Investment Strategy Report
July 2021 Table of Contents Slide No.
I 4QFY21 Earnings Review & Update on Indian Economy 3-9 II Model Portfolios & Returns – Direct Equity 10-12 III Mutual Fund Recommendations 13-16 A Recommended Equity Mutual Funds 14 B Recommended Debt Mutual Funds 15 C Other Relevant Categories 16 IV Model Portfolios & Returns – Mutual Funds 17-22 V Non-MF Product Recommendations 23-41 A PMS 23-35 C Unlisted Shares 36 D Bonds 37-39 Disclaimer 40
2 4QFY21 Earnings Review & Update on Indian Economy
3 4QFY21 – Improved demand offset margin pressure
Sales growth accelerated in 4Q, even excluding commodity companies EBITDA margins moderated for a second consecutive quarter in 4Q
EBITDA growth accelerated on the back of the commodities and utilities sectors Thus the profitability has started to show improvement
Note: IIFL Institutional Research 4 4QFY21 – Balance sheet deleveraging reduced interest burden
Interest burden edging down, mainly aided by deleveraging of balance sheets Gross debt declined across most sectors in 2HFY21
Debt burden has reduced in 2HFY21 The high base of 4QFY20 also weighed on the YoY growth in 4QFY21
Note: IIFL Institutional Research 5 INR facing depreciation pressure, vulnerable to external factors
CAD widened to ~1% of GDP in 4QFY21 Exports growth continues to trail that of EMs, by a wide margin
Both, FII and FDI flows, moderated in 4QFY21 The dollar index started edging up partly due to slightly hawkish US Fed
Note: IIFL Institutional Research 6 However, steady capital inflows and FX reserves to support INR
Remittances to India have been fairly resilient to the Covid shock Net services exports actually improved by ~4% YoY in FY21
FX reserves jumped by ~50% on steady capital flows and narrowing CAD FX reserves exceed India’s external debt
Note: IIFL Institutional Research 7 Overall the Indian economy is gaining momentum amid inflation risk
Commodity price rally generally drives a pick-up in investments Electricity consumption growth has seen an uptick
E-way bill generation, too, has been increasing since the last few weeks RBI’s forecast of CPI for FY22 faces upside risks
Note: IIFL Institutional Research 8 Real Estate Sector: Strong finish to FY21; FY22 outlook remains healthy
Growth in Residential bookings – Strong industry‐wide growth in 4Q Top developers − Market share elevated at 24% for FY21 vs 13% in FY20
Sector fundamentals improving – Debt levels declining, bookings value up Occupancy for Commercial/REITs has sharply declined over FY21
Note: IIFL Institutional Research 9 Model Portfolios – Direct Equity
10 Model Portfolios – Direct Equity
Investment Objective & Portfolio Strategy - Aggressive portfolio targets above market returns using high beta and midcap ideas. Moderate portfolio uses Multi-cap approach to reduce volatility. Conservative portfolio is built with objectives of less volatility and capital protection.
Aggressive Allocation (%) Moderate Allocation (%) Conservative Allocation (%) Axis Bank 8 ABB India 8 NHPC 8 Gujarat Gas 7 ICICI Bank 7 Gujarat State Petronet 7 Crompton Greaves Consumer Electricals 8 Infosys 7 TCS 8 ICICI Bank 8 HCL Technologies 8 Hindustan Unilever 7 Persistent Systems 9 Dr. Reddy's Labs 7 Hero Motocorp 8 Larsen & Toubro 8 ICICI Lombard General 8 HDFC Bank 9 SRF 9 Cadila Healthcare 8 ICICI Lombard General 9 Deepak Nitrite 8 Bharat Electronics 7 ITC 7 SBI Life Insurance Company 9 Eicher Motors 8 Dr. Reddy's Labs 7 Cummins India 9 Reliance Industries 7 Dabur India 8 Sudarshan Chemicals 8 Ashok Leyland 8 Reliance Industries 7 Greenply Industries 9 ACC 9 Cipla 8 -- -- Emami 8 Larsen & Tourbo 7 Total 100 Total 100 Total 100 Risk Reward Statistics Risk Reward Statistics Risk Reward Statistics Portfolio Beta 0.89 Portfolio Beta 0.88 Portfolio Beta 0.68 Sharpe Ratio 2.06 Sharpe Ratio 1.75 Sharpe Ratio 0.95 Portfolio Std. Deviation 36.67 Portfolio Std. Deviation 32.86 Portfolio Std. Deviation 27.15
