Model Portfolio update September 2, 2016 LatestDeal Team Model – PortfolioAt Your Service Large cap Midcap Name of the company Weightage(%) Name of the company Weightage(%) Auto 15.0 Aviation 6.0 Tata Motor DVR 4.0 Interglobe Aviation 6.0 Bosch 3.0 Auto 6.0 Maruti 5.0 Bharat Forge 6.0 EICHER Motors 3.0 BFSI 6.0 BFSI 25.0 Bajaj Finserve 6.0 HDFC Bank 8.0 Capital Goods 6.0 Axis Bank 3.0 Bharat Electronics 6.0 HDFC 8.0 Cement 6.0 Bajaj Finance 6.0 Ramco Cement 6.0 Capital Goods 4.0 Consumer 30.0 L & T 4.0 Symphony 606.0 Cement 4.0 UltraTech Cement 4.0 Supreme Ind 6.0 FMCG/Consumer 18.0 Kansai Nerolac 6.0 Dabur 5.0 Pidilite 6.0 Marico 4.0 Rallis 6.0 Asian Paints 5.0 Infrastructure 8.0 Nestle 4.0 NBCC 8.0 IT 18. 0 Logistics 606.0 Infosys 10.0 Container Corporation of India 6.0 TCS 8.0 Pharma 20.0 Media 2.0 Natco Pharma 6.0 Zee Entertainment 2.0 Torrent Pharma 6.0 Pharma 14.0 Biocon 8.0 Lupin 6.0 Textile 6.0 DRddDr Reddys 505.0 Arvind 6.0 Aurobindo Pharma 3.0 Total 100.0 Total 100.0 • Exclusion - ITC, Wipro and Reliance Industries • Exclusion – Nestlé shifted to Large cap • Inclusion – Dabur, increased weight in Maruti, Marico, Bajaj Finance & • Inclusion - Biocon UltraTech. Also Nestlé transferred from Midcap to Large cap Source: Bloomberg, ICICIdirect.com Research *Diversified portfolio - Combination of 70% large cap and 30% midcap portfolio OutperformanceDeal Team – At continues Your Service across all portfolios… • Our indicative large cap equity model portfolio has continued to deliver an • In the large cap space, we continue to remain positive on auto, impressive return (inclusive of dividends) of 108.5% since its inception infrastructure & cement. Relative to the benchmark index, we are (June 21, 2011) vis-à-vis the index return of 62% during the same period, underweight on BFSI an outperformance of 47%. This validates our thesis of selecting • With the exclusion of Reliance Industries, we affirm our underweight companies with sound business fundamentals that form the core theme of stance on metals and oil & gas. With the recent cleanup drive in PSU our portfolio. Our midcap portfolio of 16 stocks outperformed the banks, we continue to believe the underperformance would continue. In benchmark by 2x (since June 2011), posting returns of 153.2%. Our the private banking space, we prefer large banks with a strong brand consistent outperformance demonstrates our superior stock ppgicking ability name and a pan-India retail presence. We remain overweight to neutral on asmarketsinthefirsthalfofCY17alignedtoourviewoffavourablerisk- pure play defensives (IT, FMCG) as secular earnings coupled with sector reward, good franchisee vs. reward-at-any-risk businesses. Some key rotation could lead to consolidation in near term valuations and offer stock performers of our portfolio are Bajaj Finance, Lupin, Axis Bank and HDFC specific opportunities. We remain positive on auto, pharma, capital goods Bank in the large cap portfolio while Natco Pharma, Bajaj Finserv and and infrastructure UltraTech have delivered stupendous returns in the midcap portfolio • Among individual names, given the steep discount to historic valuations, • We continue to advocate the SIP mode of investment as the preferred we are strongly overweight on Infosys and TCS in the IT space. A revival mode of deployment given the current volatile market conditions. We in thecapexcyclecoupldled with lower itinteres tratescenariowould bfitbenefit highlight that the SIP return of our portfolio has consistently outperformed the BFSI and construction space (UltraTech, L&T, HDFC, HDFC Bank) the indices. This affirms our belief in the staggered and systematic House view on Index approach of investment amid market volatility • Following the subdued monsoon and weak global scenario, Sensex • The Q1FY17 performance of Sensex companies ex-banks & commodity earnings for two consecutive years remained subdued. However, a revival space (oil & gas, metals & mining) was robust on the topline front but of the same would lead the Sensex EPS to grow by 12% to | 1542 in largely flat on the profitability front. Total sales for Sensex companies rose FY17E and 18% to | 1816 in FY18E 10.6% YoY marking Q1FY17 as the second consecutive quarter of double digit topline growth, depicted a progressive up-tick in demand prospects. Strategy 2016 - Sensex & Nifty Target Furthermore, India’s manufacturing activity grew at the fastest clip in 13 2000 20.0% months in August with a PMI of 52.6, representing an eighth straight 17.8% month of expansion. Auto volumes for September continue to positively 1800 surprise indicating strong support from good monsoons and the Seventh 1600 12.1% Pay Commission 1400 10.0% 1200 • Given the last revamp in the portfolio, we have made minimal changes in the current edition, to capture