Sunday 23 September 2007

Rakesh Jhunjhunwala bullish on India

Most investors envy Rakesh Jhunjhunwala and most of them wonder how much money he must be making on a day when Sensex and Nifty gained over 4 per cent each.

Estimates of Rs 6,000 to Rs 10,000 crore have been done the rounds. He is convinced of India's rock solid performance based not on the US but on the domestic consumption story.

However he does add a disclaimer, "I am convinced that India will outperform but investors have to face the fact that the kinds of returns that the Indian equity markets have given over the last five years will not be repeated, but India will outperform. I think the P/E multiple would swing between 14 to 15 times to 20 times," Jhunjhunwala said.

His new large cap buy has been Ranbaxy Laboratories and he has added more to his Titan shares, taking his stake in the company to 11 per cent after having sold BEML and offloading part of his stake in Praj Industries holdings.

While his other investments like Nagarjuna, Punj Lloyd, Pantaloon Retail, Bilcare, Geometric Software and banking stocks like Karur Vysya are intact he is staying away from IT and real estate companies.

Private equity

Apart from about 25 listed stocks, he is also becoming private equity player having taken up his list of investments to 15 over the last one-year. His latest private equity deal was a retail play by buying a 15 per cent stake in Metro Shoes.

Is Jhunjhunwala worried about industrial production growth which fell to 7.5 per cent in July? He says it is too early to tell but it does not worry him right now. What is required though is some softening on RBI's stance.

"I salute the RBI for having controlled the growth the way that have but now they need to reduce interest rates to some extent for the future," Jhunjhunwala said.

A bullish outlook as always, the only real risk says the big bull is a sudden nosedive in global growth, which could shrink valuations not just in the west but in Asia as well.