IIFL MULTICAP PMS (Portfolio Management Service) All Data Are As on July 31, 2021 and Denominated in INR

IIFL MULTICAP PMS (Portfolio Management Service) All data are as on July 31, 2021 and denominated in INR

Investment Objective: The objective of the investment approach is to generate long term capital appreciation for investors from a portfolio of equity and equity related securities.

The investment strategy is to invest in a portfolio following the SCDV framework (Secular, Cyclical, Defensives, Value Trap) wherein it invests a large proportion of the portfolio in high quality Secular growth ompanies which are long term compounding stories. Rest of the portfolio is invested across quality Cyclicals and Defensives while avoiding Value traps. Portfolio construction across these three quadrants enables us to enhance diversification even with limited number of stocks.

Description of types of securities: Listed equity and liquid schemes of mutual funds Basis of selection of such types of securities as part of the investment approach: SCDV Framework along with internal (financial analysis, corporate governance checks, risk reward valuation) and external analysis (conferences, investor presentations, management interaction, primary visits across supply chain)

Allocation of portfolio across types of securities: • Equity Investment – up to 100% of corpus • Liquid schemes of Mutual funds and other securities as per discretion of Portfolio Manager

Benchmark: S&P BSE 200 TR Index is the benchmark of the strategy as it is a broad-based index and its composition broadly represents the strategy’s investment universe

Investment Time Horizon: Recommended minimum 36 months

The SCDV Framework

Core Portfolio (S)

SRF Limited

Bajaj Finance

HDFC Bank

Muthoot Finance

Tactical Allocation (C & D)

ICICI Bank

Infosys

Larsen & Toubro Limited

Underweight Value Traps (V)

Bharti Airtel

The mentioned securities in the SCDV framework are part of the current portfolio The above statements/analysis should not be construed as an investment advice or a research report or a recommendation to buy or sell any security covered under the respective sector/s • Cyclical (PAT>15%, ROE <15%) – Companies/Sectors that show high growth but are affected by market cycles hence need to be timed for entry and exit • Secular (PAT>15%, ROE >15%) – High growth companies/sectors which show consistent growth across market cycles • Defensive (PAT<15%, ROE>15%) – Companies/sectors that show consistent stable growth across market cycles • Value Trap (PAT<15%, ROE <15%) – Companies/sectors that are at attractive valuation but do not show commensurate growth.

Portfolio Changes during the month Stock Action Rationale

No Change - -

Management Limited (Investment Manager) Regd Off: 6th Floor, IIFL Centre, Kamala City, Senapati Bapat Marg, Lower Parel, Mumbai -400 013 Tel: (91-22) 4876 5600 • Fax: (91-22) 4646 4706 • CIN: U74900MH2010PLC201113 • SEBI AIF Category III Registration No: IN/AIF3/12-13/0016 IIFL MULTICAP PMS (Portfolio Management Service) All data are as on July 31, 2021 and denominated in INR

Key Terms Performance (%)* Strategy / Since 1 Month 3 Months 6 Months YTD 1 Year 2 Years 3 Years 5 Years Benchmark Inception Inception Date December 31, 2014 IIFL Multicap 4.09 15.22 22.59 21.78 56.18 30.08 22.90 18.83 21.13 PMS Fund Bloomberg Ticker NA S&P BSE 200 TRI 0.98 9.76 19.71 17.38 49.60 23.34 13.60 14.68 12.62

Returns are calculated on TWRR basis. Past performance may or may not be sustained in future. The performance related information provided herein is not Benchmark S&P BSE 200 TRI verified by SEBI nor has SEBI certified the accuracy or adequacy of the same. Change in investment approach may impact the performance of client portfolio

Sector - Top 6 Holdings Market Capitalization Strategy Details - Since Inception till July 31, 2021 Financials 33.55%

SI returns-IIFL Information Small Cap: 21.13% Technology 15.73% Multicap PMS Fund 17.34% Materials 14.39% Mid Cap: Large Cap: Consumer 24.10% 56.20% SI returns-S&P BSE Discretionary 9.98% 12.62% 200 TRI Industrials 6.35%

Health Care 5.64% Outperformance/ 8.51% (Underperformance) 0% 20% 40%

Portfolio – Top 10 Holdings (%) Risk Ratios Schedule of Charges Company Weightage Beta 0.85 ICICI BANK LIMITED 9.84

INFOSYS LIMITED 7.09 Management Fee As per executed term sheet Sharpe Ratio 0.78 CROMPTON GREAVES CONSUMER ELECTRICALS 5.23 LIMITED Information Ratio 19.22 LARSEN & TOUBRO LIMITED 4.56

HDFC BANK LIMITED 4.20 Treynor Ratio 0.14 Exit Load As per executed term sheet SRF LIMITED 4.08 Volatility 13.89% BAJAJ FINANCE LIMITED 3.97

