Aim to make the most out of special situations

Transcription

1 Aim to make the most out of special situations ICICI Prudential India Opportunities Fund (An Open Ended Equity Scheme following Special Situation theme) NFO PERIOD: DEC 26, 2018 TO JAN 09, 2019

2 % YoY India One Of The Fastest Growing Economies 9 % Change in GDP Year-on-Year Argentina Brazil China India Indonesia Japan Mexico Nigeria Russian Federation South Africa Thailand Turkey United States Euro-area World % 1% 6.9% 6.7% 5.1% 1.7% 2% 0.8% 1.5% 1.3% 3.9% 7.4% 2.2% 2.4% 3.7% 2018E -2.6% 1.4% 6.6% 7.3% 5.1% 1.1% 2.2% 1.9% 1.7% 0.8% 4.6% 3.5% 2.9% 2% 3.7% 2019E -1.6% 2.4% 6.2% 7.4% 5.1% 0.9% 2.5% 2.3% 1.8% 1.4% 3.9% 0.4% 2.5% 1.9% 3.7% 2020E 2.2% 2.3% 6.2% 7.7% 5.2% 0.3% 2.7% 2.5% 1.8% 1.7% 3.7% 2.6% 1.8% 1.7% 3.7% GDP (US$ Tn) Data as on Oct Source: IMF, World economic outlook (2018), E: estimates. Past performance may or may not be sustained in the future. 2

3 $ per bbl Inflation (%) Improvement In Macro With Falling Crude Prices Crude Oil Prices Decline CPI Inflation (%) The sharp slump in crude price in recent time. CPI Inflation below the RBI s 4% target. Falling crude and INR appreciation may have meaningful impact on India s fiscal situation. Source: Nirmal Bang Institutional equities, Crude data as on 20th Nov 2018, CPI inflation as on Oct 31,

4 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 In Rs. bn Tax Collection & Ease Of Doing Business Rank Improves Highest Collection in GST post Apr 2018 India has witnessed significant Jump in ease of doing business index Monthly GST Collection Ease of Doing Business Ranking 1,060 1,040 1,020 1, , , Source: Internal, Monthly GST collection Data as on Oct 2018, Source of Ease of doing business ranking: doing business ranking 2018 report- 15th Edition. Past performance may or may not be sustained in the future. 4

5 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 Nov-18 Equities: An Attractive Investment Opportunity Book Partial Profits Asset Allocation Incremental Money to Debt Invest in Equities Aggressively invest in Equities Equity Valuation index is calculated by assigning equal weights to Price-to-Earnings (PE), Price-to-Book (PB), G-Sec*PE and Market Cap to GDP ratio. G-Sec Government Securities. GDP Gross Domestic Product; Asset Allocation Schemes that invest both in equity and fixed income. Source: internal. Index is as on Nov 30, Source: Internal. Past performance may or may not be sustained in the future. 5

6 Challenges: Crisis Or Chance? These challenges can create opportunities which lead to Special Situations The above instances are for explaining the events occurred in the particular stocks/sectors. Source: BSE filing & various media sources 6

7 Special Situations: The Road Less Travelled Special situations are unique situations that companies may face from time to time. These situations present an investment opportunity to a fund manager who can foresee and interpret the implications of that opportunity. This style of investing is bottom up stock picking style because the core of its investment strategy is identifying companies in special situations which requires rigorous 360 degree stock research. The portfolio of the scheme is subject to changes with in the provisions of the Scheme Information document of the scheme. Please refer to the SID for investment pattern, strategy and risk factors. The asset allocation and investment strategy will be as per Scheme Information Document. 7

8 Situations That Can Be Turned Into Opportunities (1) Special Situation due to temporary crisis in a. Company b. Sectors c. Economy (2) Government Action/ Regulatory Changes 3) Global Events/Uncertainties The above list is illustrative and not exhaustive, there are several other opportunities that may give rise to special situations. 8

9 1(a) SPECIAL SITUATIONS: COMPANY SPECIFIC 9

10 1 0 Situations That May Arise From Regulatory Issues Consolidation in Industry/ Increased competition Management Change Companies into Special Situations Established Businesses / Proven track record of management / Brands which are household names Unfavourable Business Cycle / Macros The above list is illustrative and not exhaustive, there are several other opportunities that may give rise to special situations.

