Religare Invesco Caterpillar Portfolio September 2015 1
Favorable Demographics Increase in India s working population 50% 48.25% Young working population compared to peers Median age of the population, 2014 50.0 40% 40.0 38.9 36.7 30% 23.46% 30.0 30.7 27.0 20% 20.0 10% 10.0 0% 1990 1994 1998 2002 2006 2010 2014 Source: The World Bank 0.0 Source: Statista.com Russia China Brazil India India s working age population aged between 15 and 64 has significantly increased over last fifteen years. On the contrary, major developed economies are seeing rising proportions of retirees. India s median age is the lowest even amongst the BRIC countries. Over the next decade India s working age populated aged between 15 and 64 is expected to rise, while it is expected to decline in China, Brazil & Russia. 2
Rising Income Levels Rising Per Capita GDP 3,000 2,500 2,000 1,500 GDP per capita (Current USD) 2,672 1,808 1,631 1,417 Transformation of Indian Households Distribution of Indian household by consumption expenditure 100% 80% 60% 40% 1,000 740 20% 500 0 303 376 384 457 1985 1990 1995 2000 2005 2010 2014 2015E 2020E 0% FY2010 FY2015E FY2020E FY2025E Surviving Emerging Evolving Prospering Upper Class Real-rich Source: The World Bank, Statista.com Source: Kotak Institutional Equities Per capita income rose by just USD 81 from 1990 to 2000, whereas it rose by a massive USD 960 between 2000 to 2010. It is expected to increase by USD 1,255 between 2010 to 2020. Consumption patterns & economic growth change once critical levels like USD 1,000 & USD 2,000 are crossed. With incomes rising more households are expected to migrate towards Evolving and Prospering class. The number of households under the surviving category is expected to be eliminated by 2025. Distribution of Indian household by consumption expenditure. Category Definition: Surviving: Up to USD 3,000. Emerging: From USD 3,000 to USD 6,000. Evolving: USD 6,000 to USD 12,000. Prospering: USD 12,000 to USD 24,000. Upper Class: USD 24,000 to USD 36,000. Real-Rich: USD 36,000 and above. 3
Consumption: The Big Opportunity Growth Expected in Indian Consumption Expenditure Sectors Expected to Benefit Period- March 2012 to March 2025 Period- March 2012 to March 2025 Incremental Growth Expected in Consumption Expenditure INR 83.61 Trillion INR 56.13 Tillion INR 139.74 Trillion Category % Share of Incremental Growth Expected in Consumption Expenditure Food & beverages 27.43% Housing 15.28% Transport 10.24% Healthcare 6.52% Leisure 5.24% Household goods 4.72% Clothing & footwear 4.47% 2012 2025 Others 26.10% Source: Kotak Institutional Equities Research Others Include: Hotels, Communications, Education, Alcohol & Tobacco and Miscellaneous 4
India in a Sweet Spot Favorable Demographics Rising Income Levels Increased Consumption Govt. Policy Action Tax Reforms Make in India Thrust on Infrastructure Sectors that may benefit Consumer Discretionary & Staples Banking & Financials Healthcare Industrials (Manufacturing & Infrastructure) The above analysis is based on current view and subject to change without notice. Sector Source Classification: Bloomberg GICS. 5
Sizeable opportunities in Mid & Small cap space 102 Data as on March 31, 2015 75 49 35 28 19 33 25 Consumer Discretionary & Consumer Staples Financials Health Care Industrials Large Cap Mid Cap & Small Cap Past performance may or may not be sustained in future. Source: Bloomberg. Definition: Large Caps are defined as companies having market capitalization above the Simple Average Market Capitalization of Top 5 Constituents of CNX Midcap Index. Midcaps are defined as companies having market capitalization between the Simple Average Market Capitalization of Top 5 Constituents of CNX Midcap Index and Simple Average Market Capitalization of bottom 5 Constituents of CNX Midcap Index. Small Caps are defined as companies having market capitalization lesser than Simple Average Market Capitalization of bottom 5 Constituents of CNX Midcap Index. Sector Classification Source: Bloomberg GICS Classification. Other Sectors are: Energy / Information Technology / Materials / Telecommunications / Utilities 6
Why Mid and Small Caps? Better compounding machines Provides exposure to structural growth stories Offers participation in emerging businesses Beneficiaries of earning growth and P/E multiple expansion Provides alpha generation as they are under-researched & largely overlooked Widening pool of entrepreneurial talent in India is best tapped in mid & small cap stocks 7
