In an exclusive interview with Moneycontrol, the big bull delved into a plethora of topics ranging from his investment philosophy, private equity escapades to his latest bets.
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Rakesh Jhunjhunwala, who is renowned for his astute stock-picking abilities, said he is “very bullish” on the market despite the COVID overhang which has caused huge whipsaws in the market.
In an exclusive interview with Moneycontrol, the big bull delved into a plethora of topic ranging from his investment philosophy, private equity escapades to his latest bets.
Here are some of the key highlights:
Bullish On PSU Banks
Jhunjhunwala expects PSU banking stocks to lead economic recovery post-pandemic amid a rise in credit growth. He singled out two Canara Bank and SBI as his top picks in the PSU banking space.
Betting on the credit growth opportunity he said, “I think traditionally credit growth to GDP in India is 1.25-1.50. Credit growth, which is 6-7%, will go to 15% according to me.”
Highlighting the advantages of the PSU banks he said adding to credit growth prospects, these banks are fully provided in their provisioning and they have deposit gathering ability.
Read: Rakesh Jhunjhunwala lists SBI & Canara Bank as top picks in PSU banking space
Strong Momentum In Commodities
Jhunjhunwala believes that the potential of the commodity stocks is yet to be realised in their stock performance. He said, “this commodities cycle is here and will last for minimum of five years. In comparison to the cash flows, the valuations are still absent”.
He is betting on Tata Steel and JSPL to benefit from the strong momentum in commodities.
Value Unlocking In Private Equity
Over the years, Jhunjhunwala has been actively re-deploying the profits from equity investments into the private equity space. There have been hits and misses he agree,s but is confident that some portfolio companies will give “multi-returns”.
Many of the PE investments made by Rare Enterprises have now reached maturity and are ripe to list. An investment made 2 years ago in a consortium with WestBridge, Star Health is close to filing for an IPO, reports suggest.
“Four companies from PE portfolio should list in 12-18 months,” he said.
Private Equity Deal Thrust
Jhunjhunwala said he has continued active investments in high growth sectors with high entry barriers. His latest venture is a consortium with Renuka Ramnath’s Multiples to buy Zydus Animal Health (ZAHL) for close to Rs 3,000 crores.
“Animal husbandry and poultry can be a big source of income for the farmers, with the govt promoting this space, the opportunity is too huge,” he said.
Jhunjhunwala is looking at 2 more PE deals in the next 6 months in the space of education & healthcare.
Other Investments Gunning For IPO
Apart from Star Health, three other companies in which Jhunjhunwala holds a stake are heading for an IPO. These include Metro, Concord Biotech, Inventurus Knowledge Solutions. However, he refrained from spilling the details citing regulatory reasons.
He also said he is “in the process of negotiating two-to-three deals at the moment”, and two more private investments may be done in the next six months.
Read: Rakesh Jhunjhunwala says 4 of his investments headed for IPO; Here they are
Tech Reservations
Jhunjhunwala said he is currently only invested in one tech company- mobile gaming company Nazara Technologies – which debuted on the markets earlier this year.
Jhunjhunwala admitted he doesn’t understand tech companies and has to sometimes take his son’s help to use the computer.
“I don’t understand tech companies. And they need a lot of hand-holding, which I have a very limited team. And I think we are discounting the future, which is extremely expensive. So I in general, refrain from making tech investments, especially those which are not mature,” said the big bull
Catch the full interview with Rakesh Jhunjhunwala here
