Established IN 1944 PL is one of the oldest and leading financial services providers in India 1944 1970 10+ 1971 1980 25+ 1981 1990 60+ 1991 2000 120+ = Team Strength Equi es Arbitrage Business IPO Distribu on Ins tu onal Equi es Foreign Ins tu onal Investor (FII) Equity Stock Broking Underwri ng Domes c Ins tu onal Investor (DII) Arbitrage between NSE and BSE Domes c Funds Franchisee setup = New Service Vertical Badla Finance = Achievement 2001-2017 275+ Corporate Registered as a partnership stock broking firm in 1944. Advisory Investment Banking Margin Funding through NBFC Por olio Management Services (PMS) First branch in Pune First to offer doorstep service Online Trading Currency Commodi es First in India to computerize back office opera ons One of the leaders in Badla Finance for the retail segment First to become a BSE member Empanelled with a number of FIIS & DIIS Established a strong sub-broker network Corporate Advisory business grew manifold within 3 years PMS - Corpus size grew mul fold Rated amongst the best by Ins tu onal investors for our research. Consistently rated amongst the best brokerage houses for its research by Asiamoney Brokers Poll
7+ Decades of POWERING FINANCIAL GROWTH Financial expertise & Best-in-class research Along with a strong adherence to our founding principles of integrity, transparency and accountability. 410+ Centres INSTITUTIONAL BUSINESS Institutional Equities Investment Banking Corporate Advisory Cities 120+ 150+ Foreign & Domestic Institutional Clients RETAIL BUSINESS Broking (Equity, Derivatives, Commodities, Currency) Wealth Management, PMS Bonds & Fixed Deposits 75,000 Retail Clients Mutual Fund IPO Distribution Insurance Real Estate Advisory. 275+ Team Strength NBFC Loan against shares & securities Margin Funding Corporate STRUCTURE PRABHUDAS LILLADHER ADVISORY SERVICES PRIVATE LIMITED Prabhudas Lilladher Pvt. Ltd. Broking, Depository, PMS Prabhudas Lilladher Financial Services Pvt Ltd NBFC Loan against Shares and securities PL Capital Markets Pvt Ltd PL Commodity Markets Pvt Ltd PL Fund Advisors Pvt Ltd PL Distribution Company Pvt Ltd Investment Banking Commodity Trading Debt Syndication Third party financial products & Real Estate broking
INDEX BEST SCENARIO FOR EQUITY 5 WEALTH CREATION BY INDIAN EQUITIES 6 SOME OF THE PROMINENT MULTI-BAGGER IDEAS BY PL RESEARCH 7 INDIA HAS THE POTENTIAL TO GROW ATLEAST 8 @ 7-8% OVER THE NEXT DECADE INDIA: ROBUST MACRO-ECONOMIC FUNDAMENTALS 9 GOVT S COMMITMENT TO MAMMOTH INFRA SPENDING OVER THE NEXT 3-5 YEARS 10 LEVERS FOR EARNINGS GROWTH IN PLACE 11 STRONG INSTITUTIONAL FLOWS UNDERPIN INDIAN EQUITY MARKET S RESILIENCE 12 MARKET OUTLOOK FOR 2018 13 PL PMS: INVESTMENT PHILOSOPHY 14-15 FOCUS THEMES & KEY SECTORS 16 PL PMS: EDGE 17 PL PMS STRATEGY 18 CORE MEMBERS OF OUR TEAM 19 CONTACT DETAILS 20 DISCLAIMER: The presentation given by Prabhudas Lilladher Pvt. Ltd is only by way of information on a no-liability, no-guarantee and no-obligation basis. The information provided is based on past performance and these returns cannot be guaranteed in future. Any decision, action or omission thereon shall be entirely at the risk of the person and should be based solely on their own verification of all relevant facts, financial and other circumstances, by making a proper evaluation thereof in consonance with their investment objectives. Such persons should be aware of the risks involved while investing and trading in securities and will be solely liable for their decisions. Prabhudas Lilladher Pvt. Ltd shall not be responsible for any loss that such person may incur by relying on the information contained herein, whether used for investment decisions or otherwise. Investment in Equity, Currency, Futures and Options is subject to risk. Please read the risk disclosure document before investing. PMS PRESENTATION 4
