Think Beyond, Stay Ahead

"It is not just about returns...what matters is credibility"

Investment banker Ashok Wadhwa emphasises that distance is essential to maintain objectivity

Photographs by Soumik Kar

Last month*, our research team at Ambit issued a  ‘sell’ call on HDFC. I was taken aback for more than one reason. For one, I have always believed that HDFC is the finest home mortgage company in the world. That apart, it was Deepak Parekh who put in the initial Rs.2 crore capital in Ambit after we moved away from RSM.

The research team did buy my point about HDFC’s superiority as a mortgage company. To their mind, though, the current valuation for the stock was not sustainable in the light of increasing competition, which meant HDFC’s current position of dominance will be difficult to sustain. At that point, we were among a handful of brokerages to have a ‘sell’ call on HDFC. Since then, the HDFC stock has gone on to hit a new high!

As you can imagine, it was not an easy call for me to put out a ‘sell’ report on a company that is led by someone I not only admire professionally, but also am personally obligated to. But then, I learnt early in life that it is important to Think Straight and Talk Straight. It is a philosophy that was inculcated during my tenure at Arthur Andersen, which I joined straight after my chartered accountancy in 1983 as its first employee. By the time I quit them in 1997, I was the managing partner for the Mumbai office. 

Incidentally, I was the first in my family to get a post-graduate qualification and also the first to seek employment. My family migrated to Kanpur from Pakistan and I spent my formative years there as part of the lower middle class. My father ran a small business in Kanpur before we moved to Mumbai in 1971. Unlike most business families, he wanted me to become a professional. I did that, but the entrepreneurial gene in me ultimately took over. 

My early learnings at Andersen actually became the pillar of Ambit. I can recall several examples of how “talking straight” worked very well for us even though it might have been uncomfortable to talk about. I recall a conversation with Vijay Mallya around the time South African Breweries decided to enter India and had acquired Haywards from Shaw Wallace. Vija

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