Agrawal recalled that in his early years, he bought stocks aggressively, accumulating shares in hundreds of companies largely because of the way trading worked at the time. “Till 1994, because of bad deliveries… we ended up with a portfolio of about 225 companies,” he said. But all of that changed once he discovered Buffett. “He talks about focused portfolios—saying you should not have too many companies you cannot understand or take care of. He said 15–20 companies are enough.”
That idea stayed with him. In 1995, Agrawal decided to overhaul his portfolio entirely, taking the help of his wife to methodically sell off stocks. “She sold 10–15 companies every day. In about one and a half to two years, we brought it down to 15–20 companies. That very year, the portfolio doubled.”The episode cemented Agrawal’s belief in the compounding power of concentrated bets, held over long periods. Since then, he has stuck to a philosophy of owning fewer companies with meaningful allocations, typically 4–10% per stock, and seldom buying anything that accounts for less than 2.5% of the total portfolio. “Otherwise, it won’t make an impact,” he said.
Agrawal also recalled how Buffett’s writings opened his eyes to the science of long-term wealth creation. In 1994, a friend handed him a single copy of Berkshire Hathaway’s annual report. “We read it and realised it looked completely different from anything we knew… By reading just one report, I realised we knew nothing about investing,” he said. He then sourced two decades of Buffett’s letters, read each of them, and “that changed my life”.Reflecting on his iconic multibaggers—Hero Honda, Infosys and Eicher—Agrawal said the early signals were always the same: high-quality companies, strong growth, and reasonable valuations. “My style was always to buy high-quality, high-growth companies at a very low price early in their journey—PEG of one or half,” he said. He would not buy anything that did not offer at least 20–25% return on equity and robust operating discipline, such as short receivable cycles.
But even he admits that, earlier in his career, he did not fully understand the exponential nature of compounding. He cited his investment in Balkrishna Tyres as the biggest reminder. Agrawal bought the company when it was valued at just ₹100 crore, trading at 1x earnings, with 30–40% ROE. After meeting the management—who, he laughed, served him rasgulla during the meeting—he invested. The company surged to ₹1,200 crore within two years. He sold out completely.
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“Today it is at ₹50,000 crores value—one of the best compounders. The issue is understanding what compounding can do. We were kids. We didn’t fully understand,” he said.
Agrawal believes that India’s markets will continue to throw up such opportunities, provided investors focus on quality, discipline and patience. “There are many such stories, and many more will happen. That is the beauty of this market,” he said.
