Value investing at PPFAS

From WebNotes, a public knowledge base. Last updated . Reading time ~14 min.

Value investing at PPFAS is the foundational investment doctrine of PPFAS Mutual Fund, a SEBI-registered asset management company whose entire scheme range, beginning with the Parag Parikh Flexi Cap Fund launched on 24 May 2013, has been constructed around the value-investing framework codified by Benjamin Graham in Security Analysis (1934) and The Intelligent Investor (1949), and subsequently developed by Warren Buffett and Charlie Munger at Berkshire Hathaway. The doctrine, as practised at PPFAS, treats equity ownership as fractional ownership of underlying businesses, demands an estimate of intrinsic value before any commitment of capital, requires a meaningful margin of safety between estimated intrinsic value and market price at the point of entry, and tolerates extended holding periods and material cash balances rather than forcing capital deployment at uncompelling valuations.

The PPFAS articulation of value investing originates with founder Parag Parikh, who established the broking-and-advisory practice in 1979 and built a multi-decade record applying value-investing principles to the Indian equity market through the firm’s Cognito Portfolio Management Service (launched October 1996) and a long-running newspaper column. Parikh codified the framework in two Tata McGraw-Hill books, Stocks to Riches: Insights on Investor Behaviour (2005) and Value Investing and Behavioral Finance: Insights into Indian Stock Market Realities (2009, ISBN 978-0-07-007763-8). Following Parag Parikh’s death on 3 May 2015 in a road accident in Omaha, Nebraska while returning from his first attendance at the Berkshire Hathaway Annual Shareholders’ Meeting, the value-investing doctrine has been continuously developed by Chief Investment Officer (Equity) Rajeev Thakkar, Head of Research Raunak Onkar, and the broader investment team under the chairmanship of Neil Parikh.

Value investing at PPFAS is structurally distinctive within the Indian mutual fund industry. The majority of large Indian asset management companies operate without a publicly stated investment philosophy, market schemes around recently-popular categories or themes, and use category-relative benchmarking rather than intrinsic-value frameworks. PPFAS, by contrast, publicly articulates a Graham, Buffett and Munger framework in its monthly factsheets, in the Annual Unitholders’ Meet (modelled on the Berkshire Hathaway AGM, with the 12th edition held on 22 November 2025 at Birla Matushree Sabhaghar in Mumbai), and through the Knowledge Centre at amc.ppfas.com. The framework is operationalised consistently across the Parag Parikh Flexi Cap Fund, the Parag Parikh ELSS Tax Saver Fund, the Parag Parikh Conservative Hybrid Fund, and (with appropriate modifications for category mandates) the Parag Parikh Arbitrage Fund, Parag Parikh Liquid Fund, Parag Parikh Dynamic Asset Allocation Fund and the recently launched Parag Parikh Large Cap Fund.

The value-investing orientation has been a structural driver of PPFAS’s compound growth from a single-scheme AMC in 2013 to an AMC with approximately Rs 1.6 lakh crore in PPFCF AUM by May 2026 (the first actively managed equity scheme in India to cross the Rs 1 lakh crore threshold, in May 2025). This article is the principal Tier-3 reference on the doctrine within the broader PPFAS investment philosophy corpus.

Foundation and origin

Benjamin Graham and the formal birth of value investing

The value-investing tradition originates with Benjamin Graham (1894 to 1976), the Columbia University finance professor who, with co-author David L. Dodd, published Security Analysis in 1934, establishing the discipline of fundamentals-driven security valuation in the aftermath of the 1929 stock market crash. Graham’s framework rested on three foundational propositions:

  • Intrinsic value is distinct from market price. A security has an intrinsic value derived from the present value of its future cash flows, asset base, and earning power, and this intrinsic value may diverge substantially from the prevailing market quotation.
  • Mr Market is a moody business partner. Graham’s famous allegory in The Intelligent Investor (1949) characterised the stock market as an emotional partner who offers daily quotations to buy or sell at varying prices; the disciplined investor accepts the favourable offers and ignores the rest.
  • Margin of safety is the cardinal principle. Buying at a substantial discount to estimated intrinsic value provides a buffer against estimation errors, business deterioration, and the inherent uncertainty of forecasting future cash flows.

These three propositions, together with Graham’s quantitative screens for net-net working capital, asset-discount, and earnings yield, form the bedrock of the value-investing discipline. PPFAS’s investor education materials, monthly factsheet commentary, and Annual Unitholders’ Meet presentations repeatedly reference Graham’s framework and recommend both Security Analysis and The Intelligent Investor as essential reading on the AMC reading list at amc.ppfas.com.