11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Rs. Past Instances: From Crisis To Opportunities 750 United Spirits Ltd. Generally when there is a foreign partner (MNC) buying stake in a particular company it can lead into a change in investor sentiments. Diageo one of the world s largest spirits company bought stake in November 2012 in United Spirits. The same was well accepted by investment community and stock had moved from Rs. 272 to around Rs. 772 from November 2012 to March The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme. The stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these stock(s). Source: Internal. Past performance may or may not be sustained in the future. Returns are in absolute terms. 11

12 Jul/17 Aug/17 Sep/17 Oct/17 Nov/17 Dec/17 Jan/18 Feb/18 Mar/18 Apr/18 May/18 Jun/18 Jul/18 Aug/18 Sep/18 Rs. Past Instances: From Crisis To Opportunities Changes in management i.e, resignation of MD and CEO, led to a fall in the market price of the company Infosys Ltd. This created a negative atmosphere around the company, the fall in share price from levels of Rs 510 to Rs 438 was a well timed opportunity for investing. Since Aug 2017 to Sep 2018, the company had provided ~70% returns The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme. The stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these stock(s). Source: Internal. Past performance may or may not be sustained in the future. Returns are in absolute terms. Fund Manager will take position basis stock research. 12

13 Jul/12 Sep/12 Nov/12 Jan/13 Mar/13 May/13 Jul/13 Sep/13 Nov/13 Jan/14 Mar/14 May/14 Jul/14 Sep/14 Nov/14 Jan/15 Mar/15 May/15 Jul/15 Rs. Past Instances: From Crisis To Opportunities In July 2012, Maruti Suzuki witnessed selling pressure due to the strike at their Manesar Plant and shut down of assembly lines. This led to prices falling by ~ 10% which presented a buying opportunity in a company facing critical but temporary problems. Within 3 years, the company has provided returns of ~286% Maruti Suzuki Ltd 1000 The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme. The stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these stock(s). Source: Internal. Past performance may or may not be sustained in the future. Returns are in absolute terms. Fund Manager will take position basis stock research. 14

14 May/15 Aug/15 Nov/15 Feb/16 May/16 Aug/16 Nov/16 Feb/17 May/17 Aug/17 Nov/17 Feb/18 May/18 Aug/18 Rs. Past Instances: From Crisis To Opportunities In June 2015 Shares of Nestlé India Ltd. were hammered on news of excess lead content found in Maggi. Stock prices dropped from levels of Rs to Rs in a few months Nestlé India Ltd. This panic selling and negative sentiments among investors could provide an opportune moment to acquire great business at reasonable price. From June 2015 to Aug 2018, Nestlé's share price has appreciated by ~108% The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme. The stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these stock(s). Source: internal. Past performance may or may not be sustained in the future. Returns are in absolute terms. 14

15 1(b) SPECIAL SITUATIONS: INDUSTRY SPECIFIC 15

16 Special Situations In Sectors Sectors may undergo temporary stress due to various reasons such as: Stress due to new entrant Macro changes in economy Internal Intense competition amongst existing players External Government Reforms & Regulatory Changes Domino Effect Global Pressure The above list is illustrative and not exhaustive, there are several other opportunities that may give rise to special situations. 16

17 Jan/18 Jan/18 Jan/18 Feb/18 Feb/18 Mar/18 Mar/18 Apr/18 Apr/18 May/18 May/18 Jun/18 Jun/18 Jul/18 Jul/18 Jul/18 Aug/18 Aug/18 Past Instances: From Crisis To Opportunities Rupee Depreciation and IT Index Rupee has depreciated by around 9% from the beginning of this calendar year and is trading at Rs. ~70 per dollar as on 20,000 19,000 IT Index (LHS) INR/USD (RHS) November 28, , The falling rupee has been a tailwind for IT and Export oriented companies in the past. 17,000 16, The same can be seen in stock prices of IT companies. 15, , The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme. The sector(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sector(s). Source: NSE/BSE. Past performance may or may not be sustained in the future. Returns are in absolute terms. Data as on Nov 27, IT index is S&P BSE Information technology TRI Index. 17

18 1(c) SPECIAL SITUATIONS: CHANGE IN ECONOMIC SCENARIO 18

19 Change In Economic Scenario Macroeconomic variables are the key proponents of the trends existing in the economy. Movements in these factors can create special situation opportunities in companies and sectors. Crude Oil Prices Current Account & Fiscal Deficit Inflation Exchange Rates FX Reserves The above list is illustrative and not exhaustive, there are several other opportunities that may give rise to special situations. 19

20 Jul/11 Jan/12 Jul/12 Jan/13 Jul/13 Jan/14 Jul/14 Jan/15 Jul/15 Jan/16 Jul/16 Jan/17 Jul/17 Past Instances: From Crisis To Opportunities 800 Performance of Paint Companies ~680% 700 Asian Paints Kansai Nerolac Berger Paints Crude prices fell from $ 118 in July 2011 to levels of around $ 52 in July Companies operating across various sectors have seen good improvement in their operating margins. This helped investors in generating returns which can be seen in share prices of such companies ~550% ~350% The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme. The stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these stock(s). Source: internal. Past performance may or may not be sustained in the future. Returns are in absolute terms. Amounts rebased to 100., 20

