Prashant Jain - An experienced fund manager who is reasonable with current valuations

The main reason for Prashant Jain’s success is his ability to identify market cycles ahead of time and ride through cycles.

HDFC Mutual Fund chief investment officer and Executive Director Prashant Jain has become the first Indian fund manager to complete 25 years managing a single fund. He achieved this feat in 2019 with HDFC Balanced Advantage Fund which has generated an alpha of 9.54% over the Sensex since 1994, according to the Morningstar Direct data.

In a recent interview with CNBC TV18, Prashant Jain has mentioned market is neither expensive nor cheap, it is reasonable. After we had a great bull rally, this 7% to 8% correction is required. India's economic outlook is much better compared to pre-covid levels, in terms of corporate profits which is in upcycle, softening of NPA, and the government has started focusing more on infrastructure.

This time is evident and real that the Indian manufacturing sector is in the right position to accelerate as global players are looking for an alternative place to China. Plus the Indian government is supporting various initiatives like PLI, tax exemptions and subsidies, especially for manufacturing companies.

His view on Nykaa, Zomato

Generally, high valuation companies take more time to give the expected return so it is not a preferred choice of investment. The question is how long it will take. To comment Nykaa and Zomato, Jain says that these are new-age companies, valuation from the outside looks high but growth potential looks immense in the coming years. Since the market for this business is not mature, moderate returns can be expected in the medium to long term period.

His Multibagger Picks

Financial planners point out that one of the main reasons for Jain’s success is his ability to identify market cycles ahead of time and ride through cycles. For example, he made the most of the IT-driven rally between 1995 and 2000 by buying Infosys that multiplied 113 times. Between December 2000 and December 2017, Jain was quick to spot the capex/banking and commodity stock rally identifying stocks like BHEL which rose 35x, L&T 33x, Reliance 19x, Tata Steel 16x and SBI 14x. In the next cycle between December 2007 and December 2017, where FMCG and pharma stocks rallied he bought HUL which rose 8x, ITC 5x, Lupin 8x and HDFC Bank 6x.