Warren Buffett and Charlie Munger: the Berkshire extension

Graham’s most successful student, Warren Buffett, applied the value-investing framework as the lead investor at Buffett Partnership (1956 to 1969) and from 1965 onwards through Berkshire Hathaway. Buffett’s partnership with Charlie Munger (1924 to 2023) extended Graham’s quantitative-discount framework to incorporate qualitative business-quality assessment, summarised in Buffett’s well-known formulation that “it is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” The Buffett-Munger extensions include:

  • Quality of business. Preference for businesses with durable competitive advantages, often described as economic moats.
  • Quality of management. Assessment of management integrity, operational competence, and capital-allocation skill.
  • Long-term ownership orientation. Treating equity as ownership of businesses rather than tradable tickers, with multi-year and multi-decade holding periods.
  • Patience and willingness to hold cash. Waiting for compelling opportunities rather than feeling compelled to be fully invested at every moment in the cycle.
  • Worldly wisdom. Munger’s multi-disciplinary lattice of mental models from psychology, biology, mathematics, history and engineering applied to business analysis.

Parag Parikh’s annual aspiration to attend the Berkshire Hathaway Annual Shareholders’ Meeting in Omaha, Nebraska culminated in his first attendance in May 2015; the road accident on 3 May 2015 on the way back from the meeting to Eppley Airfield, with Rajeev Thakkar driving and Raunak Onkar among the passengers, ended that direct connection but reinforced the Berkshire association at the AMC. The PPFAS Annual Unitholders’ Meet is the explicit Indian-context homage to the Berkshire AGM format, with multi-hour open question-and-answer exchanges between the fund management team and unitholders.

The Indian context: Parag Parikh’s articulation

Parag Parikh was, by the late 1990s and early 2000s, one of a small number of Indian capital-market practitioners actively advocating Graham-Buffett value investing in print and in conferences. His two books are the principal Indian-context articulation:

  • Stocks to Riches: Insights on Investor Behaviour (Tata McGraw-Hill, 2005): The first book combines an introduction to fundamental security analysis with a behavioural-finance overlay, applied to Indian-market case studies.
  • Value Investing and Behavioral Finance: Insights into Indian Stock Market Realities (Tata McGraw-Hill, 2009): The more substantial second book systematically integrates Daniel Kahneman, Amos Tversky and Robert Shiller’s behavioural-finance literature with the Graham-Buffett-Munger value-investing framework, applied to specific Indian-market episodes including the dotcom bubble and the 2008 global financial crisis.

These books, together with Parikh’s long-running columns in Business Standard and Mint, established the Indian-context vocabulary in which the PPFAS investment philosophy is articulated today.

Application at PPFAS

Operational implementation at PPFCF

The value-investing framework is operationalised in the Parag Parikh Flexi Cap Fund through a documented investment process published at amc.ppfas.com/schemes/investment-process/, with the following principal components:

  • Universe definition. The candidate universe is the listed equity universe across Indian and (subject to the SEBI MF overseas investment cap) international markets, filtered by business quality, balance sheet strength, and management quality.
  • Fundamental research. Each candidate is subject to detailed fundamental research, including review of financial statements, industry positioning, competitive analysis, capital-allocation history, and management track record.
  • Intrinsic value estimation. The research team estimates intrinsic value through discounted cash flow analysis, multiple cross-checks, and asset-based valuation where appropriate.
  • Margin of safety assessment. A position is initiated only when the security trades at a meaningful discount to estimated intrinsic value, providing the Graham margin of safety.
  • Position sizing. Position weights reflect conviction levels, with the focused portfolio typically containing 25 to 37 stocks.
  • Hold and monitor. Positions are typically held for multi-year periods with continuous monitoring of business fundamentals and competitive positioning.
  • Exit discipline. Positions are reduced or exited when valuations become materially excessive, when business fundamentals deteriorate beyond recovery, or when superior opportunities emerge requiring capital reallocation.

The framework is implemented by lead fund manager Rajeev Thakkar (CIO Equity), co-manager Raunak Onkar (Head of Research), and equity fund manager Rukun Tarachandani, with debt-side managers Raj Mehta, Mansi Kariya, Tejas Soman and Aishwarya Dhar implementing aligned principles in the fixed-income schemes.

