Basant Maheshwari has been an active equity investor for more than 20 years now. He is known to pick up stocks in his portfolio at the right times. And, he is doing it quite consistently throughout his investing career. Maheshwari’s interest in the stock market mainly developed because of one of his maternal uncle who happened to be a broker at the Calcutta Stock Exchange. During the eighties, while Maheswari was still a kid, he used to visit the stock exchange with his uncle and would go through the newspapers that had plenty of business news. The numbers associated with stocks were something which made him curious. At that time, what young Basant Maheshwari could only understand that the place can turn somebody into a millionaire!
The Harshad Mehta era
A few years later in 1991 he enrolled in the BCom course at St. Xavier’s College, Kolkata. During that time, he became more active in the stock market. However, he was only an observer then. By then Harshad Mehta established himself as a prominent name in the Indian Securities Industry. Like many other stock enthusiasts of that time, Basant Maheshwari also got attracted to Mehta’s investment philosophies. Such was the Harshad Mehta effect that Maheshwari and his friends would often skip their classes to visit the Calcutta Stock Exchange.
In 1994, he graduated. The following year he also successfully cleared the Cost Accountancy examinations and became a qualified Cost Accountant.
Basant Maheshwari’s father told him that trading in stocks is nothing but a gamble
After completing studies, Basant Maheshwari’s father asked him to join their family business. However, he was unwilling to do so and wanted to establish himself as a stock trader. He communicated his wish to his father and requested him to give him some money so that he can start investing in the stock market. The request was rejected. He was even told that trading in stocks is just a gamble. The words were discouraging but Basant Maheshwari didn’t loose hope. He joined the family mining business. However, there was a plan behind this decision and it was to use a part of his salary to fund the investments.
Funding the investments with monthly salaries
Basant Maheshwari’s career in the stock market soon started. The plan not only worked but it also gave him immense confidence. With the salaries that he used to receive on the first day of every month, Maheshwari started purchasing stocks. He wasn’t still an expert in this field and didn’t even knew the importance of creating a diversified portfolio. His mantra was if the price of a stock is less then buy more and if the price is high then buy less.
During the late nineties, Zee TV was a booming company and many investors also purchased huge amount of shares of the company. The stock did well. Maheshwari realized that the private television channels would do well in the near future. In 1999, he spotted a company named Shree Adhikari Brothers which did some popular programmes on Doordarshan. The company was scheduled to launch a channel. Maheshwari was quick to realize that the stock would do well. He entered the stock at Rs. 130. A few years later, the price moved up and crossed Rs. 1900.
DSQ Software was another fantastic pick of Maheshwari which he picked up at Rs. 300. There was a time when the stock touched Rs. 2800. These were some of Maheshwari’s initial successes. They motivated him to invest more in the stock market. He took a huge loan from Standard Chartered Bank to purchase different stocks.
The year 2000 which turned things around!
The year 2000 turned out to be a bad year for Basant Maheshwari. He lost most of his money in the stock market. Furthermore, the family business of mining too failed and the government took all the mines that they possessed. Basant Maheshwari took up teaching to earn. It was during this time, he came across a book titled “One Up on Wall Street” authored by Peter Lynch. A new Basant Maheshwari was born after he completed reading the entire book!
Basant Maheshwari’s second innings at the stock market
Maheshwari started his second innings in the stock market in 2001. This time he was more logical and had strong knowledge on investing in stocks. In the last 15 years, he achieved significant success. The hard work helped him to establish himself as a leading equity investor of India. His successful stock picks include Bharti Airtel, Trent, Pantaloon Retail, Axis Bank, Titan, Page Industries, Hawkins Cookers and Gruh Finance.
Investment Philosophies of Basant Maheshwari
Basant Maheshwari prefers investing in companies that pay dividends at regular intervals, give significant returns on equity and have high sales growth. He avoids purchasing shares of a company which is not among the market leaders.
A few years back while speaking at a seminar Basant Maheshwari stressed on the importance of earning big from stocks rather than focussing on earning early. Focussing on earning more can lead to wealth creation.
“Most people start buying shares thinking they will make Rs. 2,000 or Rs. 5,000 a day. But that cannot change your life. What can change your life is making Rs. 2 crore or Rs. 5 crore over many years.”
He has been following this philosophy since his second innings at the stock market. This also helped Maheshwari to include a couple of multi-bagger stocks in his portfolio at different times.
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The following list reflects the performance of different stocks that Maheshwari held in his portfolio at different times.
Basant Maheshwari held this stock in his portfolio for a period of 5 years (2003-2008). During 2003 when he purchased shares of Pantaloons, it was a booming premium clothing retail chain of India. The company was also gradually expanding into other Indian cities. When Maheshwari sold off his position in Pantaloons, the return that he received was almost 40 times his investment.
The stock was picked up in 2008 when it was trading at around Rs. 350. The company was gradually capturing the market share and was growing at a significant rate. This was the reason why Maheshwari included this stock in his portfolio. When the shares of the company were sold in 2014, the returns were almost 18 times the investment amount.
The stock was held for the period 2003-2007. The return for Maheshwari was almost 14 times.
Basant Maheshwari invested in this stock in 2008 because the stock was going strong in spite of the global recession that hit all the stock markets in the world. Moreover, the dividend yield was also decent. This investment didn’t disappoint Maheshwari and he was able to earn returns of 6 times the investment in 2014.
Maheshwari picked up this stock in his portfolio in 2001. When he exited in 2004, he was able to earn returns close to 6 times the investment.
When Maheshwari entered Titan Industries in 2008, it was already a big brand and Return on Equity was also high. He exited from the stock in 2014. Maheshwari managed to get returns of 6 times from this investment deal.
This is another stock which Basant Maheshwari held between 2003 and 2006. This investment gave him a return of 6 times.
During the early 2000s as Indian telecom companies were marking their entries in the country, everybody thought them to be the big brands of the future. With a gradual increase in the popularity of mobile phones, the success of these companies was just a matter of time. This was the logic which compelled Maheshwari to purchase the stock of Bharti Airtel in 2002. The decision turned out to be a great one. When he exited the stock in 2004, he got a return of 5 times of what he had invested.
The stock was held between 2002 and 2004 and gave a decent return of 3 times.
Basant Maheshwari invested in Voltas in 2008. He also exited the stock the same year. But, this investment decision of Maheshwari turned out to be a bad one and he had to incur a loss of around 60 percent. Voltas was trading at around Rs. 250 during January 2008. By March 2008, the stock fell significantly to around Rs. 164. The stock appeared cheap and Maheshwari decided to enter the stock. However, the stock price of Voltas continued to fall. Maheshwari sold off the stock a few months later. Voltas continued the downward slide and even reached a low of Rs. 33 in March 2009.
Basant Maheshwari has proved that to learn from the mistakes is necessary. He did some mistakes in his first innings at the stock market. He didn’t repeat them in his second innings. Maheshwari learnt from his previous mistakes, otherwise, he couldn’t have established himself as a leading investor in India!
Image Courtesy: Facebook Profile of Basant Maheshwari