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Ace equity investor Rakesh Jhunjhunwala is not swayed by the frenzy surrounding IPOs of new-age companies and it is quite evident in the way he addresses that space. In an interaction with Motilal Oswal’s Raamdeo Agrawal and Navin Agarwal, Jhunjhunwala said that it is much better to invest in metals and banking stocks right now rather than putting money in such companies. While commenting on new-age firms, he said: “It is not my party and I don’t go there. The Zomato IPO’s valuation at about Rs 60,000 crore may have a 15%-20% upside but there could be a 60% downside. My discomfort is on valuation.”
The initial public offering by online food delivery startup Zomato go oversubscribed by 38 times on the last day of the bidding process on July 16. Meanwhile, digital payments and financial services firm Paytm has filed a draft red herring prospectus for its proposed Rs 16,600 crore-IPO with the markets regulator Securities and Exchange Board of India (Sebi).
Views on Indian markets
Overall, he is bullish on the domestic equity market due to the country’s strong fundamentals. At present, the starting point for the country is where it is an established software exporter. “Software exports will reach $4-5 billion in the next 4-5 years. Besides, we are in a position to become a pharmaceutical capital of the world,” he said at the Motilal Oswal Global Partner Summit.
He further added that India fundamental story today is far stronger than in 1991. The country has seen so many reforms like GST in the recent past. “Electricity bill if passed will be one of the path-breaking reforms. Indian economy is in a better position than it was ever. We also have a corporate sector that is least leveraged. We have proactive government and prime minister who understand the reforms that need to be done,” he added.
The big bull further said that PSU divestment and much better infrastructure ensure that India is slowly progressing towards 10% growth which will stay for at least two decades. “Everything in India is bottoms up, nothing is top-down,” Jhunjhunwala said, adding the ongoing bull market is not going to vanish soon.
“We are in for very very very long bull market and it is like driving a car from Bombay to London,” he said. Jhunjhunwala, also known as the Warren Buffett of India, believes that the tax collection this year will surprise the government.
Other sectors
Jhunjhunwala is also positive on the county’s real estate sector due to record low-interest rates and better affordability. He thinks that developers will get consolidated. Sharing his thoughts on public sector undertakings, he thinks that PSUs will outperform the market and the prices will move higher after divestment. He also sees 8-10 years of the bull market in commodities.
Advice to investors
He advised new investors to get proper advice from financial experts.
“This may help you to achieve 15%-20% kind of return. The best form is to choose the right mutual fund and invest via SIPs,” he said.