21 2. SPECIAL SITUATIONS: GOVERNMENT OR REGULATORY ROADBLOCKS 21

22 Government Action Or Regulatory Roadblocks It has been witnessed that a change in Government Regulation or introduction of reforms may lead to special situations in sectors/ companies. Some of them are: Amendment in regulations Changes in taxation Fiscal reforms Introduction of Government Policies and Reforms The above list is illustrative and not exhaustive, there are several other opportunities that may give rise to special situations. 22

23 Nov/16 Dec/16 Jan/17 Feb/17 Mar/17 Apr/17 May/17 Jun/17 Jul/17 Aug/17 Sep/17 Oct/17 Nov/17 Dec/17 Jan/18 Feb/18 Mar/18 Past Instances: From Crisis To Opportunities Demonetization had a negative impact on several sectors like Consumer Durables, Retails, Automobiles, Manufacturing, Aviation, etc. on account of limited liquidity made available in the hands on customers. Some of the sectors benefiting out of demonetization were businesses operating under financial sectors like Insurance Companies, NBFC s, Mutual Funds etc Bank Index The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme. The sector(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these Sector(s). Source: internal. Past performance may or may not be sustained in the future. Returns are in absolute terms. Source: MFI. Nifty Bank Index has been used for representation. 23

24 3. SPECIAL SITUATIONS: GLOBAL EVENTS/ UNCERTAINTIES 24

25 Sensex Levels Global Events/Uncertainties India remains deeply entwined in the global economic landscape, any significant international event has a potential impact on India s economic performance and position However, these problems are opportunities in disguise and can create special situations for investors Asian Financial Crisis Greek Financial Crisis US China Trade Wars Brexit Announced LTCM Crisis Global Financial Crisis Terrorist attack in the US GOP wins US presidential elections 5000 Eurozone Debt Crisis The index mentioned is S&P BSE Sensex PRI. Source: BSE Ltd. Past performance may or may not be sustained in the future. The above list is illustrative and not exhaustive, there are several other opportunities that may give rise to special situations. LTCM: Long term capital management. GOP: Grand Old Party (Republican). Data as on Nov 28, Source: MFI 25

26 Oct/15 Dec/15 Feb/16 Apr/16 Jun/16 Aug/16 Oct/16 Dec/16 Feb/17 Apr/17 Jun/17 Aug/17 Oct/17 Dec/17 Feb/18 Apr/18 Jun/18 Aug/18 Oct/18 Global Events/Uncertainties China Slowdown affected the metals /commodities industries including India Commodity Companies were dragged down due to worries over global macroeconomic growth environment. Thus, Companies like Vedanta Ltd, Hindalco Industries Ltd, Tata Steel Ltd, Jindal Steel and Power Ltd, SAIL fell to multi-year lows. Investing in financially sound companies in the commodity space during this period could have resulted in wealth generation S&P BSE Metal 7000 The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme. The stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these stock(s). Source: NSE/BSE. Past performance may or may not be sustained in the future. Returns are in absolute terms. Metal index is S&P BSE Metal TRI index. 26

27 Special Situations: An Alpha Generation Strategy Establishing and maintaining an unconventional investment profile requires acceptance of uncomfortably idiosyncratic portfolios, which frequently appear downright impudent in the eyes of conventional wisdom. - Howard Marks The ability of a fund manager to reform the consensus by investing and moving away from the crowd by identifying opportunities early in stocks/sectors can assist in gener- ating meaningful Alpha and in creating wealth for investors in long term. Following the above thesis, ICICI Prudential India Opportunities Fund is a Scheme that aims to add alpha to the portfolio over the long-term through bottom up stock picking. The portfolio of the scheme is subject to changes with in the provisions of the Scheme Information document of the scheme. Please refer to the SID for investment pattern, strategy and risk factors. The asset allocation and investment strategy will be as per Scheme Information Document. 27

28 Opportunities In Current Market Scenario Telecom: Connecting People Growth of Internet penetration Stocks within the sector have witnessed meaningful correction on account of intense competition and price wars. The sector is now seeing consolidation as the number of companies operating within the sector have come down to merely three. We believe the surviving companies can benefit from current consolidation. The above instances are event/ situation based. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme. The sectors(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sectors(s). Source: internal. Data is as on May Past performance may or may not be sustained in the future. 30

29 Opportunities In Current Market Scenario Issues in NBFCs: Banks in a Sweet Spot Credit Growth may pick up to 12-13% in FY19 The growth slowdown in the non-banking financial companies (NBFC) space following the liquidity crisis has been a blessing in disguise for Banks. Retail & corporate lenders can benefit from this opportunity. With bad loan cycle now at the fag end Private banks could benefit from this changing competitive environment. The above instances are event/ situation based. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme. The sectors(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sectors(s). Source: Nirmal Bang Equities. Report Dated: Oct E: Estimates. Past performance may or may not be sustained in the future. 29

