Gallop ahead with India Opportunity Portfolio April 2017 Contents - PowerPoint PPT Presentation

Gallop ahead with India Opportunity Portfolio April 2017

Contents The India Opportunity Why Motilal Oswal PMS ? Strategy Details 1

India : Fast growing emerging economy GDP at market prices (in % growth) 7.4 CPI inflation has dropped below 6% 6.9 Falling Interest rates 5.1 Increasing Financial inclusion Government fiscal and current account deficits under control Sharp fall in Commodity prices Expected revamping of the tax system with introduction of GST 2012-13 2013-14 2014-15 Strong reform action including passage of Coal, Mines and Insurance bills, improving ease of doing business, labor market reforms and greater co-operation between state and central governments Source: Economic Survey 2014-15 2

Rising discretionary spending Discretionary spend will rise from 52% in 2005 to 70% in 2025 DISCRETIONARY ITEMS Necessities Share of Avg. Household consumption Discretionary Items % thousand, INR 4 7 9 3 Health Care 13 1 5 6 2 11 3 9 Education & Recreation 4 17 2 6 Communication 19 14 8 Transportation 20 3 5 9 12 Personal Products & 3 11 Services 12 6 3 5 10 Housing & Utilities 56 5 42 34 Food, beverages & 25 Tobacco 1995 2005 2015 E 2025 E Source: Motilal Oswal Securities Ltd (Data as on 31/03/2015) 3

Make in India Indiacanbecomeaglobalmanufacturinghubinsectorslike: • Automobiles&autocomponents, • Pharmaceutical, • Textiles, • Gems&Jewellery, • Defence • IThardwareand • Solarpower Dedicated Freight corridors have been envisaged as "Global Manufacturing and Trading Hubs“ with creationofnewIndustrialCities Labour reforms carried out by states like Rajasthan are expected to be adapted by several states which will pavethewayforrapidgrowthinlabourintensivemanufacturingsector. Focus on manufacturing sector would help in creating employment besides helping curb the current accountdeficit. 4

One trillion $ infra opportunity Planning commission (NITI Aayog) pegged infra Trillion Dollar infrastructure investment requirement at one trillion dollar over Requirement INR 65,000 billion (2012-2017) twelfthfiveyearplan The government announced plans for $137 billion capex inrailnetworkoverthenextfiveyears Targetof30kmsofroadsconstructioneverydaybyFY17 Public Sector Private Sector Developmentofinlandwaterways Contribution Contribution Speedyenvironmentalandforestclearances Debottlenecking of several large projects which got stalledinlastfewyears. INR 33,700 INR 31,300 billion billion Concerted push to complete large infra projects like DedicatedFreightcorridor. Borrowing Budgetary support Internal Generation Borrowing Internal Generation INR 10,693 billion INR 9,630 billion INR 21,670 billion INR 16,143 billion INR 6,869 billion Source: Economic Survey 2014-15 5

Markets return as much as growth in earnings 22-years CAGR of Sensex at 10% is exactly the same as 22-years Sensex EPS CAGR! Sensex Sensex Sensex YoY EPS YoY Sensex YoY EPS YoY Mar-95 3261 181 Mar-07 13072 16% 720 33% Mar-96 3367 3% 250 38% Mar-08 15644 20% 833 16% Mar-97 3361 0% 266 6% Mar-09 9709 -38% 820 -2% Mar-98 3893 16% 291 9% Mar-10 17528 81% 834 2% Mar-99 3740 -4% 278 -4% Mar-11 19445 11% 1024 23% Mar-00 5001 34% 280 1% Mar-12 17404 -10% 1120 9% Mar-01 3604 -28% 216 -23% Mar-13 18836 8% 1180 5% Mar-02 3469 -4% 236 9% Mar-14 22386 19% 1329 13% Mar-03 3049 -12% 272 15% Mar-15 27957 25% 1354 2% Mar-04 5591 83% 361 33% Mar 16 25341 -9% 1330 -2% Mar-05 6493 16% 446 24% StdDev 32% 14% Mar-06 11280 74% 540 21% CAGR 10% 10% st Source:MotilalOswalSecurities,MOAMCInternalAnalysis| Dataason31 March2016 Theinformationprovidedhereinisforillustrativepurposeonlyandshouldnotbeconstruedasaninvestmentadvice. Pastperformancemayormaynotbesustainedinfutureandshouldnotbeusedasabasisforcomparisonwithotherinvestments. 6

Food for thought Over long periods of time equities do deliver in line with corporate earnings; but it’s a known fact that the volatilityinsharepricesiswayhigherthanvolatilityofearningsthemselves. This volatility in share prices results in emotional response of greed in rising markets and fear in falling markets.Mostlytheseresponsesarewaymoreexaggeratedonupsideaswellasdownside. When evaluated in hindsight after the data plays out; one usually rues that responses were disproportionatetochangesincorporateearnings. 7

