Why Raamdeo Agrawal Is More Bullish on India Than Ever | The Next Decade of Wealth Creation

[00:00:00] The National Market is one place where if you master it, the money is like kingdom pay. It is the biggest wonder of the world. It is not the eighth wonder, it is the first wonder of the world. Say let's talk about Bharti in 2003. I calculated that in next five years these guys are going to make anywhere between 25 to 30,000 crores. I got one like 25,000 shares. I had 25. I filed on 10x. I bought a million shares. It went to 1200. This all happened in three years time. The bad thing is the media is completely

[00:00:28] focused on the world. I'm telling you in the next 10 years India will be the most crowded capital market in the world. Half a billion people will do invest in India. The world is actually becoming rich while there are three wars are on. Hamas happened, Ukraine is on, Iran is on. And yet US markets are up by 22% in last one year. But you were being greedy when others were being fearful. I had conviction. I never do anything without conviction and conviction could be wrong. Will it be the same with AI or is this fear?

[00:00:56] I think so. Right now, a lot of scare is there that job losses will be there. I still think robots will be the servants and humans will be the bosses. What about keeping up with technology? I spent a lot of time with AI. Glock is my favorite. For someone who's say new to the stock market or doesn't know too much about it, what would be the three, four principles you think they need to follow at the get-go?

[00:01:24] On this channel, we talk about wealth creation almost every day. But today, we're going straight to the source of where that philosophy came from. Born in a small village near Raipur, Chhattisgarh, in a middle class Marwari family, our guest came to Mumbai to train as a chartered accountant with no family background in the markets, no capital and no roadmap to follow. In 1987, along with his friend,

[00:01:49] Motilal Oswal, he began as a sub broker on the floor of the Bombay Stock Exchange, quite literally shouting orders under the open outcry system. That partnership is the reason that this channel exists. Nearly four decades later, what started as a small sub-broking outfit has grown into Motilal Oswal financial services spanning broking, asset management, private equity, investment banking, wealth management and

[00:02:16] home finance. He is the architect of QGLP framework, quality, growth, longevity, price and the buy right, sit tight philosophy that has shaped how a generation of Indian investors think about the markets. Since 1996, he has led the annual Motilal Oswal wealth creation study and is the author of Corporate Numbers Game and the Art of Wealth Creation. His conviction bets like holding Hero Motorcore for

[00:02:43] two decades, including the years where the stock barely moved, have become case studies and patients for investors beyond this firm. He has lived through the Harsher Mehta scam and the portfolio damage that came with it, rebuilt it from there and helped build not one but seven businesses under one roof while doing something rare among Indian promoters, handing real ownership and power to professionals outside the

[00:03:08] family. Today, as chairman of the Motilal Oswal group, he has spent almost 40 years compounding both capital and conviction. And now he's here to talk about the philosophy, the mistakes, and the next 40 years. Thank you so much, Mr. Agarwal for joining us. You know, everyone knows of you today as the prolific market guru. But if we were to rewind the clock when you actually began your journey, there was no capital, there was no family backing, there was nothing for you to

[00:03:37] really lean on. Can you tell us a little bit more about where that self belief came from when you entered the markets? But market was there as vibrant. Yeah. So market was always a very exciting animal, you know, and exciting place. And it's like a wonderful movie, but you can't buy the ticket. You can't afford to buy the ticket. You are not

[00:04:02] some big show is happening and you are sitting standing outside. Yeah, that was the situation when I passed out in 84. But there was always an urge to watch the next show, you know, and hence buy the ticket. And then you keep working towards it. We started becoming sub broker in 87. That didn't require any fee or anything. You take a ticket from one of the established broker and he, you go with your own customer.

[00:04:30] You share 50% of the brokerage with the guy and that's how the arrangement works. So we started that zero capital, two bosses, one peon. But we had a small little space. Yeah, no space actually. Yeah. I mean, literally, it was a hundred square foot kind of a some got forsaken place in Kalwadevi. But there was a palace for us. Yeah. You know, one telephone, two chairs and

[00:04:57] diplated building completely. I'll be scared to enter that building. So, you know, that kind of place. But the great thing, I was very excited that we have our own place to sit and have our own telephone, our phone number, to have phone number, your own dedicated phone number where you because the phone itself was in short supply. That was the economy when we are born. Yeah, you know, so we had taken by spending some money, one telephone line in office and one telephone line home.

[00:05:25] Okay, so office, you do office work, whatever and home research service and collection of orders so that Mutlalaji couldn't afford to have a phone. So I have a I had a phone.

[00:05:36] Yeah, and we had one phone in office, but Mutlalaji didn't have phone for first two, three years. Oh my gosh, he was in Dombivali and he didn't have a phone. I had a phone in Lokanwala because I was giving the client service, like research, talking ideas. So we installed two phones, one at office, one at my home. That's how it worked.

[00:05:56] So it really proves that that passion was there, that you were ready to do anything to really make it work. Can you tell me a little bit more about what your what kind of conversations you all used to have together? Were you all scared of failing? Was it a very risky bet that you were taking? What was the thought process?

[00:06:14] See, it is what I would say. I was passionate about the stock market right from 1980. So I was investing in small sum of money of my brother, who had given me a few lakhs, maybe four, five lakhs at that time. Yeah, maybe a lakh or two, and then it became five, six lakhs of his. So that gave me a playing ground where nobody is asking me what's happening. So actually with that money only, I learned stock market really. And to make money for my brother, I learned everything actually.

[00:06:43] Did you make money for him? Yeah, I did make money. I don't know how much I made, but I did make money. I don't think we incurred too many losses. Okay. So between markets were cheap. It was very easy, very simple. If you can read balance sheet, you can make money. It was that kind of situation. It was very, very early, very early. And we were like, way ahead of time. Like, nobody was reading balance sheet. I could read balance sheet. Yeah, I can relate in the market. I could proficient and I had that confidence.

[00:07:09] Right. So you were saying you were very passionate and you got the opportunity for a playing ground by managing your brother's money. And you did manage to make him a decent amount. And that led me to see because there were no research reports available, not many books available. So the best way to understand a company was to read the balance sheets. Yeah. The balance sheets was also somewhat rare. So I had met friends with an odd lot dealer. Odd lot dealer is a guy who, I mean, that time there was a system of lot.

