BRST E Years BRST T Opportunity Strategy MOSt rillion Dollar N - PowerPoint PPT Presentation

BRST E Years BRST T Opportunity Strategy MOSt rillion Dollar N XT BRST BRST BRST of GDP Growth October 2018 BRSTBRST Your key to India’s Next Trillion Dollar b e r a t i l n e C g

Contents India’s Next Trillion Dollar Opportunity (NTDOP) Diversified Market Opportunity 1 Why Motilal Oswal PMS? NTDOP Strategy details

Trillion Dollar GDP FY18E 3 years 4th US$ tn 3rd US$ tn 58 years 7 years 2nd US$ tn 1st US$ tn FY23E FY22E FY21E FY20E FY19E FY17E Source: Statisticstimes.com FY16E FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY08 FY07 FY06 FY05 FY04 5 years GDP (USD bn) FY02 31% 54% 29% 17% FY16 Services Industry Agriculture GDP Contributors In 53% 30% 17% 53% 16% FY77 46% 28% 26% 42% 26% 31% 36% 25% 37% FY15 FY12 FY97 FY87 FY03 FY01 Ÿ India has joined the club of countries with Ÿ Dependency on agriculture is expected to 34 22 investments. may or may not be sustained in future and should not be used as a basis for comparison with other involve known and unknown risks and uncertainties that could cause actual results. Past performance Above forward-looking graphs/statements are based on external current views and assumptions and Source: Statisticstimes.com growth GDP would reduce the volatility in GDP Ÿ Higher contribution of service sector in countries reduce as witnessed in developed growth driver 155 income, manufacturing sector to be a key Ÿ Due to sustained growth in consumer lead future GDP growth productivity improvement is expected to Ÿ Service sector driven by rapid strong GDP growth Ÿ Overall robust service sector enabled by trillions in faster successions. Ÿ GDP is expected to reach next US $ the 2nd US $ trillion. 1st US $ trillion; but only 7 years to reach Ÿ It took our GDP almost 60 years to reach a Trillion Dollar GDP in FY08 59 301 FY00 2,042 FY90 FY80 FY70 FY60 FY51 3,977 3,611 3,278 2,976 2,702 2,453 2,274 2,090 1,864 465 1,828 1,879 1,708 1,366 1,226 1,239 948 834 721 618 524 494 475 2

Rising Discretionary Spending 60,000 1991 110,000 10.5% CAGR of 9.5% CAGR of CAGR of 11.6% 100,000 90,000 80,000 70,000 50,000 1993 40,000 30,000 30,000 10,000 -10,000 (In Rs. Thousand) Per Capita Income Higher per capita GDP to increase disposable income Ÿ Per capita GDP has grown to Rs. 103,007 in 2017 from Rs. 31,206 in 2007 Ÿ for comparison with other investments. 1992 1994 Source: data.gov.in & Motilal Oswal Securities Ltd 2009 assumptions and involve known and unknown risks and uncertainties that could cause Above forward-looking graphs/statements are based on external current views and 3 2017 2016 2015 2014 2013 2012 2011 2010 2008 1995 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Past performance may or may not be sustained in future and should not be used as a basis Discretionary Items Discretionary spending is expected to increase 12 17 11 11 9 8 4 3 3 3 2 10 12 20 14 5 5 6 5 25 34 42 56 in 2005 to 70% in 2025 Discretionary spending will rise from 52% disproportionately going forward 19 1 Necessities 2025 E % thousand, INR Share of Avg. Household consumption DISCRETIONARY ITEMS Health Care Education & Recreation Communication Transportation Services Personal Products & Housing & Utilities Tobacco Food, beverages & 2015 2 2005 1995 13 9 7 4 9 6 5 3 6 3 actual results.

Consumption • Cement • Utility Services • Passenger Vehicles • Consumer durables • Retailing spending • Increasing consumer These are illustrative in nature and can change from time to time based on the outlook of the portfolio manager. Some themes that benefit from GDP Growth • Engineering • Real Estate • Construction • Capital Goods • Power • Beneficiary from high Spending • Benefit from Government Related Services Infrastructure and Financial Services Banking and • NBFCs • Insurance • Broking • Banks savings rate GDP growth and 4