Why Motilal Oswal PMS? Amongst India’s leading PMS providers, with Assets under Management of approx Rs.10,304 Crores. Motilal Oswal PMS has one of the largest active accounts (more than 21,701) on PMS Platform. Our NTDOP Strategy has outperformed the benchmark across market cycles over last 9 year period. Our Flagship “Value Strategy” has outperformed the benchmark across market cycles over a 14 year period Motilal Oswal PMS has active clients in 152 different cities right from Adilabad to Zirakpur; a testimony of strong acceptance of our PMS across the length & breadth of the country. Dataason31 March2017 st 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 performanceforanyofthestrategies. 8

Why Motilal Oswal PMS? � MotilalOswalGrouppossesslegacyinequitiesforover3decade. Motilal Oswal AMC is chaired by Mr. Raamdeo Agrawal, one of the most honored and � trustednameintheinvestingworld. OneofthepioneersofPMSbusinesswithover14yearsofPMStrackrecord. � Trusted by over 21,700 HNI investors and with over Rs. 10,300 Crs of AUM as on 31st � March2017. PresenceacrossthelengthandbreadthofIndiaandalsooverseas. � Basic Traits of our Investing Style � Weinvestincompanieswithoperatingleveragethanfinancialleverage. We do not believe in “timing the market”, rather we believe in “spending time in � market”. Wedonotoverdiversify. � Thebusinessesweinvest,musthavegrowthpotentialwitheconomicmoat. � � WepractiselongtermBuyandHoldinvestingstyle. 9

Our investment philosophy – ‘Buy Right : Sit Tight’ At Motilal Oswal Asset Management Company (MOAMC), our investment philosophy is centered on 'BuyRight:SitTight‘principle. Buy Right Sit Tight QGLP ‘Q’uality denotes quality of the business and Buy and Hold: We are strictly buy and hold management investors and believe that picking the right business needs skill and holding onto these ‘G’rowth denotes growth in earnings and businesses to enable our investors to benefit sustainedRoE from the entire growth cycle needs even more ‘L’ongevity denotes longevity of the skill. competitive advantage or economic moat of Focus: Our portfolios are high conviction thebusiness portfolios with 20 to 25 stocks being our ideal ‘P’rice denotes our approach of buying a good number. Webelieveinadequate diversification business for a fair price rather than buying a but over-diversification results in diluting fairbusinessforagoodprice returns for our investors and adding market risk 10

Why ‘Buy Right : Sit Tight’ is significant? Realwealthiscreatedbyridingoutbulkofthegrowthcurveofqualitycompaniesandnotbytradinginand outinresponsetobuy,sellandholdrecommendations. This philosophy enables investor and manager alike to keep focus on the businesses they are holding ratherthangetdistractedbymovementsinshareprices. Anapproachofbuyinghighqualitystocksandholdingthemforalongtermwealthcreationmotive,results indrasticreductionofcostsfortheendinvestor. While BUY RIGHT is largely the role of the portfolio manager, SIT TIGHT calls for involvement from the portfolio manager as well as investor. This brings in greater accountability from the manager and at the same time calls for better involvement and understanding from investor resulting in better education for thelatter. Longtermmultiplicationofwealthisobtainedonlybyholdingontothewinnersanddesertingthelosers. 11

mayormaynotbesustainedinfutureandshouldnotbeusedasabasisforcomparisonwithotherinvestments.Strategyreturnsshownabovearepostfees&expenses. PleaseNote:TheAbovestrategyreturns areof aModelClientason 31 March2017.Returns of individualclientsmaydifferdependingon timeof entryinthestrategy.Pastperformance Investment Value Investment Value Strategy Inception Date: 11/12/2007 Strategy Inception Date: 24/03/2003. 140.00 190.00 240.00 -10.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00 40.00 90.00 0.00 5.00 Dec-07 Mar-03 Jun-03 Mar-08 Sep-03 Jun-08 Dec-03 Mar-04 Sep-08 Jun-04 Dec-08 Sep-04 Dec-04 Mar-09 Mar-05 Jun-09 Jun-05 Sep-05 Sep-09 Dec-05 Dec-09 Performance of Buy Right Sit Tight Strategy Mar-06 Jun-06 Mar-10 Sep-06 Jun-10 Dec-06 NTDOP Strategy st Mar-07 Sep-10 Jun-07 Value Strategy Dec-10 Sep-07 Dec-07 Mar-11 Mar-08 Jun-11 Jun-08 Sep-08 Sep-11 Dec-08 Dec-11 Mar-09 Nifty Free Float Midcap 100 Index Jun-09 Mar-12 Sep-09 Jun-12 Dec-09 Mar-10 Sep-12 Jun-10 Dec-12 Sep-10 Nifty 50 Index Dec-10 Mar-13 Mar-11 Jun-11 Jun-13 Sep-11 Sep-13 Dec-11 Mar-12 Dec-13 Jun-12 Mar-14 Sep-12 Dec-12 Jun-14 Mar-13 Sep-14 Jun-13 Sep-13 Dec-14 Dec-13 Mar-15 Mar-14 Jun-14 Jun-15 Sep-14 Sep-15 Dec-14 Mar-15 Dec-15 Jun-15 Mar-16 Sep-15 Dec-15 Jun-16 Mar-16 Sep-16 2.03X 23.04X Jun-16 9.07X 4.98X Sep-16 Dec-16 Dec-16 Mar-17 Mar-17 12