Rakesh Jhunjhunwala, christened the Big Bull of the Indian stock market, was known for his skill in picking winners – and then holding on to them for a long time in topsy-turvy markets. His patience with his investments and his belief in betting on “great businesses, not stocks” earned him comparisons to the American investor Warren Buffett.
After graduating from Sydenham College in Mumbai, Jhunjhunwala enrolled at the Institute of Chartered Accountants of India. Influenced by his father’s interest in the stock market, he began investing in college, and his road to becoming a billionaire investor started with Rs 5,000 in 1985.
Over his long career, Jhunjhunwala was chairman and director at multiple companies, including Hungama Media, Aptech, Viceroy Hotels, and Concord Biotech. He also founded Akasa Air. Jhunjhunwala ran his asset management firm Rare Enterprises till his death in 2022.
Since his passing in August, his portfolio has been managed by the team at Rare Enterprises, headed by Utpal Sheth and Amit Goela. The portfolio’s net worth in Q2FY23 was Rs 33,225.8 crore, and it publicly holds stakes in 30 stocks.
The best-performing stock in Big Bull’s portfolio is Escorts Kubota. Its price has risen 1,145% over the past seven years. However over the years Rare Enterprises reduced its stake to 1.4% in Q2FY23 from 10.2% in Q3FY16.
The next best-performing stock is gem and jewellery company Titan with a price change of 648.2%, followed by realty company Anant Raj (422.6% rise) and IT training services company Aptech (391.9% rise). Jhunjhunwala’s portfolio owns a 43.8% stake in Aptech. In stocks that were added recently, Indian Hotels (bought in Q1FY21) has risen 311.4%, Tata Motors (bought in Q2FY21) 191%, and Jubilant Ingrevia (bought in Q3FY18) 103.5%.
The worst-performing stock in Jhunjhunwala’s holdings is pharmaceutical company Wockhardt; it has fallen 55.7% since Q3FY21.
While another pharmaceutical stock Jubilant Pharmova has fallen 45.3% since Q1FY18, the oldest negatively performing stock in the portfolio is healthcare supplies company Bilcare. As its price fell by 36.5% since Q3FY16, Rare Enterprises cut its stake to below 1% in Q2FY23 from 8.5% in Q1FY23. It also cut its Indiabulls Housing Finance (housing finance company) stake to below 1% as its price fell 40.7% since the time of purchase.
Textiles, apparels and accessories, and banking and finance are Rare’s preferred sectors
As much as 38.5% or Rs 12,780 crore of Jhunjhunwala’s total portfolio value is concentrated in the textiles, apparels and accessories sector, as it holds a 5.5% stake in Titan, whose market-cap is 2.3 lakh crore.
Similarly, Jhunjhunwala holds 14.4% of the footwear company Metro Brand, taking the retailing sector to 10.4% of the total portfolio. The banking and finance sector constitutes 27.6% of the portfolio. Automobiles and auto components take up 5.5% of the total holdings, while the rest constitute less than 4% each.
Portfolio changes in Q2FY23
In Q2FY23, Jhunjhunwala’s portfolio had no major additions except for Singer India. RARE Enterprises added a 7.9% stake in the household appliances manufacturer. Other additions were 0.5% stake each in Tata Communications (telecom services company) and Titan, a 0.4% stake in Fortis Healthcare (healthcare facilities company), and minor stake additions to NCC and Tata Motors.
Rare Enterprises cut 1.6% stake in specialty chemicals company Jubilant Ingrevia, 1% stake in Federal Bank, and 0.5% stake each in Canara Bank, D B Realty and agrochemicals company Rallis India. Stakes in Autoline Industries, Indiabulls Housing Finance and Bilcare were cut below 1%, as against 4.5%, 1.2% and 8.5% respectively in Q1FY23.
Tata Motors among loss-making holdings, several portfolio stocks outperform their industry in share price
Of the 30 companies in the portfolio, only four have reported a consolidated net loss in Q2FY23. Tata Motors had the highest loss of Rs 944.61 crore, as against a loss of Rs 4,441.6 crore in Q2FY22. The other companies that reported losses are Wockhardt, Dishman Carbogen Amcis (pharmaceuticals company) and Orient Cement.
12 companies in the Big Bull’s portfolio outperformed their respective industries over the year in share price. Stocks that outperformed their industries include Karur Vysya Bank, Metro Brands, Escorts Kubota, Federal Bank, and NCC.
Escorts Kubota had the highest basic annual EPS of Rs 74.1. Crisil had a basic annual EPS of Rs 64, Tata Communications of Rs 52, Canara Bank of Rs 35 and Jubilant Ingrevia of Rs 30.
50% of Jhunjhunwala’s portfolio stocks are trading in the PE Buy Zone (Stocks are in the PE Buy Zone when their current PE is below their historical PE levels). The stocks in the PE Buy Zone include D B Realty, Prozone Intu Properties, Geojit Financial Services and Nazara Technologies (internet software and services company).
Meanwhile, 27% of the stocks, including Agro Tech Foods, Escorts Kubota, Jubilant Pharmova and Singer India are trading in the PE Sell Zone. Stocks that have their PE higher than their respective sectors are Edelweiss Financial Services, Crisil, Escorts Kubota, Titan, Nazara Technologies and Agro Tech Foods.
How volatile is Jhunjhunwala’s portfolio?
The beta for 12 stocks in Jhunjhunwala’s portfolio is below 1, and 18 stocks are greater than 1. The average beta of the portfolio for a year as well as the quarter is 1.1. The volatility of the portfolio is in line with the benchmark index.
Rakesh Jhunjhunwala or the Big Bull will be remembered for his uncanny ability in figuring out where the market was headed, and his optimism for the Indian economy - even in the midst of the pandemic. It will be interesting to see if the RARE Enterprises team lives up to the reputation this portfolio has built over the past several decades.