How has Midcaps performed? Midcap indices have outperformed large cap indices consistently 36.27 Data as on September 30, 2015. (in %) 13.72 17.75 18.29 11.69 12.61 16.31 5.68 7.22 7.73 14.97 11.62 10.62 5.90 8.28 9.23 18.67 16.88 14.77 15.45 11.97 13.05 11.81-0.20 1 Years 2 Years 3 Years 4 Years 5 Years 6 Years 7 Years 8 Years 9 Years 10 Years 11 Years 12 Years CNX NIFTY CNX Midcap Past performance may or may not be sustained in future. Source: NSE. The base date of CNX Midcap Index is January 1, 2013. Returns up to 1 year are absolute Returns and returns over 1 year are Compounded Annualized Returns. The above simulation is for illustration purpose only and should not be construed as a promise on minimum returns and safeguard of capital. The AMC is not guaranteeing or forecasting any returns. 8
Mid and Small Cap Transition in a Decade Period: March 31, 2005 March 31, 2015 March 2005 100 Small Cap Co s of March 2005 (Market Cap Range: INR 400 Crs to 985 Crs) March 2015 March 2005 110 Mid Cap Co s of March 2005 (Market Cap Range: 985 Crs to INR 3,834 Crs) March 2015 60 40 30 77 3 Co s Remained Small Cap in March 2015 Co s Transitioned to Mid Cap in March 2015 Co s slipped to Small Cap in March 2015 Co s Remained Mid Cap in March 2015 Co s Transitioned to Large Cap in March 2015 (Market Cap Range: INR 600 Crs to INR 3,297 Crs) (Market Cap Range: INR 3,297 Crs to INR 59,259 Crs) (Market Cap Range: INR 600 Crs to INR 3,297 Crs) (Market Cap Range: INR 3,297 Crs to INR 59,259 Crs) (Market Cap Range: INR 59,259 Crs and Above) Past performance may or may not be sustained in future. Source: Bloomberg. The definition of capitalization is based on internal analysis and views. Definition: Large Caps are defined as companies having market capitalization above the Simple Average Market Capitalization of Top 5 Constituents of CNX Midcap Index. Midcaps are defined as companies having market capitalization between the Simple Average Market Capitalization of Top 5 Constituents of CNX Midcap Index and Simple Average Market Capitalization of bottom 5 Constituents of CNX Midcap Index. Small Caps are defined as companies having market capitalization lesser than Simple Average Market Capitalization of bottom 5 Constituents of CNX Midcap Index. 9
Transition Leads to Superior Performance Period: March 31, 2005 March 31, 2015. Return : Average CAGR 37.99% 18.53% 24.29% 5.31% -0.52% 30 60 77 40 03 Mid Cap (2005) - Small Cap (2015) Mid Cap (2005) To Small Cap (2015) Small Cap (2005) - Small Cap (2015) Small Cap (2005) To Small Cap (2015) Mid Cap (2005) - Mid Cap (2015) Mid Cap (2005) To Mid Cap (2015) Small Cap (2005) - Mid Cap (2015) Small Cap (2005) To Mid Cap (2015) Mid Cap (2005) - Large Cap (2015) Mid Cap (2005) To Large Cap (2015) Past performance may or may not be sustained in future. Source: Bloomberg. The definition of capitalization is based on internal analysis and views. Definition: Large Caps are defined as companies having market capitalization above the Simple Average Market Capitalization of Top 5 Constituents of CNX Midcap Index. Midcaps are defined as companies having market capitalization between the Simple Average Market Capitalization of Top 5 Constituents of CNX Midcap Index and Simple Average Market Capitalization of bottom 5 Constituents of CNX Midcap Index. Small Caps are defined as companies having market capitalization lesser than Simple Average Market Capitalization of bottom 5 Constituents of CNX Midcap Index. The returns of each category is calculated as simple average of CAGR returns of the stocks in the particular category. The return of individual stock in a category is based on adjusted stock price considering corporate action excluding dividends. 10