Application across the PPFAS scheme range

Value investing at PPFAS is applied consistently across the active equity schemes:

  • Parag Parikh Flexi Cap Fund: The flagship scheme since 24 May 2013, where the full framework (including up to 35 per cent international allocation, focused portfolio, and material cash holdings when warranted) is applied. PPFCF AUM stood at approximately Rs 1.61 lakh crore as of 15 May 2026.
  • Parag Parikh ELSS Tax Saver Fund: Launched 4 July 2019, applies the same value-investing framework subject to the ELSS three-year lock-in and Section 80C eligibility constraints. AUM as of April 2026 approximately Rs 5,260 crore.
  • Parag Parikh Conservative Hybrid Fund: Launched 28 May 2021, applies value-investing principles to the 10 to 25 per cent equity allocation, with the remainder in debt managed under the same risk-aware framework.
  • Parag Parikh Dynamic Asset Allocation Fund: Launched 22 February 2024, applies the value-investing framework with a dynamic equity-debt allocation.
  • Parag Parikh Large Cap Fund: Launched 4 February 2026, applies a semi-passive value-aware framework benchmarked to the Nifty 100 TRI.

In the Parag Parikh Arbitrage Fund and the Parag Parikh Liquid Fund, the doctrinal alignment is implemented through risk-conscious credit selection and conservative duration management rather than directional value-investing in the equity sense.

Documentation and disclosure

The PPFAS value-investing framework is documented and disclosed through several mechanisms:

  • The official investment-philosophy page at www.ppfas.com/about/our-philosophy/.
  • The investment-process page at amc.ppfas.com/schemes/investment-process/.
  • Monthly factsheets published at amc.ppfas.com/downloads/factsheet/, each containing multi-page commentary by Rajeev Thakkar on portfolio decisions, market conditions, and broader investment themes.
  • The annual Letter from Neil Parikh published on the AMC site, in Buffett’s annual-letter tradition.
  • Annual Unitholders’ Meet presentations, with the 12th edition held on 22 November 2025 and prior editions archived on the PPFAS YouTube channel.
  • Scheme Information Documents and Statement of Additional Information filed with SEBI.

Case studies in value investing at PPFAS

The international value-investing core

A distinguishing feature of PPFAS value investing is the willingness to look beyond Indian-listed equity for value-investing opportunities. Following the launch of PPFCF in May 2013, the international diversification doctrine was applied through significant positions in US-listed mega-cap technology and consumer franchises including Alphabet (Google), Microsoft, Amazon, Meta Platforms, and historically Berkshire Hathaway Class B shares. These positions were acquired and held under the same value-investing framework applied to Indian holdings, with intrinsic-value assessment based on long-term competitive position, free cash flow generation, and reinvestment opportunity.

The international positions reached approximately 28 per cent of PPFCF AUM by January 2022, before the SEBI MF overseas investment cap restrictions in February 2022 capped further deployment. The structural value-investing thesis on the international holdings has been retained even as the share has declined to 11 to 16 per cent by 2026 due to inability to add to positions at industry-wide cap utilisation.

The PSU contrarian build

PPFAS has been a notable Indian investor in Public Sector Undertaking (PSU) equities at points when the broader market sentiment toward PSUs was negative. Holdings have included Coal India, Power Grid Corporation of India, NTPC and ONGC at various periods. As of the April 2026 factsheet, Power Grid Corporation was the second-largest PPFCF holding at 6.99 per cent and Coal India was the third-largest at 5.95 per cent. The PSU positions exemplify the value-investing approach: building positions in fundamentally sound businesses with capital-intensive moats and attractive dividend yields, at valuations that provided a Graham margin of safety, despite negative consensus sentiment.

The long-running ITC position

PPFAS held a substantial position in ITC across multiple periods, with ITC reaching the top three PPFCF holdings (7.99 per cent in one disclosure during 2025) during periods of consumer-staples underperformance. The ITC thesis combined the value-investing principle of buying durable consumer franchises at reasonable valuations with the contrarian willingness to hold through extended periods of market underperformance.

HDFC Bank as the domestic financial anchor

HDFC Bank has been a recurring large PPFCF holding, reaching the top position at 7.94 per cent in the April 2026 factsheet. The HDFC Bank thesis combines the long-term structural growth of Indian retail banking with the value-investing principle of paying reasonable prices for high-quality financial franchises.

Comparison with broader industry approaches

Indian flexi-cap peer comparison

The Flexi Cap mutual fund category in India contains over twenty active schemes. The typical peer fund operates with:

  • 50 to 80 stocks in the portfolio, materially more diversified than PPFCF’s 25 to 37 stocks.
  • Near-fully-invested positioning, with cash typically under 5 per cent of AUM.
  • Domestic-only equity exposure, without the international diversification.
  • Implicit or unstated investment philosophy, with marketing typically organised around recent category-relative performance.
  • Higher portfolio turnover, typically 40 to 100 per cent annually.

PPFAS’s value-investing orientation, focused portfolio, willingness to hold material cash, international diversification, and tax-aware low-turnover discipline are structurally distinctive.