BHARTI AIRTEL LIMITED 3.71 All risk ratios are calculated since inception Minimum *Information Ratio is a ratio of portfolio returns above the returns of a Investment Rs 50 Lakhs LARSEN & TOUBRO INFOTECH LIMITED 3.50 Amount benchmark index to the volatility of those returns. CCL PRODUCTS (INDIA) LIMITED 3.35 **Volatility measures the risk of a security by using the standard deviation of the asset returns. CASH AND CASH EQUIVALENTS 2.34 Investment Manager Top Gainers for last Month Performance Top Losers for last Month Performance IIFL Asset Management Limited (IIFL AMC) CCL PRODUCTS (INDIA) LIMITED 22.36% DR. REDDY'S LABORATORIES LIMITED -13.13%

Fund Manager Profile COFORGE LIMITED 22.29% ESSEL PROPACK LIMITED -11.95% - Mitul Patel HINDUSTAN PETROLEUM CORPORATION SRF LIMITED 19.01% -10.93% Mitul has an overall experience of 16 years LIMITED across areas of Equity Research, Fund Management, Private Equity Advisory and NAV Movement Investment banking. Apart from managing the strategies of Portfolio Management Services offered by IIFL Asset Management Limited (IIFL IIFL Multicap PMS Fund S&P BSE 200 TRI AMC), he also heads research for listed equities and is responsible for generating investment 40.0 ideas across sectors and market capitalizations. And also directly tracks companies in the Chemicals, Auto and Pharma sectors. Prior to joining IIFL AMC, Mitul spent 7 years with Laburnum capital, a boutique investment 20.0 management firm. He has also worked with Avendus Capital and JP Morgan Chase India.

0.0 Dec-2014 Oct-2015 Aug-2016 Jun-2017 Apr-2018 Feb-2019 Dec-2019 Oct-2020 Jul-2021

NAV shown is for the model portfolio. NAV of 10 assumed on the inception date (December 31, 2014)

Fund Commentary

Indian equity indices experienced a zig zag movement and ultimately ended the month flat with negligible gains. The benchmark indices, BSE-30 and Nifty-50 indices registered monthly gains of 0.2% and 0.3% (over last month). The indices down the capitalization curve continued to outperform the benchmark indices with BSE Mid-cap and BSE Small-cap indices recording gains of 2.4% and 6.2% respectively. Amongst the sectoral indices, Realty stocks soared (BSE Realty 16.1%) on account of property sales gaining momentum due to lower interest rates and lower stamp duty. Meanwhile, easing of lockdown restrictions and gradual opening up of economies across the globe has led to rise in the prices of commodities as well the industrial metal stocks (BSE Metals up 12.6%). On the other hand, banks expressing concern over the rising stress in auto and CV loans weighed on the auto sector (BSE Auto down 5.4%). Meanwhile rise in inflation due to spike crude oil price had a bearing on the power (BSE Power down 5.0%) and oil & gas stocks (BSE Oil & Gas down 4.5%).

FPIs turned net sellers of Indian equities to the tune of US$1.5 bn in July’21, reversing their last month trend. The YTD flows at US$7.0 bn continue to remain decent. As the global economy recovers from the pandemic led slowdown, we believe there could be investor interest towards higher risk participation even though rising inflation and tapering of monetary stimulus from central banks of a few major economies may have a bearing on investor sentiments.

Indian Equity Markets: Slow but steady! The month started on a positive note with news regarding a steady decline in the Covid-19 cases, rise in the daily vaccinations and gradual easing of the pandemic related restrictions. However, news regarding delta variant spreading in several countries, expectation of reduction in the stimulus programme by US Fed and inflation inching were some of the factors which contained the rising trajectory, thereby leading nearly flat monthly gains. Amongst the key developments during the month, there was a major churn in the central government ministries, the IMF cut India’s FY22 GDP forecast, ECB kept rates unchanged and the cabinet approved the PLI scheme for speciality steel which has an outlay of INR 63 bn for production during FY2023-27.

The manufacturing PMI which had contracted in June’21, was back in the expansionary zone – printing 55.3 in July’21 as some of the states relaxed localized restrictions, leading to an overall improvement in the economic activity. Some of the other macroeconomic indicators such as power consumption, e-way bill collection and rail freight were robust for July’21 indicating a pick-up in the economic activity. Power demand touched an all-time high ('Maximum All India Energy Met'- power supplied in a day) in July’21 and over 64.1 mn e-way bills were generated in July’21. Even the railway network, achieved its highest incremental freight loading of 17.54 MT in the month of July’21.

India’s eight core sectors index increased by 8.9% in June’21. The production of Coal, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity industries increased in June 2021 over the corresponding period of last year.Further, the merchandise exports strengthened in July’21 – highest ever monthly achievement and stood at US$35.2 bn, posting an increase of 47.9% over July’20 figure. While India is a net importer in July’21 with a trade deficit of US$11.2 bn, as compared to trade deficit of US$5.3 bn in July’20, the exports during the April-July this year were US$130.5 bn, up by 73.5% over the corresponding period in 2020. Simplification of compliance related procedures, make in India, make for world were some of the reasons which attributed to the record performance of exports.

