Rakesh Jhunjhunwala is one of India’s renowned investor who has built a fortune from scratch over last three decades. He was interviewed on his life, his investing style, his views on market etc by Ramesh Damani in a show hosted on CNBC TV18 called ‘Wizards of Dalal Street’.
Following is a summary of the interview:
Early years in the stock market:
Born in 1960, and he first dabbled in the markets when he was aged 15 years. He was interested in markets due to daily fluctuations in stock prices and due to investments in markets by his father. When Rakesh decided to make a career in investing by being a broker, he was instructed by his father that he can go ahead, provided he fulfilled a few conditions – a) don’t go to any of his father’s friends for money, b) don’t ask him (Rakesh’ss father) for any money and c) that Rakesh should always keep his promises
He started investing in 1985 by borrowing Rs.750,000 @18% to 24% interest from two people. He subsequently earned Rs.8-10 lakhs on this capital over next three years. He then brought shares in a utility company, where the dividend yield was closer to the interest he paid on borrowed capital. The reason was that there was an expectation of an increase in its guaranteed RoE, which could be linked to its power generation efficiency. He always invested based on company fundamentals and did not speculate in his early years in the stock market.