.5 lakh shares at the cost of Rs 35 each. Within six months, Sesa Goa price increased to Rs 65 rupees.

 In 1989, the government of VP Singh was sitting at the centre with Madhu Dhanwati as the Finance minister. The 1989 Union Budget changed a lot and it became the career turning point to Rakesh Jhunjhunwala. Every common investor and stock marketer thought the budget of Madhu Dhanwati would concentrate on social things, not on the business industry. 

On the other side, Rakesh Jhunjhunwala had a different thought and believed that VP Singh, Prime Minister who was Thakur and had an excellent knowledge of business would never introduce such a budget that would hurt the business industry. 

Then, the assumption of Rakesh Jhunjhunwala turned out absolutely right as on the day of the budget Madhu Dhanwati announced a great budget which was supportive for all businesses. Before this announcement, Rakesh Jhunjhunwala net worth was Rs 2 Crores and after five months of budget net worth increased to Rs 40-50 Crores. 

Rare Enterprises Company

Finally, he established Rakesh Jhunjhunwala company called Rare Enterprises, an asset management firm through which he manages his own portfolio. Rare stands for the beginning letter of Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala. 

In 2002-2003, he purchased Titan Company (a big jewellery brand) shares for Rs 4.5 per share average price. Titan stock increased to Rs 80 then fell to Rs 30 after some time. Due to this, the value of Rakesh Jhunjhunwala portfolio deprived to over 300 crore but, he didn’t sell even a single share in the price of Rs 30. 

Because he believed that Titan would definitely grow.

Today, the price of Titan shares is around  Rs 1400 rupees. Therefore, an investor should have patience in the stock marketing business, and here we noticed the quality in Rakesh Jhunjhunwala. 

Rakesh Jhunjhunwala’s Investment Strategy 

Rakesh Jhunjhunwala tips for investment are listed below- 

Patience- 

Not only in Titan but there are also various companies where he showed his excellent patience level. In 2005, he sold Rs 27 crores of Crisil shares and bought a flat in Malabar Hill, Mumbai. He always suggests having patience as a good investor.  

Learn from mistakes- 

After some time, he sold that flat at a significant price. He says that flat would have cost Rs 80-90 crore but if he would not have sold the Crisil shares then today its value would be more than 700-800 crore. He never regrets any of his mistakes but always learns from them. According to him, the market is supreme that never goes right or wrong; and the only credit goes to you. So, whenever you make mistakes, accept them first, then learn from them and keep going. If you never admit your fault, you would never learn.

Experience and skills - 

He believes that experience is one of the wheels of investment, and we get knowledge from our mistakes. This is one of the successful reason for Rakesh Jhunjhunwala investment. 

Be active- 

He says that a reasonable investor should be an active person. He is known for his long-term investment, but he is also an active trader. He strengthens his capital base at the beginning of a career with help of trading. He says that trading keeps him alert.

Passion- 

He says that you should be passionate about your goal. He didn’t make stock marketing his profession because he wanted to become a famous well creator, but because of his passionate behaviour towards stock marketing, and he enjoys it. 

Vision- 

He says that to get success in any area, you need to have the vision to achieve that. His journey of Rs. 5000 to an impressive net worth shows his excellent vision.

Rakesh Jhunjhunwala has always been the right time-right decision player. You have to select the right stock at the right time, and he has this quality to lead him in investing.

Rakesh Jhunjhunwala’s investment also revolved around searching many multi-baggers stocks and engaged with many companies such as Crisil, Praj Industries, Lupin, Titan etc that gave him a massive value of interest. Rakesh Jhunjhunwala believes in the growth story of India. 

He never gets attached emotionally to any stock and suggests this to everyone. He purchases stocks to sell them. When he found that there is a need to hold any stock for the long term, he does that. 

Rakesh Jhunjhunwala Net Worth 

Currently (as of April 2021) the net worth of Rakesh Jhunjhunwala stands to be around $410 crores. Last year, on his 60th birthday, 5 July 2020, he announced to donate 25% of his total wealth.  According to him, the stock market is a very interesting business. Now, he is also a movie producer of movies like English Vinglish, Ki & Is and Shamitabh. Today, he is involved in the board or committee members with several companies too. 

How did Rakesh Jhunjhunwala Make his money? 

His passion, vision and real taking ability towards the stock market led him to success. His profit from 8-10 lakh in 1986 to today's 410 crores of net worth was an incredible journey. He always invests in the right stocks and built strategies to sell them at the right time, and that’s how he earned fame and money in his career. 

Hope you found this blog interesting and if you wish to know detailed information about his journey as an investor then click here


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