Retail, infrastructure, liquor are his favourites; strict no to auto components, realty, sugar
by Sumit Moitra/ FE
Enigmatic equity investor and self-styled India bull Rakesh Jhunjhunwala is a contrarian investor, going by tips handed out by him on Saturday. While the media always closely follows what stocks the ace investor buys into, here’s what he stays away from. And there are a few surprises.
He is keeping away from sectors like auto-ancillary and real estate, the two big growth stories of India. “I am not quite bullish about the auto-component sector. They have no pricing power.” That’s what Jhunjhunwala had to say when members of Millennium Mams, a club of women investors, asked him about what he thinks of the much-talked about global opportunities before the auto-ancillary makers.
There’s another tip: don’t buy the property story that has propelled such stocks like Unitech and Mahindra Gesco to stratospheric heights amply supplemented by the SEZ craze. “Real estate sector is India’s new Internet. Stay away from it,” the chubby investor told another Millennium Mams’ member, comparing the rush for any stock that peddles a real-estate story with the Internet bubble of the ’90s.
And considering current valuation, sugar and cement are also out of favour for Jhunjhunwala. “Cement stocks are fully valued; all positive factors have been discounted. Don’t enter the sugar sector either. From what I have gathered from recent news reports, selling ethanol to oil companies wouldn’t be as profitable as what was thought before,” he said.
So what is he bullish about? Jhunjhunwala is betting big on retail (his pick: Shoppers’ Stop), infrastructure (particularly Punj Lloyd), liquor, financial services and small cap hotels and IT stocks. “Try to identify those small cap hotels and IT companies that can scale up. For scalability and sustaining, growth are the two big challenges before corporate India,” he said.
Jhunjhunwala has already placed his bets on the following sectors: Nagarjuna Construction, Praj Industries, Pantaloon, Punj Lloyd, Geojit Finance and Geojit Software, which now feature in his portfolio that has appeared in bits and pieces in various news reports. “I have made some good money investing in Pantaloon, and if you are convinced that Kishore Biyani will be able to achieve his ambitious dream, you can bet on him,” he said.
The ace investor’s portfolio is not a surefire prescription to earn above average returns and he himself fears that a strategy to follow in his footsteps may not work. “Taking a tip from another investor is injurious to investing, more so if he is a smoker,” Jhunjhunwala told a lady member, lighting up a cigarette.