MC Exclusive: The super-investor you haven’t heard about

With a remarkable investment track record of 44 years, Govind Parikh enjoys the trust and respect of the big boys of Dalal Street but maintains an ultra-low profile

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While studying for his chemical engineering degree in the late 70s, he would eagerly wait for the mail to see if he had managed to get the allotment of shares he had applied for in initial public offerings (IPOs). But after his father suffered a serious accident, investing became more than a past time for him. And how.

Over the next four decades, he would have an eventful journey as a broker and investor, painstakingly building up sizeable positions in blue chips, coming close to losing it all, then using the lessons to emerge even stronger in the subsequent years.

Meet Govind Parikh, a reclusive investor who operates out of Chennai. His knack for spotting blue chips-in-the-making, earned him the trust and respect of some of the Big Boys of the game on Dalal Street.

Today Parikh’s portfolio comprises of names of Sundaram Fasteners, EID Parry, TVS Holdings, 3M India, Bajaj Holdings, Bajaj Auto, HDFC Bank, Cholamandalam Holdings, Coromandel International, Ramco Industries and Ramco Cements.

The early days

Parikh was lucky to have been introduced to veteran BSE broker KR Choksey when he was starting his journey in the financial market as a 20-something. Speculation, rather than investment, was the name of the game at that time when retail investors hardly ventured into the market.

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Under Choksey’s guidance, Parikh would learn the ropes of value investing, though by his own admission he was often hasty when it came to booking profits.

In an era when annual reports were often sourced from scrap dealers, earnings were announced semi-annually and there was no concept of material disclosures by companies. Parikh had to gather information about the companies he intended to invest in, by personally visiting the factories and speaking to managements.

No piece of information was trivial for Parikh, even if it came from a transporter who said he liked trips to a certain cement company’s factory because they had good facilities for drivers, like clean restrooms and good food.

This approach was to sharpen his understanding of business models, company culture, and management mindset, and also helped him build a strong network — a potent combination which even big brokers sitting out of Bombay (as Mumbai was called back then) found hard to match. Even as he managed to stay low profile, Parikh would often be called upon by the leading players of the Bombay Stock Exchange for advice and for sourcing blocks of hard-to-get shares.

And while he remained a value investor at heart, the temptation of punting in stocks was hard to resist, and sometimes with disastrous results. Once in the 90s, having sold a chunk of one of his core cement holdings to a foreign broking house, Parikh thought he may have got a raw deal, despite having offered his shares at a premium to the market price. He decided to buy back the shares from the market even as the price kept falling. The misadventure cost him a packet.

On another occasion, Parikh short sold shares of a capital goods company and then tried to cling on to that position even as the price kept rising. The loss would have been even bigger, but for his mentor squaring off the position without asking him. (Parikh had short sold the shares through KR Choksey claiming it was a friend’s position). The incident it is said, cured him of his itch to short sell.

Parikh is among the handful of financial market veterans who have managed to stay relevant in the stock market landscape as India transitioned from being a financial backwater to one of the most sought after investment destinations today.

Read our interview on his investment philosophy and learnings: here