Indian value-fund peer comparison

A small number of Indian asset management companies operate explicitly labelled “value funds” under the SEBI scheme rationalisation circular 2017 value-fund category. PPFAS chose not to operate within the value-fund category; instead PPFCF operates as a Flexi Cap with value-investing as the explicit underlying philosophy. The distinction matters because the value-fund category prescribes minimum 65 per cent equity in “value-style” stocks (whose definition is left to the AMC), while the Flexi Cap framework provides full freedom across market capitalisation and (subject to the overseas cap) geography.

Global value-investing peer comparison

Globally, the value-investing tradition is practised by firms including Berkshire Hathaway, Tweedy Browne, Ruane Cunniff (Sequoia Fund), Wedgewood Partners, Baupost Group (Seth Klarman), Pabrai Investment Funds (Mohnish Pabrai), and Oaktree Capital (Howard Marks). PPFAS sits within this tradition, with operational adaptations to the Indian regulatory and tax environment.

Recent developments

2024 to 2026 cash positioning

During 2024 to 2026, PPFCF maintained materially elevated cash positions of 18 to 25 per cent of AUM in response to what management characterised as broadly elevated equity valuations. The cash discipline is consistent with the value-investing principle of patient capital deployment and was defended at length by Rajeev Thakkar in May 2026 commentary published in Business Today, where he addressed the question of why PPFCF was holding cash even after a 10 per cent market correction.

Finance Act 2024 tax-rate change

The Finance (No. 2) Act 2024 amended Section 112A to raise the long-term capital gains rate on listed equity from 10 per cent to 12.5 per cent (with the exemption threshold raised from Rs 1 lakh to Rs 1.25 lakh annually). The value-investing low-turnover discipline retains relevance under the amended framework, as deferring capital-gains realisation continues to compound at higher rates of tax.

Crossing Rs 1 lakh crore in AUM

In May 2025 PPFCF became the first actively managed equity mutual fund scheme in India to cross the Rs 1 lakh crore AUM threshold, a structural validation of the value-investing approach at scale. By 15 May 2026 PPFCF AUM had reached approximately Rs 1.61 lakh crore.

Criticism and debates

Capacity at scale

A recurring criticism of value investing at PPFAS, accentuated by the rapid AUM growth, is the capacity-versus-concentration debate. The focused 25-to-37-stock portfolio, applied to Rs 1.6 lakh crore of AUM, produces large single-stock positions that may constrain liquidity in adverse scenarios. PPFAS has consistently defended the focused approach as structurally beneficial, with continued empirical validation through the long-run Nifty 500 TRI outperformance.

Growth investing critique

A separate critique is that value investing, narrowly defined as buying low-multiple stocks, has structurally underperformed growth investing over the post-2010 global cycle. PPFAS’s response, articulated repeatedly by Rajeev Thakkar, is that the PPFAS framework is not narrowly low-multiple value but the broader Graham-Buffett-Munger framework, which explicitly accommodates paying reasonable prices for high-quality growth businesses. The international holdings (Alphabet, Microsoft, Amazon, Meta) and Indian high-quality holdings (HDFC Bank, Bajaj Holdings, Infosys, TCS) exemplify the framework’s accommodation of quality-and-growth at reasonable prices.

Benchmark concerns

The Nifty 500 TRI benchmark has been argued to be inadequate for a scheme with up to 35 per cent international allocation. PPFAS has retained the domestic benchmark as consistent with the principal mandate as a domestic flexi-cap scheme.

See also

External references

References

  1. Benjamin Graham and David L. Dodd, Security Analysis, McGraw-Hill, 1934 (and subsequent editions).
  2. Benjamin Graham, The Intelligent Investor, Harper and Brothers, 1949 (and subsequent editions).
  3. Parag Parikh, Stocks to Riches: Insights on Investor Behaviour, Tata McGraw-Hill, 2005.
  4. Parag Parikh, Value Investing and Behavioral Finance: Insights into Indian Stock Market Realities, Tata McGraw-Hill, 2009, ISBN 978-0-07-007763-8.
  5. PPFAS Mutual Fund, “Our Philosophy” and “Investment Process,” amc.ppfas.com, retrieved May 2026.
  6. PPFAS Mutual Fund monthly factsheets, May 2013 to April 2026.
  7. AMFI member page for PPFAS Mutual Fund (member number 64), amfiindia.com.
  8. Warren Buffett, Berkshire Hathaway annual shareholder letters, 1965 to 2025, berkshirehathaway.com.
  9. Business Today coverage of PPFCF AUM milestones, 2025 and 2026.
  10. Business Standard, “Dalal Street veteran Parag Parikh dies in Omaha,” 4 May 2015.

Reviewed and published by

WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

Last reviewed
Conflicts of interest
WebNotes is independent. No relationship with any broker, registrar or bank named in this article.