Now that PSU stocks have made a comeback, are they still cheap?
I will invest in them only when the government actually does something. Now the government has reformed this disinvestment programme into privatisation programme and I am quite sure the government will now sell its jewels very smartly. But I also have limited capital here and before this could happen, I was fully committed at the highest leverage of my life and still have it. I am a person who does not easily buy, who does not easily sell. I am actually so highly committed today that unfortunately I have no investment in the public sector except State Bank and Canara Bank.
When you say you are leveraged, I am assuming that you have more ideas and less capital?
The day I came into the market, if you gave me Rs 5,000 crore, I will do shopping in a week in the market. By leverage, I mean the borrowings I have done to invest.
If you have leverage in the market, it means that in the short to medium term also you expect the market arrow pointed high?
I really doubt trend is my friend. There is so much disbelief.
Why is there so much disbelief?
When somebody says I do not believe in God I do not go and argue with him.
DIIs are selling and FIIs are buying. It is not a great feeling to see that when such great things are happening, our local people are not participating?
That is their point of view.
One sector where large changes have happened is the entire banking space. The government is talking about privatising more banks. How do you see the dynamics changing for the banks now?
First of all, the improvement in profitability and valuations for the public sector and the smaller banks will be much higher than the favoured banks. That is one dynamic which will change. Second, the excess liquidity in India is only Rs 6-7 lakh crore and the loan total loan outstanding is 15 to 20 times Rs 6-7 lakh crore. I do not know if you have to grow 11% next year. I see no way we can grow unless and until credit growth is 15%. So, over a period of time, anybody who can garner deposits will become very powerful and will have the ability to lend. His interest margins will go down.
Where there is peak efficiency, it is difficult for more efficiency to come. But these banks’ cost to income ratio margins are at the lowest. If I was an investor, I would choose the PSU banks and the smaller private sector banks.
But what could be the relevance of these banks in today’s technology dominated era?
Every bank now has technology. I do not think the smaller private sector banks are less technology efficient than any of the modern banks and the State Bank is better than most.
For the longest time, India has been the generic capital of the world. Now we have become the vaccine capital of the world also. A serious amount of rerating has happened for the pharma sector, but somehow markets are not recognising that?
Well they have gone up, they have gained, they have not lost so much of growth because basically it is a defensive industry. Within the pharma sector, there is a lot of churning. India already is and is going to remain the pharma capital of the world. It is not easy to build knowledge industries. I am bullish on both IT and pharma.
What is the distinction in terms of where pharma was five-seven years ago versus where it is right now. Are the USFDA problems, pricing issues behind us?
Absolutely, the dynamics has changed.
You have called the market bottom right in 9/11, in 2013-2014 but when you look back and you talk about this Covid bottom, is this the best call of your career?
I hope the best is still to come but by God’s grace I made a good call. I must admit that with all modesty.
How has this entire work at home experience changed you as a person?
I do not like it because I want to separate my personal life and my work life right and also for the other people in the home it is an intrusion. I do not like the work from home concept.
Is there a big revival coming in the real estate sector and stocks?
Do you have any doubt?
I am asking you for information.
I think the real estate sector has bottomed.
Will real estate and equity compete for this decade?
There is a lot of money available for everything in India. So there is no question of competition. They will complement each other.
But for an average investor, do you expect that in this decade Nifty can give a double digit return?
Double digit return every year for the next five-six-seven years?
Five-six years 10-11% return.
I would be disappointed if the next 8 to 10 years the Nifty does not give a high-teens returns.
Which means in this decade, Sensex definitely should cross 100,000?
If high-teens returns are there, it should be much more than one lakh. But I am extremely positive on the markets. My perception of India is very bullish. It differs from most Indians. I reserve the right to be wrong but that is what my feelings are.
How do you think history will remember Elon Musk?
As a true pioneer and entrepreneur.
What do you think — Tesla is a bubble or Tesla deserves that kind of market cap?
Elon Musk has not given the market cap of Tesla. It is the public who has created it. This market cap is not going to last. But that does not take away some of the entrepreneurial capabilities or performance of Mr Musk. The valuation of Tesla is not linked to the entrepreneurial capabilities of Musk.
Rakesh Jhunjhunwala’s entire wealth is in India even though people have options to invest outside India. Is that patriotism or a business decision?
There is no patriotism in that. It is ease. I invest because I enjoy the process. Legitimately, the Government of India does not allow me to invest more than $1 million a year or maybe $1.25 million. It is not going to make much difference to my balance sheet. So why go where and I want to go for scale?
The second thing is I think the opportunities in India are great and as good as any in the world over a period of time. So when the food at home is so good, why think of eating out?
If you could short Bitcoin, will you short Bitcoin?
Well I would short Bitcoin at some point.
Are you bearish on Bitcoin as people are saying that it could be an alternative currency? Don’t you like blockchains as a technology?
No it is not a question of liking blockchain as a technology. Crypto currencies can never replace currencies. But currencies cannot fluctuate 5-10% in a day in value. Secondly, the first sovereign right of a country is to issue currency. Do you think they will give up that right? And third thing is can a currency be something which anybody can create? For these three reasons, I am not interested in Bitcoin.
Normally people start planning retirements at 60. Rakesh Jhunjhunwala has taken his biggest leverage bet after he turned 60. So no retirement plans?
Well employees retire at 60, not businessman. I am going to work until the last day of my life. I pray to God that whenever you are going to take me, let me get up in the morning, do my yoga, have a lovely breakfast, come to the office, do some trading, do some investing and in the evening, go have two good drinks and then you can take me.
I am sure God will give you a long life and we will wish for a long life…
Death is a part of life.I am not afraid of it. I do not know when it will come. I cannot predict it. I can model it but I cannot know it. So it is inevitable. What is death? Death is permanent sleep.
What are the three things you tell your children — Nishtha, Aryaman and Aryavir — that they should not do?
Sex, drugs and cigarettes. I do not tell them, it is a wish. And I want them to have integrity, education, independence and the power to give and their mother’s nature and my brain. I want my children to do what they will enjoy in life. I do not think that wealth is the source of happiness and I have a very different concept of rich man. I think a rich man is one who feels he has more than he needs. I do not want my children to be like me. I want them to do what they enjoy in life and be responsible, good citizens.
( Originally published on Feb 24, 2021 )
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4 Comments on this Story
Ashutosh 1 hour ago
Its always a great pleasure to read and listen to his views.
PURE SOULS3 hours ago
the real bin laden of world are this type of people not terrorists we know
Arthagnanam Telugu3 hours ago
last question and it’s answer are epic. Thanks Rakesh sir…