Stock Selection is the key Only few mid & small cap companies benefit from the structural changes in the economy Period: March 31, 2005 March 31, 2015. Return: CAGR 37.99% 24.29% 15.34% 16.07% 18.53% CNX NIFTY Index CNX Mid cap Index Mid Cap (2005) - Mid Cap (2015) Small Cap (2005) - Mid Cap (2015) Mid Cap (2005) - Large Cap (2015) Past performance may or may not be sustained in future. Returns over 1 year are Compounded Annualized Returns. Source: Bloomberg. The definition of capitalization is based on internal analysis and views. Definition: Large Caps are defined as companies having market capitalization above the Simple Average Market Capitalization of Top 5 Constituents of CNX Midcap Index. Midcaps are defined as companies having market capitalization between the Simple Average Market Capitalization of Top 5 Constituents of CNX Midcap Index and Simple Average Market Capitalization of bottom 5 Constituents of CNX Midcap Index. Small Caps are defined as companies having market capitalization lesser than Simple Average Market Capitalization of bottom 5 Constituents of CNX Midcap Index. The returns of each category is calculated as simple average of CAGR returns of the stocks in the particular category. The return of individual stock in a category is based on adjusted stock price considering corporate action excluding dividends. 11
Religare Invesco Caterpillar Portfolio Capitalizing on transformational opportunities. Capitalize on the transformation of small and mid sized companies Participate in companies with structural growth trends Participate in niche or emerging business areas Exploit overlooked investment opportunities Benefit from both earning growth and P/E multiple expansion 12
Religare Invesco Caterpillar Portfolio Investment Guidelines Universe/ Fundamentally strong and high growth midcap 1 and smallcap 2 companies Stock Selection Approach Investment Focus Portfolio Construct Bottom-up stock picking Potential of strong and sustainable growth Attractive Returns on Capital and adequate cash flow Industry attractiveness and competitive advantages Good quality management with sound corporate governance High conviction portfolio 15 to 20 Stock Portfolio 1 Midcaps are defined as companies having market capitalization between the Simple Average Market Capitalization of Top 5 Constituents of CNX Midcap Index and Simple Average Market Capitalization of bottom 5 Constituents of CNX Midcap Index. 2 Small Caps are defined as companies having market capitalization lesser than Simple Average Market Capitalization of bottom 5 Constituents of CNX Midcap Index. 13
How has Religare Invesco Caterpillar Portfolio performed since inception? If Rs. 25 Lahks were invested in Religare Invesco Caterpillar Portfolio, CNX Midcap Index and CNX Nifty on June 26, 2006, its present value would have been.. Period: June 26, 2006 September 30, 2015 Rs. 1.44 Crs Rs. 0.68 Crs Rs. 0.84 Crs CNX Nifty Index CNX Midcap Index Religare Invesco Caterpillar Portfolio Past performance may or may not be sustained in future. The data given above is for model portfolio. The returns are calculated on the basis of daily market value of the Portfolio. Disclaimer: The returns of model portfolio given above are for illustration purpose only. Model portfolio returns does not take into account expenses/charges and Profit/Loss on account of derivative transactions. Returns under client wise portfolio may vary vis-à-vis returns of model portfolio due to various factors viz. timing of investment/additional investment in client s portfolio, timing of withdrawals in client s portfolio, mandates given by respective client, profit/loss on account of derivative transactions, expenses charged to respective portfolio, dividend income in the respective portfolio etc. The Portfolio manager does not offer guaranteed or assured returns. 14
Religare Invesco Caterpillar Portfolio Performance at glance 60.52% Data as on September 30, 2015 35.75% 36.27% 39.50% 13.68% 18.29% 23.21% 7.22% 25.41% 14.97% 19.01% 20.81% 11.97% 14.02% 1 Years 2 Years 3 Years 5 Years 7 Years 9 Years Since Inception (June 26, 2006) Religare Invesco Caterpillar Portfolio CNX Midcap Past performance may or may not be sustained in future. Returns up to 1 year are absolute Returns and returns over 1 year are Compounded Annualized Returns. The data given above is for model portfolio. The returns are calculated on the basis of daily market value of the Portfolio. Disclaimer: The returns of model portfolio given above are for illustration purpose only. Model portfolio returns does not take into account expenses/charges and Profit/Loss on account of derivative transactions. Returns under client wise portfolio may vary vis-à-vis returns of model portfolio due to various factors viz. timing of investment/additional investment in client s portfolio, timing of withdrawals in client s portfolio, mandates given by respective client, profit/loss on account of derivative transactions, expenses charged to respective portfolio, dividend income in the respective portfolio etc. The Portfolio manager does not offer guaranteed or assured returns. 15