[00:07:39] So you have to buy 50 shares or 100 shares, anything less than that would be odd lot. And odd lots of five shares, 10 shares. So those shares, somebody will aggregate and make a lot and sell it at full price. Odd lot shares would be 5-10% lower than full lot shares. So there was a, there is a guy who had almost all the company on earth registered in his name.

[00:08:03] Okay. So he was getting all the balance sheets. So I had met friends with him every other weekend, like every 15 days I would visit and collect all the balances from him. He would be very happy to discard. Yeah. He would get 10 copies, 15 copies. Tied on my bike. I had a bike and go home. And that was my weekend reading. I would finish up page to page by Monday morning. And that was a, that was a foundation I had of knowing the companies.

[00:08:32] Yeah. That's incredible. You've always spoken about being a very voracious reader. Yeah. Reader and. And can you tell me a little bit more about how books studying balance sheets, following some market legends, like Charlie Munger, Warren Buffett, et cetera, changed or paved your path in the markets? That was a much later thing. I mean, like initially it was my own, what do you call fiction that I was reading a lot of fiction. Okay. So that's. Balance sheets and fiction. Balance sheets and fiction.

[00:09:01] Balance sheets and fiction. So it just started with fiction. I mean, till about, I think after 84, I stopped reading fiction. Okay. But till then I used to be, I mean, I always have a book with me even today, but now it's not fiction. Then it was fiction. So I used to read fiction on financial, financial, what do you call financial fictions. And those are very few. There were very few authors like Paul Edmund, money changers.

[00:09:30] So very, very few will come, but how many I could read? I could read say 10, 12, 15 in a year and old backlogs were there of the books. So those books I read and I still remember Paul Edmund. He, I think his book, the first book I read was billion dollar sure thing in 81, 79, 80 or something that blew my head. Yeah. At that time a billion was more like a trillion now. Okay. Then he wrote a book called silver bear. Then he wrote a book called zero coupon bond.

[00:09:59] All three of them. I remember. I don't know some more. He must have written. I must have written, read all the books, but those books were very fancy. Like I think in, I think zero coupon bond, this guy's doing global trading of bonds and he has set up at a river side in a hotel, in a home.

[00:10:18] He would set up and, you know, antenna and all, and he will do a global trading from there. I mean, that kind of some crazy thoughts, which was complete fiction for me, you know, but they were making a lot of money in the books in the story.

[00:10:33] So that financial market is one place where if you master it, the money is like unlimited. I mean, like you're talking about trillions now, like a tie. So even that time it's all, it was a very large market and financial markets have actually started exploding post 87.

[00:10:57] Some, somehow, uh, the start of the financialization globally is in eighties. I think it is something to the computers, uh, because computing power till then was very limited. Yeah. So, and hence, uh, I mean, how do you handle paper? How do you handle the whole, the moment it started becoming a DMAT, then the proliferation of financialization happened worldwide. Yeah.

[00:11:21] India caught up a little later, but, uh, uh, but we had the foundation of stock market 100, 125 years back. And that gave us that grounding of education practices and how to look at the companies. And since I was making little money, I was, it kept me going. Correct. I mean, if I hadn't, if I had not made money, if I had gone into speculation and lost it, then I would have lost it.

[00:11:46] But I think what you're stressing on is that your foundation was so strong and you mastered it, which is why the opportunity was there. Because there's a lot of people who also look at the stock market the way you did those years ago and say, wow, there's such a great opportunity. I can make so much money. But if they're not going to build their principles strong, then they can really get their fingers. You have to build. I mean, if you want to make a big, see stock market or the financial markets, you can make a thousand historic building. Even thousand is less, I'm telling you.

[00:12:16] Ten thousand historic building. Therefore, but building ten thousand historic building, you need that solid foundation. Because the foundation of the foundation, you can make a big building. So probably my foundation, when I look back, I didn't know what I'm doing. But it looks like, you know, I was making a good solid foundation for whatever we have built brick by brick.

[00:12:43] So I mean, that was the early, early days. And it was out of complete passion for making money. And it was fun. It was magical that you buy something for 50 bucks, it goes to 100. Yeah. You know, it's magic actually. It's like when you go to magician, you give one ball in hand and then suddenly when you open it, it's five. Yeah. So it's something like that. Yeah. Absolutely.

[00:13:09] But you know, you've spent 30 years admiring and learning from the likes of Munger and Buffett along the way. What did you have to invent for yourself? Because there was no equivalent of that in India. Yeah. Like see this entire capitalism is truly, it is American phenomenon. It's very, very, very American. I mean, maybe the markets must have started from Amsterdam and Britain and Europe and things like that.

[00:13:36] But very early it got transmitted to US and the Wall Street in the 20th century, right from, I think even before World War II. I think we don't have any books from UK and all. I mean, the erstwhile books. So it's all started from. If I understand correctly, the earliest books are what Benjamin Graham read, you know, what he read.

[00:14:03] And then he wrote security analysis. In fact, the entire academic foundation of valuation and stock market stock market was there, but academically written. I think it all started in 2030 and things like that. And then Burr William and Graham and those guys, they started writing. They were props and all.

[00:14:26] And then it was taken up by Buffett and practitioners like Warren Buffett and Munger. And then the fund management exploded. Peter Lynch and all kinds of mutual fund guys who are managing now trillions. They took it to a different level of financialization. And now we are talking about just I'll tell you in 1950 total market cap of the world was 200 billion as much as today's Reliance.

[00:14:56] Okay. Today it is 164 trillion. So how many times it is up? It is up 700 times in 75 years. So that's been the kind of a revolution. Actually, financialized financial stock market revolution is on for 75 years. And actually we are seeing the best part in last 5, 10, 15 years post 2000. Yeah, exactly.

[00:15:22] So tell us what is the best part, especially when you're looking at it from a very macro perspective on India. Are there things that you believe India has as big strengths that maybe others would disagree with? Yeah, everybody has his own opinion. But I am an India bull. So, and for the right reasons what I understand about India and India is a very, it is a very large country. We have to understand it's a very poor country.

