Renowned stockmarket trader-cum-value-investor Rakesh Jhunjhunwala is bullish on commodity stocks, particularly steel, and feels they still have steam left despite the run-up over the last few months.

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The astute stock picker has named Tata Steel and JSPL among the stocks in the sector he is bullish on.

"I made a very large investment in Tata Steel and JSPL," he said in an interview to CNBC-TV18's Nisha Poddar.

"There is a lot of money in commodities; I feel this commodity cycle is going to last for minimum of five years. The valuations were absurd, and when compared to cash flows, the valuations are still absurd," he said.

Among banks, Jhunjhunwala is bullish on state-run State Bank of India and Canara Bank. He said both banks have fully provided for bad loans and have a strong in gathering retail deposits.

He said that credit growth, which was 7 percent in FY21, is likely to be in double digits by next year.

On SBI, he said: "The bank is very well run, it has YONO. If somebody wants to borrow Rs 5000 crore, whom will he go to? It is doing very well in the retail space, their subsidiaries are doing well. Nobody can match their distribution reach for insurance products and mutual funds."

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Value unlocking in private equity

Over the years, Jhunjhunwala has been actively re-deploying the profits from equity investments into the private equity space. There have been hits and misses, he agrees, but remains confident that some portfolio companies will give “multi-returns.”

Many of the private equity (PE) investments made by Rare Enterprises have now reached maturity and are ready to go public. An investment made two years ago in a consortium with WestBridge, Star Health is close to filing for an IPO, reports suggest.

Four companies from the PE portfolio should list in 12-18 months, Jhunjhunwala said, without naming the companies.

Jhunjhunwala's Rare Enterprises has formed a consortium with Renuka Ramnath’s Multiples to buy Zydus Animal Health for close to Rs 3000 crores.

“Animal husbandry & poultry can be a big source of income for the farmers, with the govt promoting this space, the opportunity is too huge,” he says.

Rakesh Jhunjhunwala is looking at two more PE deals in education and healthcare over the next six months.

Note to reader: An earlier version of the copy said JSW Steel instead of JSPL. The error has been corrected and is regretted.

First Published:May 27, 2021 1:38 PM IST