It was around 7pm on the 14th of August 2022, I was almost done with my writing for the day, and I decided to grab a coffee. Just as I grabbed my cup and started scrolling on my phone, I saw a news alert that shocked me. The alert read “India’s Warren Buffet Rakesh Jhunjhunwala Passes Away at 62.” Now, I did not know him personally, but being follower of super investors of India for years, it did feel like a personal loss to know the biggest whale in the stock market is no more.
In the days that followed, a slow realisation dawned that Rakesh Jhunjhunwala had left behind not only a portfolio that investors world over would envy, but a legacy of how he became the Warren Buffett of India. Jhunjhunwala turned a meagre Rs 5,000 into a staggering Rs 60,000 cr empire.
Let us see how Jhunjhunwala applied Warren Buffetts top 5 investing in his portfolio to master India’s roller coaster markets.
Rule #1: The Art of Not Losing Money in a Volatile Market
Warren Buffett’s core principle is a very simple. He says “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.” Shared in his Berkshire Hathaway letters, this quote of Buffett emphasizes safeguarding your investments to let compounding work its magic over the years.
Jhunjhunwala also believed in this ideology and also that a loss sets you back more than a profit moves you forward. Just like Warren Buffett, Jhunjhunwala also learnt early in life that managing risk is everything.
Like Buffett, Jhunjhunwala also avoided high-risk bets. Remember how Buffett avoided the big names in the tech bubble in the 1990s. Jhunjhunwala stayed away from speculative sectors during India’s dot-com frenzy. Even in the big crash of 2008 Jhunjhunwala opted for stable businesses.
His portfolio shows this focus in abundance with holdings like Canara Bank (1.5% holding worth Rs 1,447 cr) and Federal Bank (1.5% stake worth Rs 705 cr). And it is holdings like these that prove that Jhunjhunwala preferred solid financials over anything else when it came to protecting his capital. Like Buffett’s long-term relationship with Coca-Cola, Jhunjhunwala held Titan Company through market storms, often buying more during dips to turn it into his biggest winner.
Indian investors have some takeaways in the comparison. Given that by their very nature stock markets are unpredictable, it is wiser to follow the Warren Butt rule and pick companies with low debt, strong financial and reliable dividends. Jhunjhunwala’s Titan stake, held through crashes, grew into a fortune. This approach minimizes losses and sets you up for potential long-term gains.
Rule #2: Mastering the ‘Circle of Competence’ in India
“Never invest in a business you cannot understand.” From Warren Buffets letters, this one is one of the strongest quotes by him. This reveals why Buffett skipped complex industries until he learnt their value, like waiting for Apple’s consumer appeal to click before investing in it.
Jhunjhunwala followed this closely too, focusing on sectors he knew well, such as India’s consumer and financial markets. Both categories he had shined in. His stakes in Indian Hotels Company (2.0%, Rs 2,231 crore) and Metro Brands tapped the growing spending power of India’s middle class, like Buffett’s bet on Coca-Cola. He also stepped into online gaming with Nazara Technologies but sold when valuations got too high, showing the same discipline as Buffett. His NCC holding (12.5%, Rs 1,711 crore) leaned on his understanding of India’s infrastructure boom.
As an Indian investor, stick to what you know, whether it’s IT, retail, or another field you follow closely. Dig into annual reports and study management quality before buying. With over 5,000 listed stocks in India, focus on a handful. Like say 10 to15 stocks that you truly get. This will help you to avoid traps like the overhyped IPOs. Jhunjhunwala’s success came from deep knowledge, ensuring smart choices that grew his wealth. This keeps you from costly errors and builds a strong portfolio.
Rule #3: Buying Wonderful Indian Companies at a Fair Price
Here’s another Buffett quote from one of his letters in 1989…
“It’s better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
This approach prioritizes businesses with strong competitive edges over cheap but weak firms.
Jhunjhunwala made this into his strongest suite. He successfully blended value investing with India’s growth potential. His early investment in Titan, bought at a bargain, soared as the company compounded its revenues and profits year after year, much like Buffett’s stake in say Bank of America or American Express.
