HDFC MF’s investment chief Prashant Jain lightens positions on some PSU stocks

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26 Aug, 2025 12:21

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Prashant Jain, chief investment officer at HDFC Mutual Fund, is known for his bold bets on India’s state-owned enterprises because of the view that such stocks are deeply undervalued at a time when the country’s investment cycle is on the cusp of a turnaround.

Of the top five stocks held by Jain in the funds directly managed by him, the top three are state-owned enterprises reflecting his well-known conviction in the space. He manages HDFC MF’s flagship Flexi Cap fund, HDFC Top 100 fund, and HDFC Balance Advantage fund. The total average monthly corpus of the three funds declined by 0.1-2.4 percent on-month in February.

“I think there is no reason one should be pessimistic on this space,” Jain told CNBC-TV18 in an interview in February, arguing that the turnaround in the economy has helped PSU stocks make a comeback.

However, in February, the veteran asset manager appeared to have lightened his positions on some state-owned companies, as per data compiled by Edelweiss Securities. Funds managed by Jain pared allocation to State Bank of India, Bank of Baroda, NHPC and NLC India – which make up a significant chunk of his PSU bets.

SBI, which is the largest holding in the funds managed by Jain in terms of value, saw a reduction in positions to the tune of 5.95 million shares in February as the stock declined more than 10 percent during the month. Bank of Baroda, another favourite of the fund manager, saw a reduction in position of 6.1 million shares in February.

Curiously, as Jain pared exposure to the two state-owned banks, he raised exposure in two heavyweight private sector lenders. Funds managed by Jain raised their holding in ICICI Bank by 1 million shares while they increased their stake in HDFC Bank by a similar quantum.

The enhancement of holding in HDFC Bank suggests Jain sees value in a stock that has undergone severe correction over the past few months and is trading near its 52-week low. HDFC Bank, the country’s largest private lender, has come under pressure likely because of the selling from foreign investors, who hold a significant chunk of the bank.

In NHPC, Jain’s funds have pared holding by 616,000 shares but still hold close to 195 million shares. In February, shares of NHPC declined 8 percent but have risen more than 16 percent over the past 12 months in spite of the correction.

The trimming of position by Jain in some of the PSU stocks hints at likely profit booking by the fund manager given that both the Nifty PSE and Nifty PSU Bank index have outperformed the broader Nifty 50 index in 2022 so far.

The Nifty PSE index has risen close to 6 percent in 2022 while the PSU Bank index has climbed more than 7 percent in the same period. The outperformance has largely been driven by a concerted shift by investors towards ‘value’ stocks as prospects of higher interest rates make growth stocks unattractive.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.