Ÿ Multi Cap companies of 2008 have 2008 132 241 3996 No. of Companies 297 Companies with net sales over 5000 Cr. Companies with net sales between 1000 Cr. To 5000 Cr. 84 222 468 2016 3174 500 450 400 350 300 250 200 150 100 50 0 449 Source : Capitaline transformed into today’s Large Cap <1000 Cr. companies Ÿ The number of Large Cap companies (> Rs. 10000 Crs.) has almost quadrupled since 2008 Ÿ Companies with net sales over Rs. 5000 Crs. have increased by ~4 times from 2008 to 2016 Ÿ Companies with net sales of Rs. 1000 Crs. to Rs. 5000 Crs. have increased by ~2 times from 2008 to 2016 The Multi Cap Opportunity 1000 Cr. - 5000 Cr. No. of Companies 5000 Cr. - 10000 Cr. >10000 Cr. Total 2579 185 37 53 2854 2008 2017 Market Capitalisation 5

Source: Motilal Oswal Securities, MOAMC Internal Analysis | Data as on 31st March 2017 Mar-14 2% 1354 25% 27957 Mar-15 15% 272 -12% 3049 Mar-03 13% 1329 19% 22386 9% 5591 236 -4% 3469 Mar-02 5% 1180 8% 18836 Mar-13 -23% 216 -28% 3604 Mar-01 Mar-04 83% 1120 CAGR 720 16% 13072 Mar-07 1% 1347 17% 29621 Mar 17 14% 32% StdDev 10% 10% 21% 361 Mar-05 33% Mar 16 25341 -9% 1330 -2% 6493 540 16% 446 24% Mar-06 11280 74% 9% -10% CAGR - is an investing specific term for the geometric progression ratio that provides a constant rate of return over the time period; Std Dev - a quantity expressing by how YoY Mar-97 16% 833 20% 15644 Mar-08 38% 250 3% 3367 Mar-96 181 3261 Mar-95 EPS 0% Sensex YoY Sensex YoY EPS Sensex YoY Sensex 6 Markets return as much as growth in earnings 22-years CAGR of Sensex at 11% is exactly the same as 22-years Sensex EPS CAGR! and should not be used as a basis for comparison with other investments; Mar-95 is taken as base year The information provided herein is for illustrative purpose only and should not be construed as an investment advice.; Past performance may or may not be sustained in future much the members of a group differ from the mean value for the group. 3361 266 17404 3740 Mar-12 1% 280 34% 5001 Mar-00 23% 1024 11% 19445 Mar-11 -4% 278 -4% Mar-99 6% 3893 Mar-09 9709 -38% 820 -2% Mar-98 16% 2% 291 9% Mar-10 17528 81% 834 33%

Food for thought Over long periods of time equities do deliver in line with corporate earnings; but it’s a known fact that the volatility in share prices is way higher than volatility of earnings themselves. This volatility in share prices results in emotional response of greed in rising markets and fear in falling markets. Mostly these responses are way more exaggerated on upside as well as downside. When evaluated in hindsight after the data plays out; one usually rues that responses were disproportionate to changes in corporate earnings. 7

Characteristics of Multi cap market Larger stock universe Relatively under owned and under-researched companies Fewer business lines and focused businesses Attractive valuation as compared to large caps 8

Amongst India’s leading PMS providers, with Assets under Management of approx Rs. 14,762 Crores. and trusted by over 40,073 HNI investors NTDOP Strategy has consistently outperformed the benchmark across market cycles over last 10 years. Overall PMS track record of over 15 years since its inception in 2003. Why Motilal Oswal PMS? th Data as on 30 September 2018 Investments in Securities are subject to market and other risks and there is no assurance or guarantee that the objectives of any of the strategies of the Portfolio Management Services (PMS) will be achieved. Investors in the PMS Product are not being offered any guaranteed/assured returns. Past performance of the portfolio manager does not indicate the future performance for any of the strategies. 9

Our Investment Philosophy – ‘Buy Right : Sit Tight’ Sit Tight market risk in diluting returns for our investors and adding diversification but over-diversification results number. We believe in adequate portfolios with 25 to 30 stocks being our ideal Focus: Our portfolios are high conviction skill. from the entire growth cycle needs even more businesses to enable our investors to benefit business needs skill and holding onto these investors and believe that picking the right Buy and Hold: We are strictly buy and hold QGLP At Motilal Oswal Asset Management Company (MOAMC), our investment philosophy is centered on fair business for a good price business for a fair price rather than buying a ‘P’rice denotes our approach of buying a good the business competitive advantage or economic moat of ‘L’ongevity denotes longevity of the sustained RoE ‘G’rowth denotes growth in earnings and management ‘Q’uality denotes quality of the business and Buy Right 'Buy Right: Sit Tight‘ principle. 10