Best scenario for Equity Shift from physical to financial assets Real Estate prices are under pressure, Gains have been limited for 3 years in a row Gold prices have been benign, investment demand remains soft This makes a unique opportunity to channelize savings into Equity markets Indians have resorted to MF investing through SIP route Rs. 48 bn / month inflows observed Inflow in domestic funds cushions significant downsides on FIIs Sell-offs due to global risk-off events GOLD AS AN INVESTMENT LOSES SHINE 31050 29600 28007 26344 28624 29000 REAL ESTATE SOFT, EXPERTS SAYING PRICE / TIME CORRECTION Avg 28946 2012 2013 2014 2015 2016 2017 2018 30000 DOMESTIC SAVINGS TO BE CHANNELIZED INTO EQUITY FUNDS FIRST TIME IN 3 DECADES, DOMESTIC INVESTORS ARE EAGER TO BUY IF FIIS WERE TO SELL No returns = few takers Most tier 2 cities have seen 25% fall in prices and few buyers Supply side looking up due to low cost housing Illiquid market for exits PMS PRESENTATION 5
Wealth creation by Indian Equities 40,000 35322 35,000 1981-1990 1991-2000 2001-2010 30,000 Growth of 7 times Growth of 3.8 times Growth of 5.2 times 25,000 16358 20,000 15,000 10,000 3972 5,000 148 1048 0 Dec-80 Dec-81 Dec-82 Dec-83 Dec-84 Dec-85 Dec-86 Dec-87 Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 BSE Sensex has delivered 15.8% CAGR from 1981 to May 2018 PMS PRESENTATION 6
PL RESEARCH AMONGST THE INITIAL FEW TO CATCH THE EMERGING TRENDS EARLY SOME OF THE PROMINENT Multi-bagger ideas by PL Research PI Industries Wabco India Britannia L&T Finance Yes Bank Maruti Suzuki Navneet Education Capital First JSPL Jubilant Life Indraprastha Gas UPL OUR RESEARCH HAS INITIATED TIMELY COVERAGE ON UPCOMING AND EMERGING STOCKS OVER THE PAST DECADE. SOME OF THE WEALTH CREATORS ARE NICHE PLAYERS AND MANY BEING LEADERS IN WHAT THEY DO. PMS PRESENTATION 7
India has the potential to grow atleast @ 7-8% over the next decade Real GDP Growth (%) 10.0 8.0 6.0 4.0 2.0 - (2.0) (4.0) (6.0) World United States Euro area China Japan India Brazil 2016 2017 2018 2019 Russian Federation Mexico Indonesia Turkey Argentina Nigeria Thailand 2016 3.2 1.5 1.8 6.7 0.9 7.1 (3.5) (0.2) 2.3 5.0 3.2 (2.2) (1.6) 3.2 0.3 2017 3.7 2.3 2.4 6.8 1.8 6.7 1.1 1.8 2.1 5.2 5.1 2.5 0.8 3.7 0.9 2018 3.9 2.7 2.2 6.6 1.2 7.4 1.9 1.7 1.9 5.3 3.5 2.5 2.1 3.5 0.9 2019 3.9 2.5 2.0 6.4 0.9 7.8 2.1 1.5 2.3 5.5 3.5 2.7 1.9 3.4 0.9 GDP (US $ trillion) 78.0 19.4 12.4 11.9 4.9 2.5 2.1 1.6 1.0 1.0 0.8 0.6 0.4 0.4 0.3 South Africa Source: IMF Note: GDP for 2017 India s GDP will grow at the fastest rate among all the major economies and India will continue to attract a torrent of capital flows PMS PRESENTATION 8
