Top stocks that drive Prashant Jain’s stellar run on D-Street
Prashant Jain manages some of the best-performing equity funds in India’s fund mart.
He is India’s highest-paid fund manager, and has managed to make his funds perform year after year through the ebbs and flow of the market, even as their sizes swelled, competition grew and the very contours of the economy rapidly changed.
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Jain rarely appears on TV shows to comment on the stock market, least of all, his funds; but as some fund distributors would tell you, there are investors who swear by his name and pick mutual fund schemes simply because his name is attached to them.
Numbers would vouch for it. As of April 2017, Jain was managing a corpus of nearly Rs 60,000 crore, which was more than the combined foreign portfolio investment flow to domestic equities in the whole of FY17, which was Rs 55,703 crore.
Jain manages some of the best-performing equity funds in India’s fund mart; such as HDFC Top 200, HDFC Equity Fund, HDFC MIP-Long Term and HDFC Prudence.
To boot, all his funds have been outperforming the benchmark equity indices, rising on an average 19 per cent (CAGR) in last five years. Data available with mutual fund database valueresearchonline.com showed HDFC Equity Fund generated 18.30 per cent return CAGR in last five years, whereas HDFC Top 200, HDFC Prudence and HDFC MIP-Long Term Fund have delivered 17.20 per cent, 17.83 per cent and 11.90 per cent annualised returns, respectively, in the same period.
It is not easy to figure out Jain’s investment style simply by looking at his portfolios. In his rare appearances at investment forums and television shows, Jain always swears by well-managed businesses and India’s infrastructure story, but it is difficult to brand him as a contrarian, an appendage that often goes hand in hand with successful equity investors.
An analysis of his portfolios across the funds he manages throws up some of his clear favourites. State Bank of India, a stock Jain swears by and has defended as a big bet for the medium term, figures in all his portfolios, as do ICICI Bank, Larsen & Toubro, Infosys and Punjab National Bank – stocks that are either going through a down cycle or have just come out of it.
India’s largest automaker Maruti Suzuki is another of his pet bets. These stocks are common to the portfolios of all the four funds he manages.
Maruti Suzuki shares are hovering around their all-time level of Rs 7,200 this week. The company recently became the first automaker to hit a market capitalisation (m-cap) of Rs 2 lakh crore.
Maruti is a favourite with many analysts on Dalal Street. “Despite so many new launches by peers, Maruti has maintained its market share. This clearly shows its strong positioning in the passenger vehicles segment,” said Gaurav Dua, Head of Research at Sharekhan. The brokerage recently raised its target price for Maruti to Rs 7,400 from an earlier target of Rs 6,800.
Engineering major Larsen & Toubro (L&T) reported a 29.5 per cent jump in net profit for March quarter at Rs 3,025 crore and claimed it was eyeing a revenue growth of around 12 per cent this financial year. The stock was trading around Rs 1,770 on Tuesday, up 29 per cent year to date and nearly 5 per cent last year.
State-run Punjab National Bank (PNB) experienced acute pressure from bad loans through the past few quarters. But the PSU lender reported a profit after tax (PAT) of Rs 261.90 crore for March quarter compared with a loss of Rs 5,367 crore reported for the corresponding quarter last year.
In his search for alpha, Jain does not ignore the usual market favourites: Reliance Industries, Tata Steel or HDFC Bank, stocks that are prominent in the portfolios of HDFC Equity Fund, HDFC Prudence and HDFC Top 200.
RIL has been in the news since the launch of Reliance Jio last year and also because of some stellar quarterly numbers it has managed to put up over the past three quarters. Shares of the oil-to-telecom conglomerate have surged over 25 per cent since January to trade at Rs 1,360 as of May 30.
Collectively, Jain has over 20 years of experience in fund management and research in the mutual fund industry.
Other big bets in Jain’s HDFC Top 200 fund portfolio include HDFC, CESC, TCS, NTPC, Century Textiles, ABB, Power Grid and Aurobindo Pharma.
Aurobindo Pharma posted some upbeat earnings numbers for March quarter earlier this week and the company management went public to say it was looking to expand the high-end of its particular product portfolio.
Other notable stocks in Jain’s HDFC Prudence portfolio included Adani Ports, Canara Bank, REC, PowerGrid and Vedanta.
HDFC MIP-Long Term had stocks like Balkrishna Industries, ITD Cementation, Sharda Cropchem and PNC Infratech, while the portfolio of HDFC Equity Fund comprised stocks like Info Edge, BEML, TCS, UPL, Power Grid and Balkrishna Industries.