30 Opportunities In Current Market Scenario India can be one of the beneficiaries of the trade war between US & China We believe, India is in an advantageous position as it can benefit from the Import ban/tariffs imposed by US on China. China s retaliatory move of imposing tariffs on US products also provides an opportunity to India. India may benefit with its increase in share of exports in sectors like metals, textiles etc. The sectors(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sectors(s). The above instances are event/ situation based. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme. Past performance may or may not be sustained in the future. 30

31 Opportunities In Current Market Scenario Auto Industry: Reviving up for growth Some of the Auto Ancillary companies have seen market cap erosion on fear of introduc tion of Hybrid / Electronic Vehicle (EV). However we believe the acceptance & affordability of such Hybrid / EV has a long way to go. Despite disruption taking place in auto industry, the growth within the sector is still intact. The Indian two-wheeler industry grew at ~15% while crossing the 2 crore unit milestone, for the first time ever, in 7.90% Growth in FY % 19.9% 14.8% 11.90% FY18. Exports increased at a healthy pace of 16.12% during FY 18. Two wheeler exports jumped over 20%, India exported more than 28 lakh two-wheelers in FY 18. PV 2W CV 3W Total The above instances are event/ situation based. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme.. The sectors(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sectors(s). Source: Internal. Report Automotive Mission Plan Report dated May Past performance may or may not be sustained in the future. 31

32 ICICI Prudential India Opportunities Fund (An Open Ended Equity Scheme following Special Situation theme) NFO Period: December 26, 2018 to January 09, 2019 Fund Manager*: Mr. Sankaran Naren and Mr. Roshan Chutkey * Priyanka Khandelwal for investment in overseas securities. 32

33 ICICI Prudential India Opportunities Fund Investment Objective*: To generate long-term capital appreciation by investing in opportunities presented by special situations such as corporate restructuring, Government policy and/or regula- tory changes, companies going through temporary unique challenges and other similar instances. Investment Style: Concentrated portfolio with High Active Share Market Cap and Sector Agnostic approach Bottom up approach *However there can be no assurance or guarantee that the investment objective of the scheme would be achieved. The portfolio of the scheme is subject to changes with in the provisions of the Scheme Information document of the scheme. Please refer to the SID for investment pattern, strategy and risk factors. The asset allocation and investment strategy will be as per Scheme Information Document. 33

34 ICICI Prudential India Opportunities Fund NFO Period December 26, 2018 to January 09, 2019 MICR Cheques Till end of business hours on January 09, 2019 RTGS and transfer cheques Till end of business hours on January 09, 2019 Switches Switches from equity schemes and other schemes January 09, 2019; Till cut off time (specified for switch outs in the source scheme) Plans/Option ICICI Prudential India Opportunities Fund : Growth & Dividend ICICI Prudential India Opportunities Fund Direct Plan: Growth & Dividend Minimum Application Amount Rs.5,000/- (plus in multiple of Re.1 thereafter) Benchmark Nifty 500 Index Fund Manager* Mr. Sankaran Naren and Mr. Roshan Chutkey SIP Available during NFO & Ongoing offer period SWP/ STP Available during ongoing offer period * Priyanka Khandelwal for investment in overseas securities. 34

35 Riskometer & Disclaimers ICICI Prudential India Opportunities Fund (The scheme is suitable for investors who are seeking*) Long term wealth creation An equity scheme that invests in stocks based on special situations theme. Moderate Investors understand that their principal will be at high risk *Investors should consult their financial advisors if in doubt about whether the product is suitable for them. LOW HIGH Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Disclaimer: All figures and data given in the document are dated unless stated otherwise. In the preparation of the material contained in this document, the AMC has used information that is publicly available, including information developed in-house. Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been made available to the AMC and/or to its affiliates. Information gathered and material used in this document is believed to be from reliable sources. The AMC however does not warrant the accuracy, reasonableness and / or completeness of any information. We have included statements / opinions / recommendations in this document, which contain words, or phrases such as will, expect, should, believe and similar expressions or variations of such expressions, that are forward looking statements. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our services and / or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc. The AMC (including its affiliates), the Mutual Fund, the trust and any of its officers, directors, personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner. The recipient alone shall be fully responsible/are liable for any decision taken on this material. The sector(s)/stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sector(s)/stock(s). Past performance may or may not be sustained in the future. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the scheme. Please refer to the SID for investment pattern, strategy and risk factors. Investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other financial implication or consequence of subscribing to the units of ICICI Prudential Mutual Fund. The information contained herein should not be construed as a forecast or promise nor should it be considered as an investment advice. 35