The IMF lowered India’s economic growth projection for FY22 to 9.5% from 12.5% (estimated in April), mentioning a slow recovery in consumer confidence on account of the fierce second wave of the pandemic and a delayed vaccination programme. Even globally, renewed waves experienced by some countries—notably India, will have an impact on the global economic recovery. The IMF cited that the growth prospects in India have been downgraded on account of the severe second wave and hence expected slow recovery in confidence from that setback.

There are a few risks in the near to medium term which market participants should closely watch out for

1. High spatial and temporal distribution of monsoon which could pose a risk for food inflation 2. Spread of new strain of virus along with lower pace of vaccination could put pressure on the health infrastructure 3. High valuations along with lower than expected earnings growth, could cap the upside from equity markets

When the fog of pandemic lifts, the path will be clear again! With WPI in double digits and retail inflation above the stipulated range, there are concerns with regards to economic recovery. However, it is important to note that the rise in inflation was on account of global commodity price boom and supply side bottlenecks. We believe that the recent decrease in global oil prices, could provide some relief. Also, there were apprehensions regarding the monsoon deficit and uneven distribution, however, the monsoon rainfall improved to normal levels towards the second half of July’21, which led to improvement in sowing in some of the key states. On the positive note, the spike in the tax collection in April-June’21 period, especially in corporation tax shows an enhancement in corporate profitability.Further, improvement in the personal income tax collection during the second wave is a testimony to the fact that the phased lockdowns did not have as adverse economic impact as last year.Even though the pandemic is in the stage where ‘it is not over till it is over’, we believe that a rise in the inoculation drive (over 470 mn doses administered till July 30, 2021) along with acquired immunity could probably serve as a cushion for any subsequent waves. We believe that increasing the pace of vaccination and a recovery in economic activity is likely to boost revenue, which could enable government to spend more in the second half of the fiscal, and result in economic growth. A combination of these factors is likely to support the economic recovery and keep the markets buoyant in the near to medium term.

Portfolio Positioning With various parameters showing the economic impact of second wave lesser as compared to the first wave, we believe that cyclical recovery is underway.We believe that the earnings growth recovery in the near to medium term is expected to be broad based in nature with potential winners across market capitalizations. The earnings growth for companies in Nifty and Sensex, is likely to be strong for the next couple of years resulting in ROE expansion. All these factors are likely to bode well for markets in the near to medium term. With ROE and PAT growth as our key parameters for stock selection, our portfolio is biased towards companies in Financials, Industrials, and Building materials space which are expected to benefit from the acceleration in growth trajectory. Meanwhile, we would also tactically look at opportunities in the defensive segment which are less likely to be impacted by the short-term disruptions. We continue to focus on bottom up security selection while having a positive bias towards cyclical recovery and taking tactical calls based on the market dynamics.

Disclaimer

Securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Strategy will be achieved. As with any securities investment, the value of a portfolio can go up or down depending on the factors and forces affecting the capital markets. Past performance of the Portfolio Manager may not be indicative of the performance in the future.

This document is for informational purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy the securities or other investments mentioned in it. All opinions, figures, charts/graphs, estimates and data included in this document are as on date and are subject to change without notice. The past performance of the Strategy is not indicative of its future performance. Client(s) are not being offered any guaranteed or indicative returns through these services. The returns mentioned anywhere in this document are not promised or guaranteed in any manner. While utmost care has been exercised while preparing this document, IIFL Asset Management Limited does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. While we endeavor to update on a reasonable basis the information discussed in this document, there may be regulatory, compliance, or other reasons that prevent us from doing so.

Returns are dependent on prevalent market factors, liquidity and credit conditions. Strategy returns depicted are in the current context and may be significantly different in the future. The contents of this document should not be treated as advice relating to investment, legal or taxation matters. For tax consequences, each investor is advised to consult his / her own professional tax advisor. This communication is for private circulation only and for the exclusive and confidential use of the intended recipient(s). Any other distribution, use or reproduction of this communication in its entirety or any part thereof is unauthorized and strictly prohibited. The investments may not be suited to all categories of investors. Recipient shall understand that the aforementioned statements cannot disclose all the risks and characteristics.

This document is not directed or intended for Distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdictions, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject IIFL AMC to any registration or licencing requirement within such jurisdiction.

IIFL Asset Management Limited and its group and associate companies are engaged in providing various financial services and for the said services may earn fees or remuneration in form of arranger fees, referral fees, advisory fees, management fees, trustee fees, Commission, brokerage, transaction charges, underwriting charges, issue management fees and other fees. For the purpose of trading and investments in securities, the Portfolio Manager transacts through and maintain demat account(s) with IIFL Securities Limited (associate broker & depository participant) and IIFL Wealth Management Limited (Holding Company of IIFL AMC).