[00:15:51] I mean, what this is what the legacy we have got. And we have been growing from say in 1985, there was one report where I think per capita GDP was about $200 or something like that. Less than a dollar per person per day. 95% of people were poor. I mean actually poor. Like you could see in the streets of most of the cities, a lot of beggars.

[00:16:16] You might have seen in last 20, 25 years, you will rarely find any beggar, actually beggar in Mumbai now. So that's the transformation from 85 till now. You know, so it's a very different country to understand. It's very poor, very large, a lot of value system, a lot of entrepreneurism. And so we are growing at about 7, 8%. And that's the pace at which it will go. I don't think we are going to go to 11, 12%.

[00:16:45] And, but then we can keep growing like this for next 100 years. You know, that looks like, I mean, 100 years, in any case, I'm not going to be around. So for next 40, I mean, I have seen 45 years. And what's going to drive that growth? Same. What has driven last 45 years, same will drive here. The world is growing, you are growing. You know, if the whole universe called globe or world economy is growing at about 4-5% dollar, nominal dollar,

[00:17:14] I don't see any reason why it will definitely slow down at some point of time, it will break down. But the machine is so well oiled that it will keep growing at 4-5%. I mean, you cannot visualize very long, but I don't see any end. It's just a cut into perpetuity. Yeah. I mean, the world didn't know 50 years back that will be $164 trillion market cap.

[00:17:40] So like that, I can't say that it will be $6,000, $7,000 trillion market cap by 2050 or something like that. So leave that number. It's mine, completely mine, mine goes away. So you've been an eternal bull, but we've had some trying times off late. I know we've had a lot of headlines thrown at us. But despite that, does your philosophy continue to remain the same when it comes to driving decisions in terms of what drives your long-term success as an investor?

[00:18:10] Yes. When is that? What is the opportunity? Is the opportunity exploding? Opportunity is exploding. You know, but so we have to also, it is becoming competitive also because now there's too much on the table. And there are too many, everybody can see it. Everybody can see the opportunity. But so the competition now, young kids are coming. When I started in 87, if you're a charter account and you're coming to the stock market, you're not marriageable. People used to hate it. You know, today, if you're a charter account and you are not in stock market, people hate you.

[00:18:40] Yeah. That's a change in 40 years. Yeah. You know, so now it's all over. Everybody, housewives, even farmers, everybody wants to be in stock market. I'm telling you in next 10 years, India will be the most crowded capital market in the world. Half a billion people will do invest in India, in India. That is what is the power of DII. So, okay. So what are the questions? I lost it.

[00:19:08] I was asking what qualities matter the most as a long term investor because you're a perennial bull. Yeah. So you have to be optimist. You have to look things. Sad thing is the media is completely focused on negatives. They will twist even the positive. They will twist it negative. I don't know what pleasure they get in presenting it that way. You know, they cannot call a bull a bull.

[00:19:36] You know, so that's a problem with the media and not only Indian media world over. Yeah. So. Optimist. Yeah. So being optimist because a lot more good things are happening while bad things are also happening. So media reports the bad things. So you have to be able to balance that world is actually becoming rich while the three wars are on. How much happened? Ukraine is on. Iran is on. I mean, world has three major wars.

[00:20:04] And yet, look at the market cap as US markets are up by 22% in last one year. Yeah. You know, 22% means what? We are talking about something like 65 trillion going to 80 trillion. 15 trillion dollars. Half the GDP of the country has been built in just last 12 months. And yet we are in the wars. Yeah. So nobody talks about that portion of it. So you have to be optimist. I mean, you have to find your logic for being optimistic.

[00:20:34] Yeah. But you have to be optimist. And second is you have to also understand the value and price equation. The world knows the prices. Nobody knows value. So price is what you pay, value is what you get. So, but why I say read balance sheet? Because that will allow you to know the company.

[00:20:58] And at some point of time, you'll be able to figure out which companies in related terms, which company is better than other. So then you can in your mind, if you read five companies, then you can say, okay, these five companies are one, two, three, four, five. Is the valuation also like that? Valuation will be misaligned. Okay. Markets are not that smart. Particularly at the early stage. Fair.

[00:21:29] Yeah. It sounds very simple. Can you put it down in maybe a real life example of when you read into both the metrics matching up to each other or not? And that's when you realized how important it is value as well. No, somehow it was always my head that I couldn't put it the way Buffett has put it. This is Buffett's quote. Price is what you pay, value is what you get. Yeah. So if you could translate that into a real example of say a company that you assessed or a stock that you assessed. Yeah.

[00:21:58] So I'll tell you, say, let's talk about Bharti in 2003. Yeah. Okay. So I read a book. I read a book or paper of economics of network businesses. Okay. So that time network business. So network business, the beauty of network businesses, which started with the internet basically. Before that was a telecom businesses where you build a network of subscribers. So the network business, the funny part is winner takes it all.

[00:22:27] The guy who builds the biggest network, he wins it. After that second guy, whatever he does, it is very tough to break the advantage of the big network. So what happens is the number one guy makes 90% of the profits. So if there is a hundred billion dollar to be made, 90 billion will be made by the first guy. $10 billion will be made by second guy. And third guy will be perennially lost. Perennially. You can go and see in telecom companies worldwide, particularly in America. Okay. This I read in 96, 97, 98.

[00:22:57] Now comes 2002 and IPO of Bharti. Now you can see the opportunity size in India. We didn't have telephones. I told you about 87. Yeah. And 87 and 2002 was no different. There were no telephones. And so the India needed telephones like mad, but we couldn't lay the enough cables, even if government wanted to. It took, but this was effortless.

[00:23:23] You switch on a exchange and suddenly you can give to millions of guys effortlessly. So what happened? There was a literally revolution of connectivity. You're not seeing the world without telephone. So in 2002, when they came with the public issue, they came at 45 bucks. Okay. But they were making losses. So our understanding was very limited by you. If you're making losses, you're, you're of no value. So actually I recommended so many fund managers to sell at 45.