India: ROBUSt MACRO-economic Fundamentals AMONG THE FASTEST GROWING MAJOR ECONOMIES IN THE WORLD CONSUMER INFLATION UNDER FIRM CONTROL 10.0 9.2 8.4 7.6 6.8 6.0 5.2 4.4 YoY Real GDP Growth (%) 9.4 8.9 8.6 8.0 7.8 7.5 6.9 7.1 7.4 6.7 6.7 6.4 5.5 FY08 FY10 FY12 FY14 FY16 FY18E FY20E 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 5.0 3.7 5.4 5.7 5.5 CPI (%) 6.1 4.3 3.3 3.0 3.3 4.9 5.1 4.4 4.6 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-1 5 Oct-15 Nov-15 Dec-15 Jan-16 Feb-1 6 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-1 6 Oct-16 Nov-16 Dec-16 Jan-17 Feb-1 7 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-1 7 Oct-17 Nov-17 Dec-17 Jan-18 Feb-1 8 Mar-18 Apr-18 Source: World Bank Source: CSO GOVERNMENT COMMITTED TO MEDIUM-TERM FISCAL CONSOLIDATION PLAN SPECTACULAR IMPROVEMENT IN CURRENT ACCOUNT DEFICIT AFTER FY13 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Fiscal Deficit as a % of GDP 6.5 5.4 5.7 6.2 5.9 6.0 6.5 5.8 4.9 4.8 4.5 4.6 4.0 4.1 4.1 3.9 3.3 3.5 3.3 2.5 3.0 2.0 1.0 0.0-1.0-2.0-3.0-4.0-5.0-6.0 CAD as a % of GDP 2.2 0.7 1.2-0.3-0.7-1.0-0.9-0.6-1.9-1.7-1.3-2.8-2.8-1.2-1.1-1.4-1.1-1.5-4.4-4.8 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E Source: Bloomberg, CSO Source: Bloomberg, World Bank PMS PRESENTATION 9
Govt s Commitment to Mammoth Infra Spending over the next 3-5 years roads HOUSING RAILWAY 83,677 kms of roads to be built Rs. 6.92 Lakh Cr to be invested 14.2 Cr mandays of jobs to be generated Universal affordable housing for 2.2 Cr families PMAY- Urban-1.2cr units with outlay of Rs1,85,069 Cr PMAY - Gramin-1.02cr units with an outlay of Rs 1,26,795 Cr Create a 3x bigger Railway which is economically viable Leverage Rs. 8,56,000 Cr of capex to expand the Rail infrastructure Focus on network decongestion through DFC and better signalling PMS PRESENTATION 10
Levers for Earnings Growth in place Operating Leverage Capacity utilization of 70% is at multi-year low. Pickup in utilization could kick-start operating leverage Organized players to gain market share GST & demonetisation could improve compliance by unorganized players Price gaps to narrow, giving impetus to organized sales Organized players better placed as brand consciousness improves COST OF CAPITAL STILL LOW Corporate profitability boosted by higher liquidity and lower borrowing costs Increase money multiplier to boost credit and trade PMS PRESENTATION 11
Strong Institutional flows underpin Indian equity market s resilience 400 300 200 CY13 DII Equity: -734.64 FII Equity: 1,112.77 FII Debt: -536.66 CY14 DII Equity: -303.21 FII Equity: 973.50 FII Debt:1,592.20 DII Equity FII Equity FII Debt CY15 DII Equity: 675.56 FII Equity :183.55 FII Debt:469.21 CY16 DII Equity: 371.12 FII Equity :187.83 FII Debt:-442.97 CY17 DII Equity: 908.35 FII Equity :517.49 FII Debt:1,485.93 CY18 DII Equity: 334.17 FII Equity :73.98 FII Debt:-20.60 100 0-100 -200 Jan-13 Mar-13 May-13 Jul-13 Sep-1 3 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-1 4 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-1 5 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-1 6 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-1 7 Nov-17 Jan-18 Mar-18 May-18 (Rs bn) Source: Bloomberg PMS PRESENTATION 12
Market Outlook for 2018 Earnings growth pick-up Crude Rise Buoyant tax collections leading to higher govt spending TRIGGERS FOR 2018 RISKS FOR 2018 Geopolitical Tensions Govt resorting to populist measures Good Monsoon FED Shrinking Balance Sheet PMS PRESENTATION 13
PL PMS: Investment Philosophy BVM MATRIX IDEA GENERATION MACRO THEMES STOCK FILTERS BUSINESS VALUATION MARKET INTEREST Industry Business ROI Management P/E vs Growth Sector / Market P/E DCF vs. Enterprise Value Economic Value Add Free Float Institutional Interest Research Coverage Great Business Undervalued Stock Price Performance RISK CONTROL & PORTFOLIO CONSTRUCTION PMS PRESENTATION 14
