Rajeev Thakkar on crises, scams & long-term investing

Hi folks! We started a new video series where Anupam Gupta, the host of the Paisa Vaisa podcast, speaks to fund managers about their journeys and their thinking processes.

We released the first episode with Co Chief Investment Officer - Equity at ICICI Prudential AMC, and the latest episode with Rajeev Thakkar, CIO, PPFAS Mutual Fund, is out now.

The conversation spans more than three decades of Indian capital markets, starting with Rajeev’s early years in the early 1990s. Like many of his generation, he entered the markets around the Harshad Mehta era, only to then live through the decade that followed (1993-2003), when equity markets went nowhere while fixed income delivered stable, high returns. For much of that period, Rajeev worked on the bond side, when government securities yielded around 14% and high-quality corporate bonds paid even more.

But after 2003, interest rates had fallen sharply. Debt mutual funds, after expenses, were unlikely to deliver more than 4–5% going forward.

At the same time, strong, well-run businesses were available at valuations that looked almost strange in hindsight. Rajeev gives the example of Hero Honda, trading around ₹180, having paid an ₹18 dividend the previous year and expected to pay around ₹20 the next. That meant a near-10% dividend yield from the country’s largest two-wheeler manufacturer, in an environment where dividends and long-term capital gains were tax-free.

Compared to debt, the decision to focus on equities came from simple comparison and first principles, not from any grand market call. So Rajeev took the plunge around 2003, seeing the relative attractiveness of equities.

A part of the conversation revolves around the influence of Parag Parikh, and also of Chandrakant Sampat, a mentor figure who regularly visited their office. For context, he is known as the Warren Buffett of India. Chandrakant Sampat believed deeply in balance-sheet strength, low leverage, high return on capital, and management quality. He thought about businesses in terms of real cash flows rather than reported earnings.

For example, in FMCG companies, he would separate maintenance advertising from brand-building spends, treating the latter almost like capital expenditure that created long-term value. These ideas, developed independently decades ago, closely resemble what many investors later came to associate with Buffett and Munger.

This way of thinking also shaped their cash view. Rajeev quotes his belief that cash in the bank is not “idle,” but rather optionality.

“Cash is an unspecified call option on an unspecified asset at an unspecified strike price at an unspecified time.”

What it simply means is that when prices fall sharply and opportunities appear, only those with liquidity can act immediately. You don’t know in advance which stock will fall, how much it will fall, or when it will happen. But when it does, cash gives you the ability to respond without delay.

We had a lovely time talking to him. We hope you enjoy listening to this. We will be releasing more episodes soon!

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