[00:23:52] We beat it down to 18, 17, 19 bucks. Okay. After that, everything is not because of me, but definitely 45 to 43 is because of me. I made so many people sell. Then at 18, 19 on 23rd, January 2003, Con call of the company, they said we have broken even. And now from here onwards, we'll make money.

[00:24:17] I calculated that in next five years, these guys are going to make anywhere between 25 to 30,000 crores. You calculated. I calculated. The stock was available for 5,000 crores. 2,000 crores equity, 20, 25 rupees was the price. So 4,000 to 5,000 crores, you could buy the entire company, which was going to make 25,000 crores in next five years. What do you do? You're knowing the price is there for everybody. You could buy, sell as much you wanted. Yeah.

[00:24:46] You could buy 1,000 crores worth. I had some money. I bought one like 25,000 shares. At 25. Now I go and explain to the guys, nobody understand because nobody has read the book. I was way ahead of time at that point of time. Now it is not that easy. Correct. So at that point of time, so when I bought at 1,000 crores, by the time it was 30, it happened in 15, 20 days a month, maybe one or two months. It went from 25 to 30.

[00:25:16] Everybody made me sell. So I sold one like share. So 25,000 shares. I said, this is profit. I'm not going to sell. That then very long term thinking was not there. Why did you listen to everybody? You have to listen. They're all friends. So then the stock went to 35, 40. I said, nobody understands. I piled on 10x. I bought a million share.

[00:25:43] Stock went to 90 in say five, six months a year. At 90, my analyst left and went to Reliance. From there, he tells me, Ramdeji, they will crush Bharati. You sell. Oh. The might of Jio and all. I sold. Stock went to 140.

[00:26:13] I said, this Joker also doesn't know. Yeah. So then, then I again went three, four X. Because I had already sold half. Again, I rebuilt. Maybe I had one and a half million or two million shares. It went to 1200. This all happened in three years time. Yeah. So knowing what? Knowing the value. I was not chasing the price. I was chasing the value. Price was chasing the value.

[00:26:39] So the best thing to happen in life is that you know the value so much ahead of time. That price will keep chasing it. And value will keep changing. No, that's incredible. Knowing the value ahead of time. You've proved that example with Bharati. If only that analyst hadn't called you up, maybe things would have been even more different. No, no, it's okay. These events will happen. Absolutely. But you have to have your conviction. See? Correct. You get conviction and then you don't act. So what can you do?

[00:27:09] I saw Bharati at 20 and I didn't buy. See, that is why they say it's also an emotional game, right? You can have the intellect, you can have the knowledge, you can have the information, but acting upon it is a lot of our emotional portion. Can you tell me about how that plays a big role? No, so I think sizing of the bet is important in the sense that if you have at that time, I must have had which year I'm talking about 2003. So I had about 10 crores. So of the 10 crores, the whole game was 2.5%.

[00:27:36] This is I don't know which book I read, but 2.5% is a good way to start. Okay, so that's, you know, something like 25 lakhs. So you can buy 1 lakh share, 1.5 lakh share, something like that. So I always put 2.5% as a first bet on any stock when I get it. So if I have 10 crores, then also I put 2.5. Yeah. Then I have 1000 crores, then also I put 2.5. But you were being greedy when others were being fearful, which is a difficult thing to do in actual practice, isn't it?

[00:28:04] No, I was not that greedy in the sense that… Well, at least you had conviction. I had conviction. I never do anything without conviction. And conviction could be wrong. Tell me when it has. For you, can you give me an example? Yeah, it has happened in the past. Can you share? Particularly when I chase, you know, when I start, I like something at 100 and the stock has gone to actually 500 and finally I buy it at 5. The moment I buy it at 500, it slumps to 300. Those things have happened. Any examples?

[00:28:32] No, it's not right to give a name because those companies are now very successful. Okay, but you know, managing your own money is one thing, but how difficult or how different is it? Managing other people's money in terms of what the approach is? What is the style? So I've done both. I mean, for the first 25 years, I did only private money. Then 2003 onwards, we started.

[00:28:55] In fact, 2003 till 2018, I did manage money for the public. And it was fun to manage because I was managing the way it is my money. Yeah. I was also having a few hundred crores of my own and a few thousand crores of public. So for me, it was a parallel thing and everything was same. What I was doing for myself, I was doing for them.

[00:29:20] In fact, the principle was do it for others first and do it later if it permits. In fact, I merged my own money with the public money. So it was the same products. Okay. So the style, the approach, everything was the same. Everything was the same. I didn't have two portfolios. No added pressure. No, no, no, no. I didn't want to do anything which is questionable. Okay. Never. Okay. You know, I want to understand a little bit more about careers and I believe most people, you know, plan their careers, but they don't plan their days.

[00:29:50] And I heard you have spoken a lot about designing your day instead. How does someone actually realistically start doing that? If someone is watching you today, they're demotivated, they don't know where to begin or they're at a little crossroads. What do you tell them about designing your day? Why is that important? And how do you do it? So now I'm, I have freedom to, I'm kind of a, so I have freedom to, I'm a chairman.

[00:30:17] So I have a lot of freedom, you know, so freedom of I, what I want to pursue, how intense I want to be. And so like, I want to read book. One book I definitely want to read every three, four, five days, 10 days, 15 days. You still get the time to do that. No, no, you have enough time. You've always had the time to do that. Always, always I had time. Made the time. Yeah. So, so that is one core thing because that takes me higher and higher in whatever field I'm reading.

[00:30:45] Second, I told you about last book I read was a startup game. I just didn't know anything. So now I know somewhat how it is being played in US and internationally. So, you know, it makes you a little better. Every book makes you a little better, little better, not significantly, but a little better. Of course. Yes. And joining the dots, it works out very well. So, so that is one thing.

[00:31:09] So I, I see to it that there is a block of two, three hours in a day to read or whatever I want to do. Okay. You know, so I want to read newspaper or book or generally catch up with some, some company reports or something. So I would, I would do that and then do three, four meetings, two meetings, three meetings. Like today I had three meetings. And, uh, so, so I'm able to. You plan it a day before you've planned that this is what my Wednesday is going to look like. Because I mean, my second who's.