PL PMS: Investment Philosophy 1 MACRO 2 STOCK 3 THEMES FILTERS RISK CONTROL & CONSTRUCTION Investment cycle revival Beneficiaries of accommodative monetary policy Domestic consumption Beneficiaries of revival in external trade / services Strong corporate governance Addressable market opportunity Medium term growth prospects Strong earnings growth Efficient capital utilization Rising RoE & free cash flow Concentration Risk: Sector & Stock Liquidity Risk PMS PRESENTATION 15
Focus Themes & Key Sectors Consumption FMCG, Auto, Financials, Pharma, OMCs, Agri-inputs, NBFCs IncreaseD government spending Housing, Finance, Capital Goods, Cement, Farm Equipment Low interest rates Infrastructure, Asset Owners, Construction, Metals, Utilities Unorganized to organized Home Improvement, Consumer Durables, Retails, Auto Components Attractive Opportunities Turn-around Companies, Bad year in a good business, MNCs Etc. PMS PRESENTATION 16
PL PMS: Edge senior research team Senior Analyst Team rated across multiple sectors More than 10 years of market experience BEST corporate access PL has one of the best Corporate Access in the industry Excellent connects with thought leaders / sector experts identification of themes Early identification of Themes Focus on catching turn-around sectors experienced fund manager Mr. Ajay Bodke Experienced Fund Manager for almost 2 decades Mr. Nishna Biyani Rated Midcap Analyst and experience of a decade Dedicated PMS SET-up Dedicated PMS set-up with customer centric approach PMS PRESENTATION 17
PL PMS STRATEGIES PL PMS provides 3 unique strategies for your wealth growth: MULTI-STRATEGY - Generate optimum returns by investing in growth oriented stocks with a large-cap bias - Help outperform the markets in the long run & provide capital appreciation - Top 5 sectors: BFSI, FMCG & Retail, Auto, Hotel, Steel EQUIGROW - Generate optimum returns by investing in growth oriented stocks with a mid-cap bias - Help outperform the markets in the long run - Top 5 sectors: BFSI, FMCG & Retail, Hotel, Auto, Chemicals FORTUNE - Invest in mid-size business that depict leadership - Open to all-caps but focus on bottoms up fundamental research - Number of stocks capped at 20-25 - Top 5 sectors: BFSI, Ent & Media, Hotel, Agro-chemicals, Publication PMS PRESENTATION 18
CORE MEMBERS OF OUR TEAM DILIP BHATT AJAY BODKE Nishna Biyani Nupur Patel DIRECTOR CEO & CHIEF PORTFOLIO MANAGER PORTFOLIO MANAGER HEAD SALES & MARKETING With more than 28 years of experience in the financial world, he is a Chartered Accountant of immaculate repute and is amongst the top ranked Equity experts in India. Over 20 years of experience as Senior Portfolio Manager with India s leading Mutual Funds like IDFC MF, Standard Chartered MF & SBI MF. Over 11 years of experience split equally in the buy and sell side. Has managed a Corpus of Rs500m for ICICI Securities Primary Dealership (Absolute return oriented) Over 16+ years of senior management experience in financial markets with renowned companies in the industry. PMS PRESENTATION 19
CONTACT US CORPORATE OFFICE Prabhudas Lilladher Pvt. Ltd. 3rd Floor, Sadhana House, 570, P. B. Marg, Behind Mahindra Tower, Worli, Mumbai - 400018. India. M: 91.9821097856 O: +91.22.66322350 B: +91.22.66322222 nupurpatel@plindia.com www.plindia.com /PLIndiaOnline /Prabhudas-Lilladher PMS PRESENTATION 20