Investing
Will Rakesh Jhunjhunwala invest in your business
Rakesh Jhunjhunwala did not buy Zomato’s shares. He doesn’t justify how share markets value such businesses. According to him, none of the current financial technology startups pose a threat to the existing banking businesses.
Rakesh Jhunjhunwala said, “Today you value Zomato at Rs 1 lakh crore. But when is Zomato going to get Rs 3,000 crore of cash. In the stock market, it’s important how long it takes, it’s more important how long it lasts.”
Rakesh Jhunjhunwala suggests people to get real. During booms, companies have insane valuations. HFCL and Unitech were among the most valued companies. They aren’t anymore. Zomato was trading at its lowest after the listing. The fundamentals of the business will not change as fast as much the startups claim. He admires brands such as Zara and Walmart.
Some of his advice for the businesses are:
Changes do come, but at a much slower pace than anticipated.
The capital is not more important, the business models are.
People should focus on the business model, which produces cash, not valuations.
The race is not ending tomorrow. Business should be sustainable, which comes from cash and profits.