[00:31:39] Yeah. She has been instructed to plan it like that. Don't crowd it too much. Like, okay. Not more than four meetings in a day. So some meeting lasts for an hour, some meeting lasts for half an hour. Okay. So like that. So then there'll be blocks of hours. So this is how I sit till 10 o'clock in any case, it's a health management in the sense that I'll go play golf or whatever exercise, talk with the friends, friends and also I, I actually start my office preparation day at 10 o'clock.

[00:32:05] So 10 to 11, 10 o'clock I get into bathroom and by 11, I'm in my office. Get ready at 1030 and be in office by 11 o'clock. So till 11, I have contributed nothing almost except for reading newspaper to the, uh, uh, official part of it. Then from 11 to whatever, seven, I'm very much here. Okay. But for someone else, is it important to design your day? Does that give you clarity, discipline? Yeah. I mean, initially it is you are cluttered.

[00:32:35] Uh, but, uh, as, uh, and if you are early stage in as an entrepreneur, okay, as an entrepreneur, you do a lot of flexibility to do what you want to do. Yeah. You know, but, uh, some, some entrepreneurs, they're crazy. Yeah. I mean, they work literally 24 hours. They don't get enough sleep. They're doing calls till 11 o'clock in the night. It's a hustle culture. What do you think? Yeah. So I keep telling him, if you work less time, you'll do better, but they don't listen. You feel you need that time to. No, no.

[00:33:04] You have to have seven hours sleep. Yeah. Yeah. You can't get anything more. Uh, I mean, it's like, uh, that is the best thing in life. But people who say that they are building, then days merge with their nights. It's all wrong. It's all wrong. But you have built something at the time. I mean, you know, but they, we have built nothing. The guys who have built multiple times bigger, I think they have also slept seven hours or eight hours like buffet. He's built a trillion dollar company. Yeah. Trillion dollar now.

[00:33:32] I mean, next 10 years will be four, five trillion dollar company in one lifetime to build from zero to a trillion and most ethical possible way and most transparent possible way. Yeah. Every, apart from that, how many guys like us, the first like us, we have become so much better. I don't know if that's the word, if anyone would use to describe you, but you know, you started, you were talking about very humble beginnings, a small room, having one phone line, starting the business 40 years ago with Mr. Oswal.

[00:34:03] What did it take? Did you always know that I'm, this is what we're going to end up doing? Uh, that this is the vision. Was it people? Was it capital? Was it delegation? What led you to where you are today? Yeah, it was, see, we were committed to a lot of work. We went to serving the customers. We knew the, uh, we knew the foundation of the business in the sense that, in fact, we wrote a mission statement in 87, maybe in a year into business.

[00:34:31] Uh, and the mission statement was to help people make money in the stock market worldwide. That's clear in 87, mission statement. That we want to see because I could see, I read some book where it is the world, the human is very reciprocatory. So if I help you make a crore, you will go out of way to see that I make at least a lakh or two. Always, you know. So we were very clear from 87 to take care of the customers. Customers will take care of us.

[00:35:01] And this, and the only trick we know is stock market. Hmm. I can make money for my brother. I can make money for myself. I can make money as well for the customers. And there's no competition. I make money and you also can make money for your customers. So where's the competition? So you're not worried about the other players? No, there is everybody's friend. So everybody's helping in their own way to help the customers. And there's so many customers. Yeah. So, so we were very clear. So we did everything very customer centric.

[00:35:31] No, no conflict with the customer interest because we were investing business in our own capacity and we were advising the same thing to our customers. So there could be conflict, but I was very clear right from beginning, not to be to come on the way of the interest of the customer. Okay. Always customer comes first, you know? So like if I have to sell, if I know I bought something at 10 bucks, price is 150. Everybody I want, I tell everybody to sell.

[00:36:00] And actually I will sell last. We have instances when the price collapsed by selling the customer's stocks. Yeah. Because it was a small stock. It collapsed from 150 to probably 70 or something. I could not sell only. They only sold. I mean, I could sell it for them only. So that was the priority. So always, always, that is a priority. That has, that has kept us in good shape so that we go with clean mind. Yeah.

[00:36:28] That we are not compromised with the customers because that is a God. Customer is actually God. And we are what we are because of the customers. If they don't give us money, they don't give us brook account. They don't give us wealth to manage. They don't give us to private equity funds or mutual. Where are we? What are we? Yeah. That is absolutely true. But it's also what's made the organization. What it is today is the people and the kind of culture that's built over here.

[00:36:54] Do you want to tell us a little bit more about what was inculcated apart from a very strong mission statement in terms of your purpose? So mission statement was before I met Buffett, but I think by 94, 95 till then we are running a bucket shop. We just because it was seller's market. The beauty is that there was no services and the country was booming. Stock market was booming and brooking services was so pathetic in the sense that it was very primitive. Brokers were very good lot.

[00:37:23] The guy, the community of the brokers were really very good. Even today they're very good. The issue was that the execution capability because of the paperwork was pathetic. It was very, very sad. Yeah. Tedious. Very tedious. And to settle the papers, so much of defects and all. So the capacity to execute was much smaller. Time was 12 to 2. And settlement cycle was, trading cycle was 15 days. Settlement cycle was 3 plus 21.

[00:37:53] That tedious. Compared to what it's become today where we are. Everything is seamless. So everything is Ziphy. We are talking about T plus 1. Yeah. So, and full demetalized, 100% success rate. No failure. No failed trades. So I think the transformation which I have seen in front of me is astonishing. And I don't know where we are headed. In the sense that, I mean, I think we are headed to 24 hours trading. Global access to the market.

[00:38:21] Like what, the way you can do it in New York or Dubai, you can do it out of India. Yeah. Someday that will happen. But I think most exciting will be 24 by 7 markets. And global access. I think that is, global access is one thing which is very clearly missing out of India. And with our own capital, can I buy Microsoft? Can I buy Nvidia? Can I buy say Korean company or something at my will? So because now knowledge is very global. Oh yeah. We are as good as anywhere in the world.

[00:38:50] Just that there is a restriction because of capital account convertible and all. But I think maybe in 5-10 years time, we will be as big a global superpower as anywhere else. Absolutely. But you know, we are looking at this AI boom and this major disruption as well that we are seeing. And in particular, the very things that Motilal Oswal was built on, research, broking. Does it worry you? How do you make sure that Motilal Oswal stays relevant in this era of AI disruption?

