India Vincent Houghton, Manish Shah 27.11.214 Pavillon Cambon, Paris For Professional Investors only
Environment
3 GDP GROWTH Below potential, above peers Real GDP Growth (214 215e) India GDP Growth rate 8. 7. 6. 5. 4. 5.6 7.1 6.5 3.6 1 8 6 6.7 8.6 9.3 6.2 5. 4.7 5.6 6.5 3. 2.5 3.2 3. 4 2. 1. 1.9 1.3.4.3 1.9 1. 1.5 2.2 2. India Mexico Brazil Russia South Africa FY9 FY1 FY11 FY12 FY13 FY14 FY15e FY16e Real GDP Growth (%), 214 Real GDP Growth (%), 215 Real GDP Growth per head (%, 5-year avg.) Source: Fitch Group Company, October 214 Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance.
4 FISCAL DEFICIT India (% of GDP) Other countries (213, % of GDP) 12 9 8.4 1 8 6 4 2 2.4 7.8 3 2 2.3 6.9 6.5 6 2.2 2.2 2.1 5 4.7 4.3 6 3 3.8 1.3 4 7.1 5.7 5.7 2.7 28-9 29-1 21-11 211-12 212-13 213-14e 214-15e Center State Brazil Russia South Africa Spain Japan UK US Australia Consolidated fiscal deficit down from 1.2% to 7.2% Center improves from 7.8% in FY8 to 4.7% in FY14e Advanced economies still reeling after GFC after-effects Strong institutional framework Ability to bounce back remains intact, though 28-12 avg vs. 213 levels (US 9.7% vs. 5.7% / UK 7.9% vs. 5.7%) Source: Fitch Group Company, October 214 Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance.
5 CURRENT ACCOUNT BALANCE OVERVIEW India (% of GDP) 6 5 4 3 2 1 4.2 3 4.8 3.6 1.7.6 2.2 2.4 1.1 1.2 Current account deficit (CAD) CAD + Net Foreign direct investment 211 212 213 214e 215e Other countries (213, % of GDP) 7 6 5 4 3 2 1 5.8 5.1 4.4 3.7 3.6 3.2 3.3 2.9 2.1 2.3.6.2 AUS CAN US UK BRZ SA Current account deficit (CAD) CAD + Net Foreign direct investment Source: Fitch Group Company, October 214 Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance.
6 DEBT AND INTEREST TO REVENUE 213 35 25 3 39 21.5 37.6 2 25 2 15 15.2 15.2 164.2 1.7 231.9 8.6 178 9.8 177.1 219.5 19.9 11 8.8 15 1 1 7.1 5 32.8 1.8 4.9 4.4 5 IND BRA RUS SA CAN GER US FRA UK HK TUR.1 General Government Debt (GG debt, % of rev.) GG int payments (% of rev.) Source: Fitch Group Company, October 214
7 EXTERNAL DEBT SERVICING & SHORT-TERM DEBT 213 9 9 8 7 78 75.5 66.7 8.8 72.4 63.4 8 7 6 6 5 4 3 2 1 5 52.9 41.4 39.2 38.2 34.4 26.1 19.8 2 16.2 17.3 12.3 9.1 9.9 6.3 4.3 4.5 2.4 2.9.8.4 IND AUS CAN GER US FRA UK CHN JAP Ext. debt servicing (% of exports) Ext. Int. servicing (% of exports) ST Ext. debt (% of GXD) 5 4 3 2 1 Source: Fitch Group Company, October 214 Past performance is not a reliable guide to future performance. The value of investments may go down as well as up.
8 FOREIGN INSTITUTIONAL INVESTOR (FII) INFLOW 213 monthly FII net investment (INR mn) Yearly FII net investment (INR mn) 4 3 2 1-1 -2-3 -4-5 22 17 12 7 2-3 -8 Debt inflow 21-13: INR 1 868bn Debt outflow 21-13: INR 774bn Debt outflow June Sept 13: INR 66bn Source: Fitch Group Company, SEBI, October 214 Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance.
