A Dose of Rakesh Jhunjhunwala

Rakesh Jhunjhunwala on Future of Equity Market

Methinks every Indian Equity Investor needs a dose of Rakesh Jhunjhunwala (RJ) every few years! ~ any sooner it could be an Overdose !¬† ūüėÜ ~ just kidding !

I like the guy ! ~ right since I interacted with him when I invited him around 15 years ago at the turn of this century for interacting in an evening  Q & A session with my packed class of @ 90 participants in my Equity Portfolio Structuring and Stock Analysis Workshop at the BSE Training Institute as I thought he would add practical value & he did

“Boss ! I’m a¬†Sadak Chaap¬†! ” ¬†he had told us then as also how he had reconstructed his equity portfolio to concentrate only in a few stocks after the 2000 ICE debacle…so in a sense most of his Wealth has grown only in this Millennium in the past 15 years ~ and to his credit in Selections that were not really Blue Chip or Core

Yesterday had gone for an ¬†IMC interactive meet in Mumbai to check out if RJ has sobered & matured in his ‘manner of speak’ over the years ~ I rarely watch Stock Channels ~ don’t even have a TV in office~ ¬†so was not really conversant with how & what he delivered in his appearances though knew of his initiating big stakes in companies

I am delighted to blog he has not changed ! ~ shot straight from the hip & mouth again as he always does ” I’m a¬†satodia(translated to mean speculator)¬†¬†& investor & not an economist” ~ his investment portfolio has spread into the Alternatives of ¬†Bollywood Movie Production too with Kareena & Arjun starrer ‘Ki & Ka’ being his latest co production~ is into horse racing too and owns a few horses ~ passions perhaps where return on investments need not be measured in monies !?

Many perceive him as¬†Dehati¬†or Crude Dude for his rustic loud boorish way of speech~ but don’t let it fool you ! & he does not make any pretenses ~ he’s a CA by training & wears a fairly sharp mind

Money Talks & Crowd Laps it up all !~ many vigorously & ‘knowledgeably’ nodding in agreement

These RJ’s views & responses to questions posed should interest you :

On The Future of Equity Markets ~ Reiterates this is only the Trailer & we are going to witness a Mother of all Bull Runs.India is a thriving young Democracy with US $ 600 b in Savings every year.Equity Markets receive just US $ 50 b from this.This has to improve and it will ~ anyone ,any  doubt!?   

On Returns from Equity  ~ Ironically while his riches have been through multibagger 1000% + equity gains in concentrated high weightage stocks like Titan & Crisil he asserts that one should be happy with 18% CAGR gains and if it goes to 24% one should be really happy read more

Markets may be Freaking all out but Thursday night’s Fusion Concert ‘Restless Peace’ of Zakir Hussain,Trilok Gurtu,U Srinivas,Rakesh Chaurasia & Ajay Joglekar freaked us all out

Markets may be Freaking all out but Thursday night’s Fusion Concert ‘Restless Peace’ with¬†Zakir Hussain on the Tabla,Trilok Gurtu on Drums and what all !,U Srinivas on the Mandolin ,Rakesh Chaurasia on the Flute and Ajay Joglekar on the Harmonium and Keyboard¬†freaked us all out

‘Restless Peace’…what an interesting name to define Fusion Music !¬†It was a hop,skip and jump from my office at Shanmukhananda Hall in¬†Matunga…8 pm to 10 pm non stop on Thursday Night,December 8,2011

Trilok Gurtu on the Drums and various Percussion Adaptations was simply in his element…Flamboyant Zakir¬†demonstrated why he remains unrivalled on the Tabla…U Srinivas was mesmerising on the mandolin … Rakesh Chaurasia,nephew of Hariprasad Chaurasia was quite good on the Flute and Ajay Joglekar complemented well on the Harmonium and Keyboard¬†¬†

The Solo’s were outstanding and when Trilok entertained us with some fabulous percussion variations on a Stainless Steel Bucket filled with water or just tapping on a loud speaker in a jugalbandi with Zakir on the Tabla,we were¬†screaming for more

…and when these Musician¬†Maestros in sequence echoed Rakesh’s Flute¬†on the Theme from Clint Eastwood’s “The Good,the Bad and the Ugly’ and even¬†James Bond we were delighted…they played ‘Lotus Feet’ which is a soothing¬†‘Shakti ‘ Track that had us spellbound

…was with Friends…they thought I was asleep in the first hour !….I was actually in a spellbound trance !

