Bhavook Tripathi is perhaps among the youngest Indian investors to have entered the billionaire club. But, the strange thing is that most of us are probably not aware with this name. He is a person who made a fortune out of stock market by investing smartly. When we discuss about several stories related to the Indian stock markets the names that automatically comes up are Rakesh Jhunjhunwala, Ramesh Damani, Basant Maheswari, etc. There is absolutely no doubt that these names are the big ones in the stock markets of the country. However, there are also other successful persons who often don’t come into prominence. One such name is Bhavook Tripathi. The young invester is in his early 40s and prefers keeping himself away from the limelight!
Apart from being a successful stock market investor, Bhavook Tripathi is also an established entrepreneur. He runs Sanshu Industries which caters to the requirements of machined components for automobile major Bajaj Auto Limited. Started in the year 1999, Sanshu in gradual course of time became a trusted name in this segment. Under the leadership of Tripathi it also expanded into several verticals.
Bhavook Tripathi’s interest in stocks developed during his school days
Tripathi’s interest in stocks developed while he was still in school. While most of his friends at school would take interests in reading novels and comics, Tripathi would indulge himself in reading newspapers. The financial columns remained his prime areas of attraction. The habit didn’t last long. To increase savings the family one day decided to stop subscription of the financial newspaper. After completing schooling from Bangalore, Tripathi moved to Varanasi to study metallurgical engineering at the prestigious Banaras Hindu University. It was during his stay at BHU Tripathi’s interest in stocks reignited.
Tripathi started investing himself with Rs. 50,000 which he got from his father. With the amount, he purchased shares of companies which was growing at that time. He invested in Dr. Reddy’s Laboratories, Gujarat Ambuja Cement, Hero Honda, Mahavir Spinning and Madura Coats. He went through each company’s annual reports before taking the investment decisions. His mantra from the very beginning was investing smartly in stocks!
In an interview, Tripathi said, “If you read the annual reports of Gujarat Ambuja, the company would consistently talk about how it was innovating. The report would have facts such as how it set up its plant in record time at the lowest cost or the energy levels required to run these plants.”
Dr. Reddy’s Laboratories was a growing pharma company during that time. And, in many times they were the first company to manufacture certain pharma products.
As motorcycles started getting popular among the Indians in the nineties, Hero Honda too was moving up the success ladder. It was also the only listed motorcycle manufacturing company at that time.
Impact of the Harshad Mehta Security Scam of 1992
Within a year, the investments started yielding good results. In 1992, all of them became multibaggers. Bhavook Tripathi then suggested his father to sell off the holdings. However, his father wanted to wait a bit longer following the advice of his friends. In a few months time, the Harshad Mehta security scam broke out following which the Indian stock markets crashed. Young Tripathi learnt many lessons from this incident.
In the meantime, Bhavook Tripathi graduated in Engineering and relocated to the United States to study finance at University of Wyoming. He also worked with an investment bank in San Francisco to strengthen his grip on finance. In 1994, he returned to India.
Setting up Sanshu Industries
In 1999, the father-son duo set up their dream manufacturing plant Sanshu Industries. It bagged a big project from Bajaj Auto soon. Sanshu was selected to supply pressure dye casting and aluminium machinery to the company. To expand the business, Bhavook Tripathi decided to enter into bearings manufacturing. After all calculations, it appeared that an amount to the tune of Rs. 300 crore was needed to push the goals forward.
It was during this time Bhavook Tripathi spotted FAG Bearings. The company’s market cap was only Rs. 35 crore and its shares were trading at around Rs. 20. His friends insisted him to buy IT stocks, however, going against the reigning trend he decided to purchase shares of FAG Bearings. Tripathi included more than 6 lakh shares of the company in his portfolio. In the initial months, the price moved only a little. But, when he sold most of the shares of the company in 2006, Tripathi earned more than Rs. 10 crore. It was the first major success for him. The profits also helped him to expand his existing business.
In the early 2000s, Tripathi also invested in several other companies. He picked up shares of Neyveli Lignite, Hindalco and Karnataka Bank at dirt cheap prices. Tripathi also picked up Solvay Pharma in his portfolio during this time. He entered the stock at prices between Rs. 400 and Rs. 500. In 2009, the management of Solvay announced its decision to sell its pharma division after 4-5 years, Tripathi was early to increase his holdings in the company. The stock price eventually went past Rs. 3,000 and Tripathi booked his profits.
Picking up R Systems International in the portfolio
In 2008, Tripathi included R Systems International in his portfolio. R Systems which got investments from Intel Capital and GE Capital in 2001 and 2002 was a growing IT company. The company went public in 2006 at Rs. 250 per share. The price of the stock moved upwards consistently. However, following the outbreak of the Satyam scandal in 2008, the price per share touched a low of Rs. 40. Tripathi was again early to make an entry in the stock. Justifying his investment, Tripathi once said, “They had real estate and cash on their hands. But more importantly, R Systems is like a kitchen for technology firms. R Systems has 13 development and technical support centres and generates 82% of its revenues from the US and Europe.”
By September 2009, Tripathi had 4% stake in R Systems and decided to exit. He re-entered the stock in 2010 and within a year he increased his stake to 25%.
Another example which proves why investing smartly in shares is necessary
In 2011, Supreme Court banned on the production and sale of Endosulphen in the country. Excel Crop Care which was the largest manufacturer of Endosulphen suffered badly because of the court order. The stock price went down drastically but Bhavook Tripathi didn’t enter the stock. He was perhaps waiting for a bigger opportunity when the company would declare its quarterly results. His assumptions turned out to be right and Excel Crop Care’s quarterly results were highly disappointing. In the next few weeks, the stock price went down to Rs. 89 from Rs. 225. Bhavook Tripathi now entered the stock and picked up approximately 4 lakh shares in his portfolio. A few months later the share prices crossed Rs. 200 mark after Supreme Court of India relaxed the terms and conditions of the ban that favoured Excel Crop Care. Tripathi booked profits and it was a pretty easy decision for him!
An aspiring stock trader can learn many things from Bhavook Tripathi’s story. One should know when to enter a stock and exit from the same. To follow an ace investor’s portfolio can improve your knowledge on stocks. But, you should also keep in mind at what price they enter and exit from a stock. Blindly investing based on their portfolio without basic study is never recommended. Stock market is not a gamble. Patience is the key. Before investing in a company, one should have good knowledge about the company. The quarterly and annual results play a big role.
Bhavook Tripathi believes in investing smartly. His latest portfolio worth is not known. As per some sources, it was more than Rs. 250 crore as of November 2012. Many analysts and investors of the country predict that the worth of his present portfolio may be somewhere between Rs. 400 – Rs. 500 crore!
If you think this post can benefit others, then do share!