It has been 15 long years since CNBC-TV18 took its first steps. Eighteen Budgets and 80 Credit Policies later, the business channel looks back at the way Indian equity market has grown and analyses what can be expected in the next 15 years. Congratulating the channel at CNBC-TV18 investor summit, Rakesh Jhunjhunwala, partner at asset management firm Rare Enterprises, says Nifty has grown 10 times in last 15 years and can easily grow 10-12 times in the coming decade. Betting on India’s steady earnings growth at 16 percent, he sees Nifty hitting 1,25,000 by In 2030.
Continuing with his optimism, the billionaire — reports suggest he has made close to Rs 35 lakh every hour in the last 12 odd months —says India is sitting on the wings of change, courtesy the perfect instrument called Narendra Modi. The pace of change that Prime Minister Modi is set to bring about will be unprecedented. The Budget, in this context, will not be as important. The important fact is that India’s growth will far exceed that of China’s.
He says India’s economy is prefectly balanced at the moment. He sees Modi’s Swachh Bharat programme has a far greater impact than we can envisage. Add to the fact are benefits like falling crude prices, which have not been fully passed on to the consumers. Jhunjhunwala is not at all pleased that RBI governor chose not to touch rates despite situation warranting quite the opposite. “Rajan will regret not cutting rates today.”
The ace investor rubbishes views that his recent accumulation of SpiceJet stock puts a stamp of credibility on the company. He believes Titan , a stock Jhunjhunwala has spoken several times previously, will continue to grow.
Below is verbatim transcript of his interview with Shereen Bhan on CNBC-TV18:
Q: Every time you are on the channel we manage to get at least one big headline or a couple of big headlines. So, let me start by getting you to tell us about your forecast and your outlook. It has been called the mother of bull runs by you, it has been called the structural bull run, it has been called multi-year bull run. Everyone is confident and optimistic and betting on India at this point in time. Some are saying that India is going to be the biggest beneficiary of the kind of fall that we have seen in crude oil markets. What is your forecast for 2015 and then I will talk to you about the next 5 and 10 years? Let us start with the big headline.
A: I thought you will ask me about the next 15 years and you start with this year? You should have foresight.
Q: We have foresight but let’s deal with the present.
A: Fifteen years ago the Nifty was 850 and today it is 8500. So, the Nifty has progressed 10 times in the last 15 years.
If the outlook for India, which is much better for the next 10 years than the growth in the past 10 years, with increasing investor participation don’t you think next 10 years should not be 10 but 15 times Nifty?
If by shear earnings, whatever earnings growth we had in the last 15 – I personally believe that the growth that we have had in the value of the Nifty in the last 10 years will be far exceeded in the next 10 years.
In the last 15 years Nifty has grown 10 times, I see no reason why Nifty should not grow 10-12 times in the next 10 years.
Q: What gives you this confidence at this point in time? Every one talks about the demographic dividend, the democratic dividend, these are things that we have come to sort of absorb and digest. What gives you the most confidence about India today?
A: A lot of countries are facing both structural and cyclical challenges. India is having an uptick both structurally and cyclically. What gives me confidence about this new government is, suppose there is a stock called Titan.
You believe that Titan is a story which will grow. When I bought the share the company was in trouble. I thought they will be able to come back, restructure and do well. However, what would be the quantum of improvement in performance?
So, the perception that most Indians having seen growth far lesser than what we thought is possible, living a civic life in which they face lot of difficulties, most of us are attune to the thought that this country cannot improve, we cannot grow 10 percent, we can never have a responsive administration, corruption will always remain part of our life, I think that will change. Things have changed in India.
Can you believe when I was doing my CA rate of income tax was 95 percent? If you told me that 30 years later the rate of tax will be 50 percent and I was on the 15th floor and you would have said jump I would have jumped. Nobody would believe that in India individual rates of tax would go below 75 percent.
However, the fact remains that individual rates of tax in India today are 33 percent and our direct taxes have grown at 20 percent compounded. So, we Indians cannot envisage the kind of change and the potentiality this country has.
The question is if you look at societies, we have skill, we have demographic dividend, we have size and we have a perfectly balanced economy. Therefore, I see no reason, we have all the ingredients, we have the vegetables, we have ghee, we have the vessel, we have the masala, we have gas and we only need someone to cook it.