the new opportunities available in the (|) 1000 1.2% market. Following the same, we have reshuffled the weights of some 800 -0.4% 0.0% companies. Among large caps, we have increased the weight of Bajaj 600 Finance by 2%. We have also increased the weight of Maruti, UltraTech 400 and Marico by 1% each. Affirming our view on consumption demand, we 200 1359 1375 1542 1816 have added Dabur to our large cap portfolio. We believe that as the 0 -10.0% softness in commodities continues, oil & gas and metal sectors would FY15 FY16 FY17E FY18E continue to remain under pressure. Following this, we have exited Sensex EPS Growth (%) Reliance Industries from Large caps PerformanceDeal Team –soAt far* Your … Service Portfolio performance since inception Portfolio performance since last update (May 2016) 175 18 16.0 153.2 16 150 13.5 122.5 14 12.2 12.5 11.1 125 108.5 12 10.2 98.7 100 10 % 71.9 8 75 61.9 % 6 50 4 25 2 0 0 Large Cap Midcap Diversified Large Cap Midcap Diversified Portfolio Benchmark Portfolio Benchmark • The large cap equity model portfolio continued its outperformance vis-à- • Since the last update, our large cap portfolio outperformed the vis the index with 108.5% return since its inception (June 21, 2011) vis-à- benchmark index, generating a return of 11.1% compared to benchmark vis index return of 61.9% in the same period. Our sustained preference for return of 10.2%. The outperformance was mainly on the back of the high quality names has aided this outperformance on a consistent basis. positive performance of Bajaj Finance and UltraTech Cement Wecontinue to be rewarddded for our meticu lous approach tdtowardsstktock • However, our conservative stock selection in the midcap portfolio selection while we endeavour to emulate the broader index exhibited some resilience to the uptrend in markets. The portfolio • On the other hand, given the astute selection in the midcap portfolio, the marginally underperformed with a return of 13.5% compared to index outperformance in the same continues, with a return of 153.2% compared return of 16%. The portfolio was impacted by negative returns in to the midcap index return of 98.7% Interglobe Aviation and Symphony • Given the overall outperformance in both (large & midcap) portfolios, the diversified portfolio (combination of 70/30 ratio) has outperformed its benchmark indices Source: Bloomberg, ICICIdirect.com Research TopDeal movers* Team –soAt far… Your Service Large cap Midcap Diversified Gainers Gainers 200 Gainers 350 300 300 250 160 250 200 ) 200 ) 120 )) %% ( 150 (% (% 150 100 80 100 50 40 50 0 0 0 Lupin Axis HDFC Tata UltraTech Natco Lupin Kansai Axis Indusind Bank* Bank Motors Cement Natco Kansai Indusind Cummins* Shree Pharma* Nerolac* Bank* Bank* DVR Pharma* Nerolac* Bank* Cement* Large cap Midcap Diversified Draggers Draggers Draggers 0 0 0 -5 -5 -10 -8 -10 -15(%) -16 -15 -20 (%) -25 (%) -20 -24 -30 * * * ol rg -25 * oo E* oo rr aa tt ara -32 St Ferr -30 Indi CAR Cast Indig Cemen -40 United State Wipro Tata Steel Dr Heidelbe Spirits Bank of Ltd Reddys Tata Steel CARE* Dr Reddys Indigo* Star India Lab Ltd Lab Ferro* Source: Bloomberg, ICICIdirect.com Research , *Starred stocks have been included in the portfolio since the last rejig in July 2012/May, August ,DecemberDecember 2013/ April, June, December 2014/ May 2015/July 2015/October 2015. Rest all are since inception in June 2011 Performance*Deal Team – soAt farYour in SIPService mode … 14,000,000 12,000,000 0 0 0 10, 000, 000 00 00 00 8,000,000 6,300,0 6,300,0 6,300,0 | 6,000,000 4,000,000 12,578,252 9,407,318 8,977,767 8,644,387 ,215,992 ,794,445 2,,,000,000 77 66 0 Largecap Midcap Divesified Investment Value of Investment in Portfolio Value if invested in Benchmark • Systematic investments at regular intervals in all our three portfolios have outperformed their respective benchmarks, acting as a perfect shield to the volatility encountered by the market last year • Assuming | 1,00,000 invested as SIP at the end of every month • Start date of SIP is June 30, 2011 Source: Bloomberg, ICICIdirect.com Research What’sDeal Team in, what’s – At Yourout? Service What'sin? s in? Name Portfolio Weight Maruti Largecap Increased from 4% to 5% Bajjjaj Finance Larggpecap Increased from 4% to 6% UltraTech Cement Largecap Increased from 3% to 4% Marico Largecap Increased from 3% to 4% Nestle Shifted from Midcap to Largecap 4% Dabur Largecap 5% Biocon Midcap 8% What's out ? Name Portfolio Weight Reliance Industries Largecap 4% Wipro Largecap 3% ITC Largecap 7% Source: ICICIdirect.com Research TheDeal story Team of the– At stocks… Your Service Biocon (BIOCON) Dabur (DABIND) • Encouraging developments on the biosimilars front have demonstrated • Dabur India has a strong portfolio of brands that straddle across various their capability in this space.