[00:39:20] Yeah. So if you see last 45 years, 40 years of this company, we have been adopting technology and whatever changes are happening, what are the opportunities are coming up, markets are expanding. Not only technologies, we are always at the forefront of the technology, but technology is one thing. The other is the evolution of businesses. We started as sub-broker of BSE. We became member of BSE. Then we became member of NSE. Then we became, in 2002, we started managing money for the people.

[00:39:48] So we started PMS services. Then we, in 2007, we took the full AMC license. Then we started private equity business. We started, we were amongst the early and private equity funds where we have done very well. Actually better than public market, we have done in the private market. Then we started wealth management. And now we are starting private. So whatever new, I mean, you couldn't have done private credit, say 20 years back. We were among the early ones to start private equity also. Yeah.

[00:40:19] And of course, mutual funds were not among the earliest ones. But whenever we found ourselves qualified to get a license, we put in our paper. So, so what is important is to remain relevant in this exploding capital market opportunity. If you stay put only with one, then probably your opportunities may remain limited. Correct. And the changing world. So when the technology is changing, some business may become redundant.

[00:40:49] You know, but concept of equity, concept of wealth management, concept of equity as a concept. I mean, it can have active, passive, smart beta, new, new products will come. But basically the world is becoming very wealthy. And right now we are managing say 70, 80, 80 lakh crores of mutual fund equity. I think in 10 years time, it will become almost 700, 800 lakh crores. But whether it will be active, whether it will be passive, whether it will be smart beta or AI driven,

[00:41:19] I don't know what all will happen. So we have to be there at the forefront, keep adopting whatever is coming. Yeah. You have been at the forefront and I think the fact that you said you've diversified into so many verticals has really, really been a big strength. But if you could tell us about the last 40 years and how the investing profession has changed in your view, what you like and maybe things you don't. Investing profession, see, basically principles of good investing remain same value and price, as I said. Yeah.

[00:41:48] Now what is value that could change, you know, like a company like say when Amazon came and they were making losses, but growing very fast in say late nineties. And so a lot of people like us, we didn't understand what's happening, but US markets, they were very forward looking and they could see value of e-commerce and things like that. And Amazon became Amazon in the last 25 years. So the new business models are coming.

[00:42:17] And I think internet has changed a lot of things. Yeah. In last like it's 30 years of internet, but the actual internet is like maybe 30, 35 years. But internet in mobile, when the smartphones came in 2004, 5 and when they merge, you could access live internet, high speed internet through phones that really exploded the world per se. Yeah. I don't know. It's a change world because of that.

[00:42:45] And won't AI be a bit, make it a change? This is also a big one, but I mean, that is because you have infrastructure of mobile internet in your hand. Then only AI can do the magic. So I think what I'll do only time will tell, but it's a very exciting world. At the end of it, it will be positive right now. A lot of scare is there that job losses will be there and all. So as an entrepreneur also, you could also become redundant with your business model. So what do you do when you see that AI is threatening you? Say out of five businesses, two businesses are threatened.

[00:43:14] So you start to more new businesses and do countermeasures of what happens there. So, you know, we were just talking a while ago that there's this book by Vineet Nayar also, Humans First Machine Second. You were saying that even the computers, when they came, you thought it like humans would become redundant. We still control everything that happens. Will it be the same with AI or is this fear? It seems so. AI will be servant of humans, far more powerful, like millions of times more powerful than humans.

[00:43:43] But it will take command. I mean, who is going to the boss? Will the AI robots be the bosses or robots will be servants? To the extent I've read, I still think robots will be the servants and humans will be the bosses. Okay. And you know, if I were to talk about another sphere, which is promoters and family businesses, a lot of Indian promoters don't like to share power beyond blood. But you know, you have treated a lot of professionals as equal.

[00:44:12] You've hired the best even at the promoter level. How important is it to do that? Especially for a family business who's not willing to let go. What message do you want to send? Yeah. So it all depends on everybody's circumstances. You know, how many family members you have to manage a business and what is the size of the business? If you have global ambition, how many family members you have? Three, four, five. Nowadays, families are also small. Earlier we had five, seven, eight brothers, sisters and all. So they could manage very large business for a very long time.

[00:44:41] You could get succession after succession. But today you have one kid, no kid, something like that. So what family structure are you talking about? So, and the business sizes are very bad. I mean, 11 businesses are like few hundred million dollars and things like that. So, and competency after a generation or two actually dwindles. The fighting spirit.

[00:45:05] Intelligence could be as good as anywhere, but the fighting spirit with the intelligence, that comes only with some kind of hunger. Yeah. And that comes from outside, not from the rich family. Yeah. That's my sense. I mean, sometimes you get both rich and what you call entrepreneur aggressive. But generally we have seen people like us who started from zero and all, they will have a lot more drive. That's what I've seen.

[00:45:30] I'm not, I don't have any judgment against rich guys, but that's what I've seen. Any, any advice you would have given that you've read so many balance sheets, looked at businesses, some which are family run businesses or owned for the promoters. Yeah. So if the business has become big, it's rich and all, they should go public. It's the biggest gift of God. Then it's another level of scrutiny once you go public. No, why?

[00:45:59] If you're honest, what is there a scrutiny? In any case, if you're large enough, all the papers are same. No, no, no. What is it? Don't bother with the stock price. Why bother with the stock price? Just come every 90 days, you come in a con call. One hour you sit there and answer all the questions. Okay. I mean, this is how we are doing it. I mean, I don't, it is for you to figure out what is the price. How did life change becoming a public listed company? This is stunning.

[00:46:29] I mean, I can't get, I think the biggest gift of God is to get successfully get listed. How do you get successfully listed if you have? If you have successful business, you will have successful listing. No, but to continue on that winning streak with the public scrutiny and expectation from shareholders. Public scrutiny, public scrutiny, the word is very harsh. It's not like that. Okay. So if you're doing, if you have a solid business, you have your- Yeah, you follow the law. You follow the law, you remain within the guardrails.