11 Model Portfolio - Returns
Absolute % Returns CAGR % Return Valuation Multiples (12m Forward) Portfolios/Index 6 M 1 Yr 2 Yr Since Inception P/E P/BV Aggressive 42.1 110.3 34.2 22.9 30.7 5.4 Moderate 21.9 66.3 32.1 20.5 37.3 5.5 Conservative 6.3 33.7 14.3 9.7 27.9 5.6 NIFTY 50 12.4 52.6 15.5 14.0 20.4 3.0
Aggressive NIFTY Moderate NIFTY Conservative NIFTY
245 240 180 170 225 220 160 200 205 150 185 180 140 165 160 130 120 145 140 110 125 120 100 105 100 90
85 80 80
Jun-17 Jun-21 Jun-18 Jun-19 Jun-20 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21
Oct-18 Oct-17 Oct-19 Oct-20 Oct-17 Oct-18 Oct-19 Oct-20 Oct-17 Oct-18 Oct-19 Oct-20
Feb-20 Feb-17 Feb-18 Feb-19 Feb-21 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21
Source: ACE Equity, IIFL Research, returns as on Jun 30, 2021
12 Mutual Fund Recommendations
13 Recommended Equity Mutual Funds
Returns (%) Asset Allocation (%) Recommended Scheme Name AUM (₹cr) 3 Y 5 Y 10 Y Large Cap Mid Cap Small Cap Debt Horizon Large Cap / Large & Mid Cap Mirae Asset Large Cap Fund(G) 25,721 15.3 16.0 15.5 86.2 8.9 2.6 2.4 3+ Years Canara Rob Bluechip Equity Fund(G) 2,886 17.9 16.8 13.6 88.5 7.0 -- 4.5 3+ years Kotak Equity Opp. Fund(G) 6,362 16.9 16.0 14.6 53.9 36.5 7.0 2.6 5+ Years Focused Axis Focused 25 Fund(G) 16,540 14.5 17.5 -- 84.7 6.6 -- 8.8 5+ Years IIFL Focused Equity Fund(G) 1,823 22.0 18.6 -- 70.7 15.8 9.3 4.2 5+ Years Flexi Cap Aditya Birla SL Flexi Cap Fund(G) 14,144 14.6 15.7 15.2 62.3 24.1 8.8 4.8 5+ Years Tata Flexi Cap Fund(G) 1,981 ------71.5 19.4 4.6 4.5 5+ Years HDFC Flexi Cap Fund(G) 25,232 14.4 14.0 12.2 78.8 9.8 8.7 2.7 5+ Years Value HDFC Capital Builder Value Fund(G) 4,826 10.1 13.0 13.1 73.2 10.1 13.5 3.2 5+ Years UTI Value Opp. Fund(G) 5,917 15.4 14.2 12.8 69.3 18.6 9.4 2.7 5+ Years Mid Cap & Small Cap Kotak Emerging Equity Fund(G) 12,463 19.7 17.6 19.3 14.1 64.8 18.5 2.6 7+ Years L&T Midcap Fund(G) 6,587 12.2 15.5 17.3 7.0 73.4 18.3 1.4 7+ Years DSP Midcap Cap Fund(G) 12,162 17.7 16.1 17.2 16.3 67.4 11.8 4.5 7+ years Nippon India Small Cap Fund(G) 14,318 20.2 21.2 22.2 5.9 20.8 69.0 4.4 7+ years
Note: Returns are CAGR; AUM as on May 2021; Returns as on Jun 30, 2021, Debt includes other investments Source: ACE 14 Recommended Debt Mutual Funds
Returns (%) Rating Profile (%) Recommended Scheme Name AUM (₹cr) YTM(%) 1 Y 3 Y 5 Y AAA AA Sovereign Horizon Overnight / Liquid HDFC Liquid Fund(G) 51,046 3.1 5.3 5.9 64.0 -- 33.9 3.5 3+ Months ICICI Pru Liquid Fund(G) 36,601 3.2 5.4 6.0 51.1 -- 38.6 3.5 3+ Months Money Market / Low Duration ICICI Pru Money Market Fund(G) 14,104 4.1 6.6 6.8 68.9 -- 25.7 3.8 12+ Months Axis Treasury Advantage Fund(G) 10,158 4.7 7.3 7.1 59.1 12.0 22.4 4.2 12+ Months IDFC Low Duration Fund(G) 9,575 4.1 7.0 7.1 77.6 -- 10.4 3.9 12+ Months Corporate Bond / Short Term Axis Corp Debt Fund(G) 4,566 6.3 7.9 -- 73.4 -- 15.6 4.9 36+ Months IDFC Corp Bond Fund(G) 20,978 5.5 8.5 7.9 73.2 -- 24.1 5.0 36+ Months SBI Short Term Debt Fund(G) 24,127 4.4 8.0 7.4 39.7 6.6 43.7 4.8 36+ Months Credit Risk HDFC Credit Risk Fund(G) 7,631 10.5 9.1 8.3 23.4 52.2 8.3 7.0 36+ Months ICICI Pru Credit Risk Fund(G) 7,443 8.8 8.8 8.4 5.3 56.1 11.1 7.2 36+ Months Roll Down Funds (Long Term) Axis Dynamic Bond Fund(G) 1,989 5.1 9.9 8.4 67.4 -- 27.8 6.6 8-10 years L&T Triple Ace Bond Fund(G) 7,911 4.5 10.1 8.0 68.4 -- 27.4 6.4 8-10 years Nippon India Dynamic Bond(G) 2,717 3.9 8.3 7.3 -- -- 92.5 6.5 8-10 years
Note: Returns are CAGR; AUM as on May 2021; Returns as on Jun 30, 2021 Source: ACE 15 Other Relevant Categories
