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Jhunjhunwala wants to fly

Jhunjhunwala wants to fly

the ace investor wants to back a new airline. but why?
finance
July 16, 2021
2 min read
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Jhunjhunwala wants to fly

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everyone’s heard this. what’s the best way to be an aviation millionaire? start as a billionaire. running airlines is hard. ask Naresh Goyal. or even Vijay Mallya. this is when everyone’s flying. what makes someone back an airline when barely anyone is flying? 

that’s a good question to ask Rakesh Jhunjhunwala. he has decided to hop aboard a company along with aviation experts to start a low-cost airline called Akasa.

not his first time on a flight deck

he has been bullish on airlines multiple times in the past. Jhunjhunwala had famously bought 1.4% of SpiceJet in a bulk deal back in 2014. he sold that stock a little later after he made a 33% return. he got back in the aviation business in 2018 and bought large amounts of equity in airlines once again. the 61-year-old clearly has an aviation thesis. 

understanding the big bull

Jhunjhunwala is a value investor who has become a legend in the circles. a recent scalp of his grabbed headlines when he made gains of over 250% in Nazara. he had come in as a private investor during the gaming company’s early days and exited when it IPOed. he has always been trying to find undervalued assets in the Indian market and this time he has decided to back one which hasn’t even taken off. 

one of the reasons this sector excites him is the margin of safety. the sector is battling a crisis and resources such as pilots are easily available. reports indicate that experienced and newly-graduated pilots are looking for opportunities to fly once again. because of lockdowns, air traffic is down and airports aren’t making as much money as they once did. some companies managing them have been looking for debt. they may be willing to give spaces for cheaper than they would.

and if none of this convinces you, Jhunjhunwala’s mentor, RK Damani turned from investor to entrepreneur in search of the right bet. this could be a step in that direction.