9 INDIA RATINGS Economic outlook 215 Key indicators 211-12 212-13 213-14 214-15e Real GDP factor cost (yoy % growth) 6.7 4.5 4.7 5.6 Agriculture 5. 1.4 4.7 3. Gradual recovery Industry 7.8 1..4 4.1 Services 6.6 7. 6.8 6.9 Average inflation (WPI) 8.9 7.4 5.9 5.5 Exchange rate (INR/$ March end) 51.2 54.4 59.6 57-58 Year-end Interest rate (1-yr G-sec) 8.56 8.1 8.8 8.3-8.4 Current account (% of GDP) 4.2 4.7 1.7 2.1 Fiscal deficit (center, % of GDP) 5.7 4.9 4.5 4.5 Source: Fitch Group Company, October 214 Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance.
1 INDIA Industrial growth to be led by electricity and construction Industry sub-sector FY13 FY14 FY15e Contribution to GDP growth (%) Mining & quarrying -2.2-1.4.5.1 Manufacturing 1.1 -.7 3.3.47 Electricity, gas & water supply 2.3 5.9 7.6.15 Construction 1.1 1.6 5.6.44 Total industry 1..4 4.1 1.5 Growth drivers Source: Fitch Group Company, October 214 Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance.
11 INFLATION HAS PEAKED OUT Fruits and vegetables spurt Whole sale price index (yoy, %) Fruits and vegetables led headline inflation since June 213 Source: Fitch Group Company, October 214 Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance.
12 SUMMARY Macroeconomic environment improving Key indicators GDP Growth Trend in FY215 To improve Agriculture To decline (base effect) Industry To improve Services To improve Fiscal deficit Currency Benchmark yield (interest rate) Current account deficit Inflation Marginal decline To appreciate To decline To expand To decline Source: Fitch Group Company, October 214 Forward looking data included is estimated and it is not a reliable guide to the future performance.
Investment Examples
14 CIPLA Generic pharmaceutical company with sales of USD 1.6bn High growth emerging markets constitute 8% of Cipla s sales with cagr of 11% 4 4 Has built up a strong pipeline of complex generics Strong franchise in respiratory therapy, this market is worth USD 41bn Sector: Health Care Market cap.: USD 8.1bn EPS growth 5 yrs (est.)*: 18% ROE: 14.6% Dividend yield:.5% Data updated as at 3/9/214 *EPS growth 5 years is a Comgest estimate and can differ from data in the graph which are based on the Factset consensus. Market Cap is calculated as of end of last calendar quarter while ROE and dividend yield are calculated as of end of last fiscal year. Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance. The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment. 3 2 2 1 1 25 15 5 Price () 2 2 1 1 29 21 211 212 213 214 215 216 27 29 211 213 215 Price Actual EPS Estimated EPS 5 3 25 15 Source: FactSet Research Systems EPS and price rebased at 1
15 MAX INDIA Fourth largest private sector life insurer in India with a 12% market share Indian population is underinsured Better product mix than competitors with a focus on traditional policies 4 4 Operates Max healthcare chain of hospitals with 2,2 beds, which is set to double in the next 6 years Strong cash flow generation supporting growth Sector: Financials Market cap.: USD 1.4bn EPS growth 5 yrs (est.)*: 23% ROE 215e: 15.6% Dividend yield: 1.8% Data updated as at 3/9/214 *EPS growth 5 years is a Comgest estimate and can differ from data in the graph which are based on the Factset consensus. Market Cap is calculated as of end of last calendar quarter while ROE and dividend yield are calculated as of end of last fiscal year. Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance. The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment. 3 2 2 1 1 25 15 5 Price () 27 29 211 213 215 212 213 214 215 216 217 Price Actual EPS Estimated EPS 25 3 2 2 15 1 1 5 Source: FactSet Research Systems EPS and price rebased at 1
Price 16 GUJARAT PIPAVAV PORT Owned by Maersk, the largest shipping line in the world Close to the main markets of North India Good road and rail connectivity to industrial hinterlands 4 8 Strong cash-flow generation to support future port expansion Debt free No regulatory cap on earnings Sector: Industrials Market cap.: USD 1.3bn EPS growth 5 yrs (est.)*: 22% ROE: 14.7% Dividend yield:.% Data updated as at 3/9/214 *EPS growth 5 years is a Comgest estimate and can differ from data in the graph which are based on the Factset consensus. Market Cap is calculated as of end of last calendar quarter while ROE and dividend yield are calculated as of end of last fiscal year. Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance. The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment. 3 25 2 2 15 1 1 5 Price () 2 4 15 1 2 27 211 29 212 213 211214213 215 215 216 Price Actual EPS Estimated EPS 25 5 6 Source: FactSet Research Systems EPS and price rebased at 1 EPS