Alpha Generators Astral Poly Technik Ltd. Purchase Date Feb 01, 2011 Holding Period (in days): 1,326 Sale Date Sep 18, 2014 Return Method CAGR Hindustan Dorr-Oliver Ltd. Purchase Date Dec 01, 2008 Holding Period (in days): 723 Sale Date Nov 23, 2010 Return Method CAGR 110.54% 195.99% 68.94% 12.17% Astral Poly Technik Ltd. CXN Mid Cap Index Hindustan Dorr-Oliver Ltd. CXN Mid Cap Index Past performance may or may not be sustained in future. Returns up to 1 year are absolute and over 1 year are Compounded Annualized. Note: Performance has been shown from the period when stock was included in the portfolio. Source : NSE / Internal. Alpha indicates excess return of the stock relative to the return of the benchmark index. The stock referred above should not be construed as recommendations from Religare Invesco AMC. The Portfolio may or may not have any present or future positions in these stocks or in any other portfolios offered by Religare Invesco AMC. The performance of above stocks should not be construed as performance of the portfolio as the portfolio would be constituted of number of stocks having different weights and the individual stock held by the portfolio may or may not give positive returns. Religare Invesco AMC is not guaranteeing or promising or forecasting any returns. 16
Alpha Generators Prime Focus Ltd. Purchase Date Apr 01, 2009 Holding Period (in days): 608 Sale Date Nov 29, 2010 Return Method CAGR Yes Bank Ltd. Purchase Date Dec 05, 2008 Holding Period (in days): 1,924 Sale Date Mar 12, 2014 Return Method CAGR 229.26% 38.51% 75.77% 18.24% Prime Focus Ltd. CXN Mid Cap Index Yes Bank Ltd. CXN Mid Cap Index Past performance may or may not be sustained in future. Returns up to 1 year are absolute and over 1 year are Compounded Annualized. Note: Performance has been shown from the period when stock was included in the portfolio. Source : NSE / Internal. Alpha indicates excess return of the stock relative to the return of the benchmark index. The stock referred above should not be construed as recommendations from Religare Invesco AMC. The Portfolio may or may not have any present or future positions in these stocks or in any other portfolios offered by Religare Invesco AMC. The performance of above stocks should not be construed as performance of the portfolio as the portfolio would be constituted of number of stocks having different weights and the individual stock held by the portfolio may or may not give positive returns. Religare Invesco AMC is not guaranteeing or promising or forecasting any returns. 17
Alpha Generators Britannia Industries Ltd. Purchase Date Jun 06, 2013 Holding Period (in days): 847 Sale Date Still Holding (As on Sept 30, 2015) 93.68% Return Method CAGR Amara Raja Batteries Ltd. Purchase Date Apr 17, 2013 Holding Period (in days): 897 Sale Date Still Holding (As on Sept 30, 2015) 79.94% Return Method CAGR 24.12% 24.74% Britannia Industries Ltd. CXN Mid Cap Index Amara Raja Batteries Ltd. CXN Mid Cap Index Past performance may or may not be sustained in future. Returns up to 1 year are absolute and over 1 year are Compounded Annualized. Note: Performance has been shown from the period when stock was included in the portfolio. Source : NSE / Internal. Alpha indicates excess return of the stock relative to the return of the benchmark index. The stock referred above should not be construed as recommendations from Religare Invesco AMC. The Portfolio may or may not have any present or future positions in these stocks or in any other portfolios offered by Religare Invesco AMC. The performance of above stocks should not be construed as performance of the portfolio as the portfolio would be constituted of number of stocks having different weights and the individual stock held by the portfolio may or may not give positive returns. Religare Invesco AMC is not guaranteeing or promising or forecasting any returns. 18