Zakir Hussain is the elder son of the legendary Tabla Ustad the late Ustad Allah Rakah Khan….his brothers Taufiq and Fazal Qureshi too are Ustads in their own right…In fact earlier in the year had attended and interacted with Fazal at his Fusion Concert at the Club in February 2011…both Taufiq and Fazal were with me in school

Connected after ages with Ustad Fazal Qureshi & his Experiment with Fusion

Thursday, February 10th, 2011   

…then at 10.15 pm we moved from Fusion to No Fusion Food !….it had to be Madras Cafe at Matunga….the popular,actually legendary South Indian¬†Udipi was packed at this fairly late hour on a weeknight…Vada in Sambhar followed by Raagi Masala Dosa with their in house white butter and Mulga Pudi Powder with Oil¬†and ¬†then a lovely Bisibele Baath…Ooooh !…perfect Meal ending with two stainless steel glasses of ¬†perfect Kadak Filter Coffee..the second one really Kadak !..and a perfect tab…whole of Rs 289 for the four of us,with each having two dishes each atleast ! read more

Rakesh Jhunjhunwala……what’s he saying Now ?

Hi Rakesh Jhunjhunwala (RJ)…just caught you on the CNBC Interview on “Wealth Creators”…you’ve now acheived a cult and icon status¬† with your investments in midcaps¬†coming ¬†good and how ! Titan,Matrix Labs,Nagarjuna Construction,Mcdowell Group,Crisil…..your gains from these are now legendary….Remarkably the¬†billions have not been made in Core Scrips like BHEL,Reliance or Larsen…but in relatively smaller scrips

I have interacted with¬†you a few times at social do’s and had also invited¬†you to interact with my participants at the Equity Portfolio Structuring and Stock Analysis Workshop at the Bombay Stock Exchange Training Institute a few years ago…You had accepted graciously in a second and at very short notice….¬†and¬†had thoroughly regaled everyone¬†in¬†your patent blunt and straightforward¬† style….”I’m a sadak chaap¬†you had thundered but then gone on to¬†demonstrate¬†your grasp of economic issues vividly¬†and¬†that you were¬†fully upto date¬†on views and model portfolios of large domestic and overseas Institutional Financial Houses….it was amazing you were able to relate,connect and comment instantly with the interesting and comprehensive slides that I was showing on macro and micro issues…this was completely unrehearsed and had gone down well with the House Full Participants….your passion for stocks¬† came through instantly….you love to share your experiences and¬†are an open book really…one just has to ask the right questions¬†¬†

So it was interesting to catch¬†you on CNBC yesterday in¬† the “Wealth Creator” Interview….though thought¬†¬†the Interviewer,Mithali, could have probed¬†you better

Some Sound takeaways from this interview are tabulated below….many have been¬†a consistent mantra

  • Look for Opportunity,Competitive Ability,Scalability and Valuation when analysing a Company
  • Respect the Market…Be Responsible…know how much to stake and when to take a loss
  • Mother of all Bull Runs is yet to Come
  • Spoke to the Top managment of Titan to assess Opportunity,Competitive Ability and Scalability and then staked¬† Life on it by Investing Well in it
  • Has intensified¬†Charitable Disposition,especially In Charities that will benefit Children,particularly Girls…recollects that¬†his late Father never ever asked him how much he earned but always how much had he donated…”Daan and Dena are more important” advised his father
  • Has faith in himself and does not rely on anybody
  • Aims to live a Life so that when he is no¬† more those who come to his funeral say “This was a Good Man”¬†
  • Aims to earn maximum Income in the most Legitimate manner and donate a large percentage to Charity¬†
  • Openly confirms he has no Pretences and¬†has no other Interests other than the Stock Market
  • His Investment in “Mid-day” has not worked…he is still hopeful but scalability by “Mid-day”¬†has not¬†been acheived¬†and this has affected growth¬†
  • Clearly had a premonition of the current Financial Meltdown by October 2007
  • Was an isolated Bull in September 2001…no one listened……¬†and the Sensex ran up from 3000 to 21000 in six to seven years…the run to 21000 from 13000 inside a year was clearly too fast and an excess and was thus reversed

RJ,you look every bit as prosperous as¬†your Investments…..however couldn’t help recalling how a chubby¬†Anil Ambani had been chided by¬†a potential Overseas Investor in the 1990s when on one of Reliance’s Road Shows he was asked bluntly as to when he himself¬†was not fit how could he¬†ensure Reliance would be¬†Fit !…Anil took this to heart and¬†is now a Fitness Freak

My wife says looking at me it would be like the Pot calling the Kettle Black if I advise you to take care ! 