17 POWER GRID CORPORATION OF INDIA Operates the largest transmission network in India, carrying 55% of the power generated and 9% of inter-regional transmission Does not carry fuel, price or throughput risk Transmission sector has been underinvested, so additional capacity will be absorbed Little competition from private sector, due to Power Grid s low cost of debt and government support in obtaining land Strong growth anticipated for next five years Sector: Utilities Market cap.: USD 11.4bn EPS growth 5 yrs (est.)*: 16% ROE: 14.9% Dividend yield: 2.4% Data updated as at 3/9/214 *EPS growth 5 years is a Comgest estimate and can differ from data in the graph which are based on the Factset consensus. Market Cap is calculated as of end of last calendar quarter while ROE and dividend yield are calculated as of end of last fiscal year. Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance. The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment. 4 3 2 2 1 1 25 15 5 Price () 27 29 211 213 215 29 21 211 212 213 214 215 216 Price Actual EPS Estimated EPS 25 2 15 1 5 Source: FactSet Research Systems EPS and price rebased at 1 4 3 2 1
18 BHARTI INFRATEL India s largest telecom tower company with the widest coverage High leverage model. Incremental co-location comes with insignificant capex/opex Long-term contracts with customers - top 3 telecom companies are key tenants 3 3 3G and 4G service will require equipment to be installed in more towers Data accounts for more than half of incremental revenue for the telecom industry Only credible player with minimal risk of continuity of business Sector: Telecom. Services Market cap.: USD 9.bn EPS growth 5 yrs (est.)*: 2% ROE: 8.6% Dividend yield: 3.6% Data updated as at 3/9/214 *EPS growth 5 years is a Comgest estimate and can differ from data in the graph which are based on the Factset consensus. Market Cap is calculated as of end of last calendar quarter while ROE and dividend yield are calculated as of end of last fiscal year. Past performance is not a reliable guide to future performance. The value of investments may go down as well as up. Forward looking data included is estimated and it is not a reliable guide to future performance. The material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment. 25 2 2 15 1 1 5 Price () 25 2 1 1 27 213 29 214 211 215 213 216 217 215 Price Actual EPS Estimated EPS 2 15 5 Source: FactSet Research Systems EPS and price rebased at 1
Performance & Portfolio
2 COMGEST GROWTH INDIA Performance* (net, in USD) Cumulative performance since inception (%) 4 % change 35 3 25 2 15 1 Dec 25 Dec 27 Dec 29 Dec 211 Dec 213 Fund MSCI India - NR Rolling performance (%) QTD YTD 1 Year 3 Years annualised 5 Years annualised Inception annualised Portfolio 5.21 57.24 63.58 9.96 7.87 14.48 Index 3.95 29.64 29.39 7.44 6.1 12.3 *Net performance in USD as of 31/1/214. Source: FactSet/Comgest Past performance is no guarantee of future results. Indices are used for comparison of past performance only. Performance calculation based on NAV to NAV variation expressed in USD. 214 Morningstar, Inc. All rights reserved. Ratings and awards mentioned in this document can change at any time and do not constitute a buy recommendation.
21 COMGEST GROWTH INDIA Top 1 holdings % Power Grid Corporation of India Limited Utilities 5.1 Max India Limited Financials 4.9 Infosys Limited Information Technology 4.4 Maruti Suzuki India Limited Consumer Discretionary 4.3 Bharti Infratel Ltd. Telecommunication Services 4.3 Bosch Limited Consumer Discretionary 4.1 Container Corporation of India Limited Industrials 3.7 ITC Limited Consumer Staples 3.4 Gujarat Pipavav Port Limited Industrials 3.4 NTPC Limited Utilities 3.2 Data as of 31/1/214 Source: FactSet/Comgest. Data on holdings is provided for information purposes only and is not a recommendation to buy or sell the securities shown. Data on holdings is subject to change and excludes cash and cash equivalents. Past performance is no guarantee of future results.
