Raamdeo Agrawal's Investment Journey: From Middle-Class Upbringing to Forbes Billionaires List

In the dynamic landscape of the Indian Stock Market, where winners and losers emerge daily, years of investing have given us a rich tapestry woven with the stories of prominent leaders. Raamdeo Agrawal is a big name when it comes to investing.

He is also known for being a co-founder of the Motilal Oswal Group and made it to the Forbes list of billionaires in 2018. He has now been investing for more than 30 years. The twists and turns he faced helped him succeed and learn a lot about investing.

According to Raamdeo Agrawal, If you comprehend the company as well as or even better than the owner, you should easily be able to predict its future. If you don't understand the business as it is today, you can't comprehend the company's future value. After facing many challenges, he became one of the top ten investors in India. 

Let's have a look at his success story with Jobaaj Stories.

Early life

Raamdeo Agrawal was born in a Marwari family, in 1953. His upbringing was in a middle-class family. He moved to Mumbai to become a Chartered accountant and completed his CA at 27. In Mumbai, he met his pal Motilal Oswal with whom he later started the Motilal Oswal Group. His investing journey started before completing his CA. 

He was passionate about investing and would spend his free time looking at balance sheets and understanding the company's capacity, cost structure, and profitability. Later in 1986, he turned his passion for equity research into a book called Corporate Numbers Game. 

Further, he also started businesses of Asset Management in 2008 and Housing Finance in 2013. He received Rashtriya Samman Patra for consistency in the highest integrity in tax payments by the Central Board of Direct Taxes. 

Investment Journey of Raamdeo Agrawal 

In 1987, he joined the Bombay Stock Exchange as a sub-broker. In 1990, he became a stockbroker and began investing. Raamdeo has invested in companies like Hero Honda, Infosys, Eicher Motors, etc. 

In 1996, he purchased Hero Honda stocks at Rs. 30 each and later sold them at Rs. 2600. In the mid-90s, he bought shares of Infosys and sold them for a return of over 12 times. He also purchased Eicher motors stocks at Rs. 900 each, which reached Rs. 32000 by 2017.

Raamdeo Agrawal also encountered numerous difficulties along the way, which he eventually used to generate his learnings. According to Him, his biggest mistake was investing in Financial Technologies at one point.

The investment portfolio of Raamdeo Agrawal

As per Raamdeo, an investor should limit himself to 15 stocks for incentive. Even Holding 15 stocks is excessive for him. He recommends holding a group of four to five Stocks. According to corporate shareholdings filed for December 31, 2023, Raamdeo Agrawal publicly holds two stocks with a net worth of more than Rs. 6,436.7 Cr.

Raamdeo Agrawal’s Idol

His investment value dropped from 30 to 10 crores after the Harshad Mehta Scam. Harshad Mehta's scam made him rethink his approach to the market. 

It was in 1994 when he decided to attend the Meeting of the shareholders at Berkshire Hathaway. In the Meeting, he met his Idol, Warren Buffet. Being an avid reader in Finance, the next thing to make his list were letters Warren Buffett wrote to Berkshire Hathaway. His meetings with his Idol made him change his investment strategies. He limited his stock holdings and focused on quality rather than quantity while investing. 

Raamdeo has been attending the sessions at Berkshire Hathaway since then. He once purchased the shares of Berkshire as well and later sold them as well.

Some Investment approaches of Raamdeo Agrawal 

1. QGLP Approach 

Quality- Experiences are always crucial for good learning. Raamdeo realized the importance of quality after his investment in Financial Technologies (India) Ltd. The shares he sold for Rs.150 were bought for Rs. 1150 by him earlier. According to him, The management of the company needs extra attention.

Growth- The growth of the business is an important aspect that needs consideration while making an investment decision. Investors should seek out a company that can profit from current circumstances in the future.

Longevity- Investors are encouraged to invest in businesses that have been market players for a long time. Investors should also focus on whether the quality and growth of the company will sustain for a long time.

Price - Price refers to the stock price relative to the underlying value of the business. Agrawal believes buying stocks at a discount to their intrinsic value is the key to generating strong investment returns over the long term.

2. Three Ds in investing

The Three Ds of investing are Discipline, Diversification, and Differentiation.

Raamdeo believes that discipline should be the must trait of the investor. A habit that can make you good at something is frequently created with the aid of discipline.

 Investors can reduce risks by investing in different industries, investments, etc. Diversification is vital for achieving long-term goals.

 For a valuable and stable portfolio, it is necessary to differentiate between price and value. The investor should stay unaffected by price, keeping the value as an aim.

3. The Compounding Effect: 

It is always better to stay invested in a good business for a long time. It can give you multifold returns. It can be less risky and might involve less effort. Raamdeo emphasizes holding on to the stocks for the benefits of the compounding effect.

4. Use a bottom-up approach:

Agrawal follows a bottom-up approach to stock picking. He analyzes individual companies rather than focusing on macroeconomic factors. He spends a lot of time studying the fundamentals of the businesses he invests in, including their financial statements, management quality, competitive positioning, and growth potential.

Wrapping Up

Raamdeo Agrawal's success story in investing spans over 30 years, during which he co-founded the Motilal Oswal Group and became one of the top ten investors in India. His investment strategy emphasizes quality, growth, longevity, and buying stocks at a discount to their intrinsic value. Due to his approaches and experience, he is on the list of successful philanthropists like Ashish Dhawan. 

Thanks for reading!

Also, Read about the Warren Buffet of India!