Look forward to interacting with you again RJ sometime soon….maybe interview you on a¬†popular TV channel…sure I can¬†draw out more from the depths of your experience and knowledge¬†for the viewing pleasure of millions to reveal the rarity of how “Wealth of Mind”and Wealth of Money” are not mutually exclusive when it comes to RJ read more

RIP S T Gerela ex GM BSE ~ gave me the best compliment till date

 

Rest in Peace now Gerela Saab  !

Mr S T Gerela ex GM of BSE passed away peacefully this morning

We had not met in years but he always remained at the top of my mind when it came to testimonials for this is what he had said to me over a decade ago,when urging me for Stock Recommendations, at one of our brainstorming sessions at our Annual BSE Training Institute Faculty Weekend Retreats , this one at The Retreat at Madh Island ,and that too in front of forty leading names of our Equity Markets like Ramesh Damani & Nilesh Shah

Mandir  may aakar Prasad na miley yeh toh ho hi nahi sakta ! 

This has got to count as one of the best compliments I have ever received till date !

Fondly called ‘Gorilla’ instead of ‘Gerela’ by some broker members of the BSE,I distinctly remember Mr Gerela quietly coming in to sit for a while at few of¬† my BSE Fundamental Equity Valuation Sessions on the 18th and 19th BTI Training Floors of the Jeejeebhoy Towers that houses BSE to see if he could catch an idea or two that I would showcase as a case study ~ he ,like so many others,had latched on to Matrix Labs Valuation in my sessions early on at Rs 25 in July 2001 and which became my second 100 Bagger ,after Wipro,by soaring 12000 % or 120 x in five years of 2001 to 2006.It since was taken over by Mylan and delisted ~ Oh ! yes even Rakesh Jhunjhunwala later entered Matrix Labs at Rs 200 picking up a million shares ,200k for wife Rekha and 800k for himself

Will always remember you Mr Gerela ~ thanks for the compliment

Strength to your grieving family to bear this loss

Equity ~Life Changers or Life Maimers ?

Equity ~Life Changers or Life Maimers ?

This Thought was inspired by a Whatsapp Forward received this morning titled Power of Equity .It listed many Life Changing Wealth Creators that grew many fold from just Rs 10000 invested in each ¬†& carried a concluding Message in Capitals ” INVEST WISELY WITH LOTS OF PATIENCE “

This was the List & I’m assuming the Years & CAGR Maths is correct with Dividends not being considered :

  1. Eicher Motors-1992 => Rs 80 lakhs
  2. Asian Paints-1986 => Rs 90 lakhs
  3. HDFC -1990 => Rs One Crore
  4. Brittania – 1985 => Rs 1.06 crs
  5. MRF – 1985 => Rs 1.10 crs
  6. BOSCH -1985 => Rs 1.20 crs
  7. Amara Raja -1991 => Rs 1.25 crs
  8. Shree Cement -1990 => Rs 2.90 crs
  9. Infosys – 1993 => Rs 3 crs
  10. Dr Reddys -1986 => Rs 10 crs
  11. WIPRO -1981 => Rs 400 crs

Cannot Argue with this Message for I’ve seen three of my Scrips,in even relatively quick time inside five years of investment too becoming over 100 Baggers ~Matrix Labs( early Millenium & now delisted as sold to Mylan),Mercator(early Millenium) & WIPRO ( from 1997 to ¬†early 2001)

It is rare for most investors to live the Conviction & Temperament to hold for long & ride the Huge Life Changing Gains.Imagine if more than Rs 10000 had been invested in each of the above,especially WIPRO!

However my Thought is what about Wrong Convictions on the High Fliers that became Wealth Destroyers &  Life Maimers !

Here are a few of them ,most yet listed & struggling to revive & how much worth would your Rs 10000 invested in each of them be now ….most are Horror Stories of the past decade or a little more…sure you can contribute more…My Horror Stories ¬†have been the Damania Group’s Damania Capital Markets to mention one.Bad Judgement Call that Cost!It was compulsory delisted in July 2004.

~Suzlon -2005=>Rs 842¬† & ¬†2008=>Rs 348 ! => 92% to 97% wiped out after considering 10:2 Split in January 2008 when it reached an all time high of Rs 2300 before split.Current Price Rs 16.Promoter Tulsi Tanti is yet on board though Dilip Shanghvi of Sun Pharma Group has acquired a major stake in it @ Rs 18 in February 2015.Mandatory Open Offer at Rs 18 to other Shareholders in January 2016 met with no success.The Share Price had raced to Rs 30 from where it has halved & is below the Open Offer & Stake Price of Rs 18.Shareholders hold out Hope of Revival back to Glory Days in the years ahead under Dilip Shanghavi.So far it’s been a muted share price trading range in recent months.

