Jhunjhunwala on new-age IPOs: I will make more money in metals

MUMBAI: Billionaire investor Rakesh Jhunjhunwala believes he can make more money investing in shares of metal producers and banks than on new-age technology companies that are swarming the Indian primary market currently.

“I don’t go there. This party (in new-age IPOs) will pop sometime,” Jhunjhunwala said at an event organised by Motilal Oswal Asset Management on Friday.

The trader-turned-investor’s comment comes at a time when new-age technology startups are hitting the primary market with initial public offerings to raise funds. Earlier today, Paytm filed its draft red herring prospectus for an IPO following in the footsteps of Mobikwik, Zomato and PolicyBazaar.

The IPO of Zomato, which ended today, drew a huge response from eager investors. The online food aggregator’s IPO received bids worth Rs 2 lakh crore at the end of the three-day bidding process for its Rs 9,375 crore issue despite being a loss-making entity.

Zomato IPO has divided the Indian investment community right down the middle, as one section has raised alarm bells over its supposedly exorbitant valuations given the lack of profit track-record, while the other has justified those valuations given its limitless growth runway.

Often referred to as India’s own Warren Buffett, Jhunjhunwala has been staunchly skeptical of valuations given to the tech startups in India, which are largely funded by sometimes limitless venture capital money.

“Except for new-age companies and cryptos, everything else is good (in this market),” Jhunjhunwala said.

On the growing concerns over inflation, the veteran investor argued that a large part of the commodity inflation is over and that eventually the rate of price rise in India will come down to the 4-4.5 per cent range.

Jhunjhunwala also made a case that the government’s fiscal health would be better this year than the previous year, as he sees India’s fiscal deficit at 6 per cent against Budget’s estimate of 6.8 per cent. Jhunjhunwala’s confidence on the fiscal front is a function of his bullishness that the government’s direct tax collections will surge in 2021-22 due to a strong economic rebound.

On the recent trend of ESG-based investing, Jhunjhunwala said anything that is harmful to the health of humans will see reduced investing as the reality of climate change is sinking in among investors globally.

However, Jhunjhunwala said he would not be apprehensive about buying cigarette stocks if they offer a “good opportunity”.

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