Model Portfolio Holdings & Performance Sept 30, 2015 Portfolio Holdings Sector Allocation Top 5 Holdings % of Net Assets Top 5 Sectors % of Net Assets CCL Products I Ltd. 7.98 Britannia Industries Ltd. 7.39 Yes Bank Ltd. 6.65 Divi s Laboratories Ltd. 5.88 Sanofi India Ltd. 5.58 Total Equity Exposure 84.13 Industrials 23.60 Consumer Staple 15.37 Information Technology 13.26 Financials 11.55 Health Care 11.47 Cash & Cash Equivalent 15.87 Calendar Year Performance Period Portfolio # Benchmark YTD 15.32% 3.18% 2014 80.60% 55.91% 2013 18.91% -5.10% 2012 45.18% 39.16% 2011-17.36% -31.00% 2010 22.00% 19.16% Portfolio Characteristics No of Holdings 16 Last 12 Month Average Weighted Market Capitalization INR 11,302 Crs Allocation to Midcap Stocks (Sept 30, 2015) 100% Standard Deviation 4.59% Beta 0.74 Sharpe Ratio: 0.51 Based on 3 years, monthly data history (risk free rate of 7.01% based on 91 day T-Bill Rate) # Past performance may or may not be sustained in future. The data given above is for model portfolio As on Sept 30, 2015. Returns up to 1 year are absolute and over 1 year are Compounded Annualized. The returns are calculated on the basis of daily market value of the Portfolio. Disclaimer: The returns of model portfolio given above are for illustration purpose only. Model portfolio returns does not take into account expenses/charges and Profit/Loss on account of derivative transactions. Returns under client wise portfolio may vary vis à vis returns of model portfolio due to various factors viz. timing of investment/additional investment in client s portfolio, timing of withdrawals in client s portfolio, mandates given by respective client, profit/loss on account of derivative transactions, expenses charged to respective portfolio, dividend income in the respective portfolio etc. The Portfolio manager does not offer guaranteed or assured returns. Please refer to the disclosure document for detailed information. 19
Portfolio Facts & Statistics Portfolio Name Investment Objective Religare Invesco Caterpillar Portfolio To achieve capital appreciation over a long term by investing in a diversified portfolio. Indicative Asset Allocation Instruments Indicative Allocation (% of Portfolio Value) Risk Profile Equity & Equity Related Instruments # 90% to 100% High Cash & Cash Equivalent 0% to 10% Low to Medium Benchmark Portfolio Manager CNX MIDCAP INDEX Mr. Chetan Shah Total Experience: 22 Years. Experience in managing this portfolio: Since December 21, 2009 Inception Date June 26, 2006 Minimum Investment INR 25 Lacs Subscription Mode: Cheque and/or Stock Transfer # The Portfolio may have exposure to derivatives upto 30% of portfolio value in accordance with guidelines issued by SEBI. 20
Who Should Invest Investor with ability to take higher risk Investor seeking long term capital appreciation Investor who is comfortable with short term volatility Investor without short term liquidity needs 21
Portfolio Manager Mr. Chetan Shah, CFA Senior Portfolio Manager - Portfolio Management Services Chetan has experience of 22 years in Indian equity markets; of which 11 years were spent in portfolio management and previous 11 years were in equity research. He has been with PMS division since inception. Prior to this he worked with Quantum Securities as a Head of Research and at DBS Securities India as a Senior Analyst. Quantum Securities was ranked amongst the Top 20 local brokers in Asia Money Broker Poll for 2003 & 2004 under his leadership. Chetan holds an Bachelor s degree in Electronics Engineering, a Post-Graduate Diploma from Jamnalal Bajaj Institute of Management Studies and a CFA charter from CFA Institute, USA. He is an active volunteer and on the Board of the Director of Indian Association of Investment Professionals (IAIP), a not for profit organization and member society of CFA Institute, promoting ethics and professional excellence in the industry. 22
MKTG/PMSPRODPPT/1015/C00113 Compliance Information Disclaimer: This presentation does not solicit any action based on the material contained herein. Religare Invesco Asset Management Company Pvt. Ltd. ( the Portfolio Manager / the Company ) will not treat recipients as clients by virtue of their receiving this presentation. