Known as the big bull of the Indian stock market, investor Rakesh Jhunjhunwala warns that the valuations of several Indian startups are stretched.
A prolific investor, and one who has the ability to move the stock market, Rakesh Jhunjhunwala, addressed the TiECON Summit in Mumbai, speaking to a gathering of startups keen on understanding how one can become a billionaire investor.
"Focus on the long run and create value for investors and the employees," he told the gathering.
Jhunjhunwala also advised startups not to go after valuations, and added that Indians need to be more original in their thinking while setting up companies. Courting some controversy, Jhunjhunwala said, "Uber and Ola are two businesses that I do not understand owing to their high burn," and added that he had lost money twice when he invested in startups - in 2000 and 2007.
He enthralled the audience, talking about the future of India and what one can expect in the next three years. On the Indian economy, he said there are medium-, short- and long-term strategies that every investor looks at. However, the one thing that investors need is a good and stable government: “India needs skills and we have been adding skilled people. Look at the world, we have Indian CEOs at Microsoft and Google. If Indians continue to add skills and jobs, we will have prosperity because of our demographic dividend.”
“India as a country is greater than any election and any politician,” he said. “Modi has done well as a Prime Minister. I believe BJP will come back. Whether it is the BJP or the Congress, India will continue to grow,” he added.
Addressing startups, he said, “There is pride in India and Indianness. We need a common code in the country. I will always fight for my Indianness."
Bank crisis and stocks
"All this (the crisis in the banking sector) is a reflection of poor regulation, poor governance and poor credit rating. Scams are part of financial markets and it’s true. About 95 percent of the money is in large caps. Why do you blame the market, and why don’t you blame yourself... Investing is not easy, and it requires full-time attention. The biggest mistake people make is they think of only great returns,” he said.
“I want to learn and understand from others. But, when people speak highly of you, you should be cautious. I have made my worst mistakes after listening to people who praise me all the time,” he added.
Jhunjhunwala also spoke about his early lessons. He said mistakes must happen and one must live in reality, but the future is always uncertain. “Don’t be predictive. The factors that drive India’s growth, a company’s profitability, its range of products, cash cycles, management style, is all knowledge that you gather. One cannot play guess-work here,” he told young startups.
Jhunjhunwala ended his talk by saying that his biggest failure was misjudging people’s character.
“I eat, dream, think and sleep markets. What is the purpose of wealth? It brings comfort and independence. But that’s not happiness. I have decided to live in humility.”