22 COMGEST GROWTH INDIA Portfolio composition* Sector breakdown (%) Industrials Consumer Discretionary Financials Utilities Health Care Information Technology [Cash] Consumer Staples Telecommunication Services Materials Energy 5 1 15 2 25 Comgest Growth India MSCI India Source: Factset / Comgest. *Portfolio as of 31/1/214
23 COMGEST GROWTH INDIA Main portfolio characteristics* Main portfolio characteristics Average weighted market capitalization (bn$) 1. P/E next 12 months 18.1x Price to book 3.2x ROE 18.7% Dividend yield 1.5% Source: FactSet/Comgest. Data as of 31/1/214 *P/E next 12 months is based on consensus estimates and may not be in line with Comgest's own internal estimations. Investors should be aware that these figures are provided for information purposes only and Comgest does not take any responsibility for discrepancies which may occur between estimated forward figures and factual market data published over the coming months. Forward looking data included is estimated and it is not a reliable guide to future performance
24 CONCLUSION GDP growth should accelerate Interest rates should fall Macro environment is becoming favourable: fiscal deficit and inflation reducing, rupee stable Falling commodity prices should lift earnings as India is a net commodity importer
25 IMPORTANT INFORMATION This document has been prepared for professional investors only and may only be used by these investors. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment. The securities discussed herein may not be held in the portfolio at the time you receive this presentation. Performance figures are provided net of all fees unless otherwise stated and are calculated on a time-weighted, total return basis. Funds which specialise in a particular region or market sector may entail higher risks than those which hold a very broad spread of investments. Past investment results are not necessarily indicative of future investment results. The value of all investments and the income derived therefrom can decrease as well as increase. This may be partly due to exchange rate fluctuations in investments that have an exposure to currencies other than the base currency of the Fund. Reference to market indices or other measures of relative market performance over a specified period of time are provided for your information only. Reference to an index does not imply that the portfolio will achieve returns, volatility or other results similar to the index. The composition of the index will not reflect the manner in which a portfolio is constructed. The information and any opinions have been obtained from or are based on information from sources believed to be reliable, but accuracy can not be guaranteed. No liability is accepted by Comgest in relation to the accuracy or completeness of the information contained in this document. The information in this document is not comprehensive and is presented for informational purposes only. All opinions and estimates constitute our judgment as of the date of this presentation and are subject to change without notice. Comgest does not provide tax or legal advice to its clients and all investors are strongly urged to consult their own tax or legal advisors concerning any potential investment. Before making any investment decision, investors are advised to check the investment horizon and category of the Fund in relation to any objectives or constraints they may have. Investors must read the latest Fund prospectus and the Key Investor Information Document ( KIID ), available at our offices and on our website www.comgest.com Investors shall undertake to respect the legal, regulatory and deontological measures relative to the fight against money laundering, as well as the texts that govern their application, and if modified investors shall ensure compliance with the applicable texts. This material is in no case an offer for people living in a specific jurisdiction which does not authorize the distribution of the Funds mentioned herein. The investment professionals listed in this document are employed either by Comgest S.A., Comgest Asset Management International Limited, Comgest Far East Limited, Nippon Comgest Inc, Comgest Singapore Pte. Ltd. Comgest S.A. is regulated by the Autorité des Marchés Financiers (AMF). Comgest Far East Limited is regulated by the Hong Kong Securities and Futures Commission. Comgest Asset Management International Limited is regulated by the Central Bank of Ireland. Nippon Comgest Inc. is regulated by the Financial Service Agency of Japan (registered with Kanto Local Finance Bureau (No. Kinsho 1696)). Comgest Singapore Pte Ltd, created 18 August 21, is a Licensed Fund Management Company & Exempt Financial Advisor (for Institutional and Accredited Investors) regulated by the Monetary Authority of Singapore.