[00:46:57] And see what public listing does. See, the entire wealth, source of wealth creation is securitization. This entire wealth in the world or US or anywhere is because of securitization. You take your company public and the same thousand crore company becomes worth 5,000 crores. Now, thousand crore company is not impacted. Try to understand what I'm saying. The thousand crore company is very intact. It is doing whatever it was destined to do.

[00:47:27] But suddenly the promoter gets 5,000 crores worth of purchasing power in the hand. So how wealthy you have become? Yeah. From thousand crores, you can't take even hundred crores. But from 5,000 crores, you can take full 5,000 crores out and company is still not impacted. I can't see. It's the magic of the financialization. Yeah. It is the biggest wonder of the world. I'm telling you. It is not the eighth wonder. It is the first wonder of the world. Okay. Wow. When you put it like that, for sure.

[00:47:53] So what is it that you would try to teach the hardest to the next generation within your firm? And what is it that you're learning from them? Huh? What are you learning from the next generation? Nothing. No, no, no. I'm learning. See, they're very competent. Yeah. They're very different guys. They're different guys. They're very competent, very driven. I mean, it's all… They're confident. Yeah.

[00:48:22] They're confident. See, the point is the… How do you make them understand the bigger opportunities which is there? That importance of making the cooperation even bigger. Hmm. So challenge is not only today's size and opportunity, but how do you take this journey forward? Because the stock market is very forward looking. Hmm.

[00:48:44] So today you get multiples because market is optimistic that you'll do that 20-25% growth into perpetuity. That's their assumption. Or at least 5-10 years, whatever is visible. The moment that machine breaks, you have a problem. Hmm. But the current leadership has limited lifespan. So… So how do you…

[00:49:09] How do you inculcate in them that actually this legacy belongs to you and you should be able to shoulder it even better? Yeah. When we started, we started with nothing. Yeah. But they're starting with a lot. Whether it is my family or staff… …which is going to take the burden. So telling them continuously that yes, your challenge is to keep growing at this pace. Yeah. Because the world is giving that opportunity. And I think they are very competent.

[00:49:39] They are very sincere and at times they surprise me what they've achieved. Yeah. Yeah. You know, of course we know you're a lifelong student and reading forms a big part of your core life. But what about keeping up with technology? Do you… Tell me what you do personally. Are you on a lot of the AI apps? Are you interested in learning? Are you keeping yourself up to speed? No.

[00:50:06] I spend a lot of time with AI as a chat GPT or GROC. GROC is my favorite. Yeah. So… But enterprise… Sorry, AI in enterprise level. That is all ops, tech devs and… Yeah. …and it is reporting into, you know, our tech chief and then into Motilagi himself. So yes, I mean… But I keep observing and how best we can do it. What are the suggestions I can give? Yeah. What are the connects I can give?

[00:50:35] So you're definitely taking time out too. But that remains… The AI, at least it is… It is… It is very disruptive. Mm-hmm. But how… How it is going to impact my… All the businesses, positive and negative both. We are adopting as much as we can. We have a lot of people. We are spending as much as we can on this. So we are sparing nothing to harness it as much as we can. Okay. So I think someday it will be fine. In the sense that we will be on the right side of AI revolution. I hope so.

[00:51:06] Okay. And can you tell me top three books that really stand out for you? Very difficult because you read three in a span of… No, no, no. Three. Three will take three months. But… I mean, it all depends. I mean, for what? Maybe if we talk one about investing journey, maybe we talk about one that changed your mindset. And maybe we talk about one that really made you learn something you did not know about. Mm-hmm. So investing. Yeah.

[00:51:35] So investing clearly… First book which really thrilled me was… I think One Up on the Wall Street. Okay. One Up on the Wall Street. It's a very common sense investing… Okay. …by this guy. I'm forgetting the… …FidDT manager. Okay. So One Up on the Wall Street was the one which actually gave me a lot of encouragement to… …that yes, you too can do it types. Okay.

[00:52:03] Anything that changed your mindset? Buffett. Buffett's letters. Letters. That changed in 94. That was… That had dramatic impact in the sense that I was walking right side. Yeah. I started going left side types. Yeah. So very diversified. And so from there he brought focus, quality… Yeah. …and long term holding, buy and hold. So all the things… The investing… Actually investing per se… The build up of value investing… That happened because of Buffett.

[00:52:31] …so the letters helped me a lot. Mm-hmm. Now you get the… …compendium of letters. Yeah. You can read… You can read a summary of the letters. Yeah. So… And then maybe one that you learned something new about that really opened your eyes. Would it be this book that you just read? No. Then there are a lot of management books. Okay. Value Migration by Adrian Slowsky. Okay. Then I read a book on the network businesses and all. Value Migration had a… I mean of course security analysis and all the letters and all.

[00:53:01] But the management books, strategy books. I mean Michael Porter's book. Which were the best management books? No, no. It all depends you know from where you're starting. No, whatever you enjoyed. So like Competitive Strategy by Michael Porter. That was the first… I mean 20 cups of coffee and then read the book types. It was very dry and you know kind of abstract, difficult to understand. Thick book. So it is scary. But I think that was amazing book. Okay. Then…

[00:53:30] Then we read Value Migration. Then we read Value Investing by Greenwald, Professor Greenwald. So we kept on reading things. Yeah. So over a period of time… See, reading is also has to be very smart. If you keep repeating the same thing, you don't go forward. Yeah. So you have to read where you find yourself blank. So biographies started coming in reading.

[00:53:59] So one biography I read was Korean. You know, work is Korean of Amul. I Too Had a Dream. What a book it is. Oh yeah. You know, so it's a thin book. Not publicized that much. But one of the best reads. I mean, if anybody should get Bharat at night is him. Oh wow. So you know, that kind of thing. Recently I read this Wealthy World by Professor Edmund. I think for the last two years I have become double bullish because of that book. Wow. And we did the wealth Christian study. Okay.

[00:54:27] So, I mean, it is an evolution of the reading also, you know. Yeah. So for someone who is say new to the stock market or doesn't know too much about it, what would be the three core principles you think they need to follow at the get go? To be successful. Have your foundation solid? No, it's all about value and price. Price you get to see. Okay, that's… So how do you value? Okay. See, if you are a pharmacist, you have done… QGLP. No, no.