Jhunhunwala’s holdings like Crisil (5.2%, Rs 2,028 cr) and Concord Biotech (24.1%, Rs 4,139 cr) show his expertise in picking firms with lasting advantages, such as rating agencies or niche pharma. He ignored penny stocks, chasing “multibaggers” with real potential.
Learn to estimate intrinsic value using tools like discounted cash flow, and buy during dips, as Jhunjhunwala did with Star Health in 2020. His Jubilant Pharmova stake (6.4%, Rs 1,081 crore) rode the specialty chemicals wave. Skip mediocre firms whose price might be low, but value might just be lower, and tap into India’s consumption-driven economy, turning careful picks into huge wins.
Today, India is a pricey market. And therefore, it’s tough to find wonderful companies at fair prices.
Rule #4: The Power of Patience in a Fad-Driven Market
Buffett could not just speak enough about this…
“Buy something you’d be perfectly happy to hold if the market shut for 10 years.”
Yes, that was his ideology when it came to his long-term holdings like American Express. It proves that staying invested beats trying to time the market always.
Jhunjhunwala was a master of patience, rarely tweaking his portfolio. He was also a believer of Buffetts “My Favourite Waiting period is FORVER”. His portfolio does not see many changes often. His stakes in Aptech (41.4%) and Va Tech Wabag (8.0%) have stayed in his portfolio for years, treating stocks as pieces of businesses, not just numbers.
The other aspect of patience of course is to wait, endlessly if need be, for the ‘wonderful company at a fair price’ opportunity. Chasing a stock rarely does any good.
If you are a young Indian investor, please don’t get swayed by the emotions of Mr. Market. In fact, also avoid those or 24/7 news that keeps feeding the monster of doomscrolling. Just focus on long-term trends digital growth and urbanisation. Just like how Jhunjhunwala did with Escorts Kubota (1.5%, Rs 580 crore) for farm mechanization. You can also use systematic investment plans (SIPs), reinvest dividends, and hold through volatility like elections. Jhunjhunwala’s rise from trader to billionaire proves the importance of patience in a fad chasing world that we live in.
Rule #5: Being Greedy When Others are Fearful on Dalal Street
Buffett’s bold advice, “Be fearful when others are greedy, and greedy when others are fearful,” from a 2008 New York Times, was the reason behind his ‘crisis buys’ like Goldman Sachs during the financial meltdown.
Jhunjhunwala thrived on this in India’s untamed markets, grabbing deals during slumps. After the 2008 fiasco, he bought Karur Vysya Bank (4.2%, Rs 861 crore) and boosted Valor Estate (4.6%, Rs 452 crore) when real estate tanked. Now that’s a learning from Warren Buffett’s contrarian strategy. Both focused on true value, ignoring market fear.
Do not miss out on opportunities in downturns, like the 2022 bear market when Jhunjhunwala had added healthcare stocks in his portfolio. Always watch for signs of panic and buy undervalued quality firms at a fair price.
And most importantly, always keep a 10-20% cash cushion ready for when big opportunities come knocking. Remember, his Tata Communications stake (1.6%, Rs 762 cr) shows how contrarian bets pay off in the long run.
A Legacy to Live By…
Rakesh Jhunjhunwala earned his “Warren Buffett of India” title following and implementing the originals to India’s unique landscape, from banking to consumer giants. His portfolio, which is a mix of stocks from different industries and market caps reflects discipline, deep knowledge, and staying power.
Indian investors can follow suit by protecting capital, knowing their field, picking quality, holding long, and buying during fear. Especially in a country like India, which is touted for an 6%+ GDP growth. Here these principles can turn small investments into some solid potential wealth in the long run. The key is to start small, stay steady, and let Jhunjhunwala’s legacy guide your financial journey.
Disclaimer
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Suhel Khan has been a passionate follower of the markets for over a decade. During this period, He was an integral part of a leading Equity Research organisation based in Mumbai as the Head of Sales & Marketing. Presently, he is spending most of his time dissecting the investments and strategies of the Super Investors of India.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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