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation / circumstances and the particular needs of any specific person who may receive this presentation. The Co's/sectors referred in this presentation are only for the purpose of explaining the concept of Portfolio and should not be construed as recommendations from Portfolio Manager. The Portfolio may or may not have any present or future positions in these stocks. The Portfolio(s) discussed in the presentation may not be suitable for all the investors. The recipient of this material alone shall be fully responsible / liable for any decision taken on the basis of this material. The appropriateness of a particular investment or strategy will depend on an investor s individual circumstances and objectives. The distribution of this presentation in certain jurisdictions may be restricted or totally prohibited to registration requirements and accordingly, persons who come into possession of this presentation are required to inform themselves about and to observe any such restrictions and/ or legal compliance requirements. Persons who may receive this presentation should consider and independently evaluate whether it is suitable for his / her / their particular circumstances and are requested to seek professional / financial advice. Past performance is not a guide for future performance. Future returns are not guaranteed and a loss of principal may occur. The Company and its affiliates accept no liabilities for any kind of loss arising out of the use of this presentation. With respect to all information found in this presentation the Company has obtained data from sources it considers reliable however, the Company and its directors, officers, agents, or employees and its affiliates make no warranty, express or implied, including the warranties of merchantability and fitness for a particular purpose, or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information contained therein and the Company shall not be liable for any indirect, incidental or consequential damages sustained or incurred in connection with the use, operation, or inability to use this presentation and information contained therein. Under no circumstances will the Portfolio Manager be liable for any loss or damage caused by anyone s reliance on information contained in this presentation. Risk Factors: All securities investments are subject to market risks and there can be no assurance that the objectives of the portfolio(s) will be achieved. Each portfolio will be exposed to various risks depending on the investment objective, investment strategy and the asset allocation. The performance of the portfolio may be affected by changes in factors affecting the securities markets such as volume and volatility in the capital markets, interest rates, currency exchange rates, changes in law/policies of the Government, taxation laws, political, economic or other developments, general decline in the Indian markets, which may have an adverse impact on individual securities, a specific sector or all sectors. Further, the investments by the portfolio shall involve investment risks such as trading volumes, settlement risk, liquidity risk, default risk including the possible loss of capital. The portfolio with investment objective to invest in a specific sector / industry would be exposed to risk associated with such sector / industry and its performance will be dependent on performance of such sector / industry. The Portfolio Manager in accordance with the features of respective Portfolio may use derivatives which require an understanding not only of the underlying instrument but of the derivative itself. Derivative products are leveraged instruments and can provide disproportionate gains as well as disproportionate losses to the investor. Execution of such strategies depends upon the ability of the Portfolio Manager to identify such opportunities. The decisions of Portfolio Manager may not always be profitable. The portfolio, returns and expenses charged including Portfolio Management fees for each Client may differ from that of the other Client. Investors of the Portfolio Management Services are not being offered any guaranteed / assured returns. The Portfolio Manager may invest in shares, debt, units of mutual funds, deposits or other financial instruments of associate/ group Co's. The name of the portfolio(s) does not in any manner indicate either the quality of the product or their future prospects and returns. Investors are advised to read the risk factors given in the Portfolio Management Services Agreement and Disclosure Document before making investments. 23
Get in touch Corporate Office: Religare Invesco Asset Management Company Private Limited 3 rd Floor, GYS Infinity, Paranjpe B Scheme, Subhash Road, Vile Parle (E), Mumbai 400057 T +91 22 67310000 F +91 22 28371565 To invest: Call 1800-209-0007 sms Invest to 56677 Invest Online www.religareinvesco.com Follow us on 24