While PSUs are his favourite, consumer stocks are pariahs, given their expensive multiples. Jain believes that though these companies have good free cash flows, multiples do not justify their growth. In fact, he was the earliest to have sold off Page Industries, after which the prices continued to still head north. “If you look at the past 10 years, in many cases, consumer companies’ top line growth was in high single digits, but the multiples they trade at are anywhere between 50x and 100x. The reason for that probably lies in the margin expansion which was partly on account of the GST cuts which, probably, were not passed on to consumers,” Jain told Fortune India.

But the steadfast devotion to valuation also meant Jain’s funds had to endure long periods of underperformance and the recent one being the longest — seven years long between 2013 and 2020. But he never let the pressure get to him. “I’m a veteran at periodically underperforming... and I have come out of it. If you try to jump from one style to another, in the long term the outcome is very likely to be very mediocre. My best chances for delivering long-term returns are by doing something that I understand, and I firmly believe in,” said Jain.

Bhaskar believes Jain has been able to weather the storm because he had the backing of a strong franchise in HDFC group. “His long track record by staying at the same fund and the strong backing of a retail bank helped him wade through the tough times. The brand ensured that flows never went off during the period of underperformance,” feels Bhaskar.

But the tenacity of Jain can be gauged from the fact he persisted even as other value funds, more so in the U.S., wilted under the prolonged underperformance since 2008 as near zero interest rates gave wings to growth stocks. Quantitative fund manager AJO Partners, which manages $10 billion, shut shop in 2020. Similarly International Value Advisors liquidated two funds in 2021. But the tide is changing with the era of zero interest rate coming to an end globally, giving a fillip to value investing. Closer home, the frenzy around the new age stocks is waning, as momentum is now favouring cyclicals — a large weightage in Jain’s portfolio.

“We have not seen real GDP growth since 2016 and now when you have genuine GDP growth of 6-7% then all sectors participate. A lot of cyclical sectors do not have debt and now even steel firms are making money. In this kind of market, 50 PE stocks on one side and 6 PE stocks on other will not sustain and that is the phase we are in for the next two years,” says Bhaskar.

While Jain has not indicated on whether he will be starting a fund of his own, Sivasubramanian is looking forward to a catch-up. “We hardly met during our days in fund management. But even after I retired, he used to call me over for a lunch meeting whenever he was in Chennai. Our talks were less about investing and more on the kind of books we were reading,” says Sivasubramanian.

Bhaskar believes Jain is set for an encore. “He couldn’t have timed his exit any better. Both Jain and S. Naren (ICICI Prudential MF) are like Michael Jordan and Kobe Bryant who will retire with the same jersey,” says Bhaskar.

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Prashant Jain: The legacy of India’s only ₹1 lakh cr fund manager