~Unitech-2006 => Rs 505 => 95% wiped out after adjusting for 12:1 Bonus & 10:2 Split in June 2006 & 1:1 Bonus in Aug 2007.Reached a high of Rs 14800 in 2006 before Bonus & split .Current Price under Rs 6

~Kingfisher Airlines-2006/7 => 0 ! => 100% wiped out & scrip suspended for trading from 2012/2013 & restricted trading from June 2015 ~ reached a High of Rs 335 in 2007 read more

FLY INDIGO !~Lists high at Rs 850+~Why!?~Read My October 2015 IPO Note

IndiGo has had a brilliant listing this morning at 10 am opening at Rs 856 on BSE and racing to a high of Rs 898 and  now is at Rs 860 levels at 10.20 am.The IPO Price was Rs 765

Why this Premium on Listing !?

Go through my  IPO Note below to get some sense and wonder why Retail Investors missed out and why many  ridiculed the Pricing and the over liberal Dividends

October 29,2015

SCRIP SCAN

FLY INDIGO !

IPO of InterGlobe Aviation Ltd (IndiGo)

Book Building Price Band : Rs 700 to Rs 765

IPO refuelling the IndiGo Fleet for Operations & Expansion

IPO refuelling the IndiGo Fleet for Operations & Expansion

Profitable Operations in 7 of 9 Operating Years as a Low Cost Carrier & Bumper Profits on significantly lower Aviation Turbine Fuel Prices in ongoing FY 16 indicate an Earnings Multiple of  just 11 on IPO Top Range Pricing of Rs 765

+

Scale Potential being tapped with Huge Expansion with current 97 Airbus Fleet to be expanded to over 527 (Orders placed) over the next decade

 

Major Risk

 Listing Gains may not be available as :

Indigo drained of all Networth by Dividends to show a negative Networth on June 30,2015 ! +  Offer for Sale Component is huge at @ Rs 1750 crs (nearly 60% of Issue Size) and nearly all shareholders are offloading part of holding

Thus Promoter Mindset perceived to be Greedy by Retail  Investors who tend to invest more on emotion & sentiment than on pure reason and thus response has been tepid from them

‚ÄúWhy should we pay a high IPO Pricing of Rs 765 just for Potential & Promoter Pocket. Moreover Bumper Profits & Over the Top Liberal Dividend Distribution Practice & Policy may not sustain into the Future!‚ÄĚ

IPO Opened on

Tuesday, Oct 27, 2015

IPO Closes Today

Thursday, Oct 29, 2015

IPO Type

100% Book Building

Equity Shares  Offered

Fresh shares ~ 16.6-18.2 Million shares (worth Rs 1272 Crs) Offer For Sale (OFS) ~  22.8 Million shares being part of holdings from nearly all existing shareholders

Face Value of Shares

Rs 10

Price Band

Rs 700 ‚Äď Rs 765 Per Equity Share

Issue Size

Rs 3018 Crs @ Rs 765 per share

Listing on

BSE, NSE

Bid Lot

15 Equity shares and multiple of 15 Equity Shares

Global Book Running Lead Manager

Citigroup Global Markets India Private Limited,  J.P. Morgan India Private Limited,  Morgan Stanley India Company Private Limited

Book Running Lead Managers

Kotak Mahindra Capital Company Limited

Object of the issue

1. Rs 1165 Crs towards retirement of certain outstanding lease liabilities and consequent acquisition of aircraft
2.Rs 33 Crs for purchase of ground support equipment for airline operations; and
3. General corporate purposes
4. To receive the benefits of listing of the Equity Shares on the Stock Exchange

QIB’s

50% of Net Issue Rs 1512 Crs (including Anchor) at upper band

NIB’s

15% of Net Issue Rs 454 Crs at upper band

Retail (upto Rs 200000)

35% of Net Issue Rs 1059 Crs at upper band

  

OVERVIEW

InterGlobe Aviation is the company  that owns & operates the Low Cost Carrier IndiGo Airlines. The airlines commenced operations in August 2006 and is now one of the largest players in the domestic airline space with the largest market share that’s fast closing in on 40%. It ranked seventh in terms of largest low-cost carrier globally in seat capacity in 2014, according to CAPA Centre for Aviation . At the end of August 2015, the airline had a fleet of 97 aircraft.

It has an order book of 180 A320 neo (new engine option) aircraft and expects to take delivery of 15 additional aircraft, including nine A320 neos by March 31, 2016. According to Airbus, A320 neo aircraft are expected to consume up to 15% less fuel than current generation A320 aircraft without shark-lets, which will further reduce fuel consumption per flight.

Indigo has also recently placed an order for 250 new Airbus aircrafts in 2015 which  are scheduled for delivery between 2018 to 2026. read more