[00:54:56] QGLP fine, but you'll find your QGLP. Okay. How to look at a company. If there are a million guys, there are a million ways of understanding underlying value. So I'm an accountant, so I would go a little more numerical. But there would be a guy who is a pharma chief of India, you know, some country head. He will look at it very differently. Okay. Then there is some HR chief. He will look at it very differently. You know? So it all depends on what background and what skill you bring.

[00:55:25] Human skills are very varied. So there are various ways of… Yeah. The point is you have to figure out a 10,000 crore company. Is it worth 20,000 crores or is it worth 5,000 crores? Okay. The price is 10,000 crores. That is known to everybody. And this market is not efficient. Yeah. That has to also be understood. In the short run year, it will fluctuate between around 10,000-11,000. But actually it is worth either 5,000 crores or 20,000 crores. So you have to figure that out. The moment you figure it out…

[00:55:56] I gave you an example of Bharti. When we bought it 5,000 crores, it was worth a lakh crore which we were getting for 5,000 crores. Yeah. So you saw the inherent value in the company ahead of the curve. Absolutely. So find your QGLP framework is very important.

[00:56:17] You know, you've cited so many people as inspirations for giving and you are also, you know, have been very philanthropic. You've spent a lifetime talking about wealth creation, but what does it take to actually give wealth? It's very tough. To give it in meaningful. You can throw the money anywhere in this country. Yeah. Our few thousand crores here and there will not count anything.

[00:56:41] But doing it meaningfully, you know, which excites you, which makes you fulfilled like what we did for the hostel and all. So I think those opportunities are few. And I think giving back, I learned from… In fact, I was searching. Making money we learned from Buffett and all. Now how do you learn to give? Because we have made so much of money, we are going to make much more. So how do you give back?

[00:57:10] And how do you bring method in the madness? Yeah. So Chuck Finney, you know, he is a guru for giving in US. And he actually taught Buffett, Bill Gates and everybody that giving pledge has come from him. He was a guy who was worth, I think, eight, ten billion dollars. And he said, I want to die like zero base. Forget about being a billionaire. Yeah. So he died, I think last year or something, having given everything.

[00:57:38] So that was very touching. And so that is the inspiration. But let's see in our own journey of giving how exactly we shape up. What are the areas closest to your heart when it comes to philanthropy? Yeah. So we are still formulating, but I still think education, if you can actually bring impact in this education. Because education, one fundamental thing is that brain is being given to everybody, whether you are rich or poor. Same.

[00:58:08] The opportunity, if you are a child accountant, doctor, engineer, you suddenly you become not only breadwinner, but you can be anywhere in the world. You can be a Satya Nadella, you can be anybody. Yeah. So, so education is one, one thing where if I can come from my village and become what I have become. I mean, it's not that my village doesn't have any more guy who is as smart as me, but how do you provide that journey to them? Yeah.

[00:58:35] So that, those are things which excites me, whatever my own experiences are there of staying in hostel. What is the power of hostel? What is the power of bringing the kids from giving the, what do you call that access to them that you go from fifth to 10th and 10th to some civilized place where you get college education. And then at some point of time, then they become self-revolved. Yeah. That becomes self-revolved.

[00:59:03] I mean, the moment the guy becomes chartered accountant, I think he knows what he could do. Yeah. Speaking of chartered accountant so much, it's not very well known that you actually started your own CA practice and you were filing returns. Every single return must be useless. Whatever few I did. How long did that last? It was about a year or so. No, but it was while I was working at some chartered accountant firm, I had permission to start my own. What was it called? Ramadhar Waland Company.

[00:59:33] I think it was only in the paper. I don't think I've earned anything on that. Okay. So, it was very… But good learning for you? No, no. Something you weren't passionate about. Because after being chartered accountant, what do you do? I mean, that was a conventional thing to open your own file practice and have some clients and… Well, at least you did it and you knew what you didn't want to do. That's something you didn't want to do. So, that didn't fly. Yeah.

[00:59:57] It was very half-hearted I had done but it didn't work and I'm happy it didn't work. So, now these first 40 years has been your story. As you write the story for the next 40-50 years, for the next generation, what would you want the story to look like? That's a good question but again… I don't know. I think we should… I think 40-50 is a lot of time.

[01:00:25] So, I think 10, 15, 20 years which is much more visible. I mean, where will be this thing? So, I think we'll do more of the same. You know, on the actually making money side. More of the same, more challenges, more delegation, creating more leaders, creating bigger corporations. Corporation has to… That center of the theme would be making Motilaswal a bigger corporation, much more admired corporation,

[01:00:52] much better place to work, you know, much more… what you call… much more… adorable by customers. Yes. You know, so those things… And much bigger in size. Size has its own power. You know, size dominates. Size is source of power. So, we want to make it a very powerful capital market entity. Hopefully, right now it's very Indian. Hopefully, at some point of time, very global. You know, so… Yes. That would be the thing.

[01:01:22] And on the way, when you become global and you make a lot of money, you also give. Give back to society at the same pace or even faster pace. Yeah. That would be kind of a thought process right now, broadly. And so, here's to the next 40 years. Thank you so much for taking the time out and talking to us and always learn so much valuable things from you. I don't know how much time we've spent. Yeah, I know. I haven't even… It's beautiful. I mean, time has just flown. So, thank you for that. Nice.

[01:01:50] Clearly, so many important lessons. He dabbled in the stock markets as a playing ground and then was clearly passionate about it. And that really goes to show that if you find your passion and really build on it, you can make something off it. As Mr. Agarwal said that the financial markets, if you master it, making unlimited money is the option. The world economy is growing and India is going to be a big, big part of it. Be optimistic but understand the metric of price as well as value.

[01:02:19] That will help you master stock picking. It's important as well in your life to design your day. If you have a clear mission statement, if you have a company. And remember, AI is going to be a powerful tool but humans will control it and be behind it. And of course, remember to have your own QGLP framework. I really hope you enjoyed watching this podcast. Do remember to like, share, comment and of course, to subscribe to the Wealth by Motilal Oswal channel. Thanks for watching.