Returns (%) Asset Allocation (%) Recommended Scheme Name AUM (₹cr) 3 Y 5 Y 10 Y Large Cap Mid Cap Small Cap Horizon Equity Linked Savings Schemes (ELSS) Mirae Asset Tax Saver Fund(G) 7,940 20.5 21.1 -- 68.9 17.7 9.2 5 Years Canara Robeco Equity Tax Saver Fund(G) 2,227 20.3 17.9 14.7 77.2 18.6 1.7 5 Years DSP Tax Saver Fund(G) 8,747 18.6 16.5 15.9 67.7 20.8 10.6 5 Years Sectoral / Tactical Themes ICICI Prudential Manufacture in India Fund(G) 615 ------59.1 15.3 20.9 8-10 Years Nippon India Power & Infra Fund(G) 1,438 10.8 12.5 7.1 56.4 17.5 24.1 8-10 Years DSP Healthcare Fund(G) 1,311 ------46.5 28.2 11.0 8-10 Years Invesco India PSU Equity Fund(G) 273 13.7 11.8 8.9 54.4 19.8 19.0 8-10 Years Hybrid / Arbitrage ICICI Prudential Balanced Advantage Fund(G) 32,188 11.5 11.0 12.5 59.9 5.9 1.3 3+ Years DSP Dynamic Asset Allocation Fund(G) 3,562 10.5 9.4 -- 54.0 11.0 0.7 3+ years Edelweiss Arbitrage Fund(G) 5,503 5.2 5.6 -- 44.7 22.6 1.5 3+ Months Nippon India Arbitrage Fund(G) 11,792 5.2 5.7 7.1 55.2 13.4 1.3 3+ Months Equity Index Funds / Equity ETFs ICICI Prudential Nifty Next 50 Index Fund(G) 1,230 10.6 13.5 13.0 91.1 8.9 -- 5 Years UTI Nifty Index Fund(G) 4,022 14.6 14.7 11.5 100.0 -- -- 5 Years SBI-ETF Sensex 46,539 14.3 14.2 -- 99.8 -- -- 5 Years ICICI Pru Nifty ETF 2,711 14.8 14.9 -- 99.8 -- -- 5 Years
Note: Returns are CAGR; AUM as on May 2021; Returns as on Jun 30, 2021 Source: ACE 16 Model Portfolios – Mutual Fund Very Conservative Risk Profile
The objective of the strategy is to generate risk-adjusted capital appreciation for investors from a portfolio of debt mutual fund schemes. Primarily to avoid any potential loss and preserve capital. The strategy is to constitute a portfolio of debt funds across different durations and endeavors to tactically manage allocation within the debt schemes based on changes in macroeconomic scenario.
CAGR % Return Allocation Sr. No Scheme Name (%) 1 Yr 3 Yr 5 Yr 10 Yr
1 ICICI Pru Balanced Advantage Fund(G) 15.0 31.0 11.5 11.0 12.5
2 IDFC Low Duration Fund(G) 25.0 4.1 7.0 7.1 8.2
3 SBI Short Term Debt Fund(G) 25.0 4.4 8.0 7.4 8.2
4 Axis Corp Debt Fund(G) 25.0 6.3 7.9 -- --
5 Edelweiss Arbitrage Fund(G) 10.0 3.4 5.2 5.6 --
Total 100.0
Note: Returns for 1 year are absolute; Returns greater than 1 year are CAGR; Returns as on Jun 30, 2021 Source: ACE
18 Conservative Risk Profile
The objective of the strategy is to generate risk-adjusted capital appreciation for investors from a portfolio of debt oriented mutual fund schemes. Primarily to avoid any potential loss and preserve capital. The strategy takes a concentrated position in debt funds across different durations and endeavors to tactically manage allocation within debt schemes depending on changes in macroeconomic scenario.
CAGR % Return Allocation Sr. No Scheme Name (%) 1 Yr 3 Yr 5 Yr 10 Yr
1 IIFL Focused Equity Fund(G) 15.0 61.7 22.0 18.6 --
2 IDFC Low Duration Fund(G) 25.0 4.1 7.0 7.1 8.2
3 SBI Short Term Debt Fund(G) 20.0 4.4 8.0 7.4 8.2
4 Axis Corp Debt Fund(G) 20.0 6.3 7.9 -- --
5 ICICI Pru Balanced Advantage Fund(G) 20.0 31.0 11.5 11.0 12.5
Total 100.0
Note: Returns for 1 year are absolute; Returns greater than 1 year are CAGR; Returns as on Jun 30, 2021 Source: ACE
19 Moderate Risk Profile
The objective of the strategy is to generate risk-adjusted capital appreciation for investors from a portfolio of equity oriented mutual fund schemes with a moderately high risk appetite. Primarily to beat inflation without having too much volatility. The strategy takes a balanced position in mutual funds across key asset classes and endeavors to strategically maintain balance between different categories depending on changes in the business cycles.
CAGR % Return Allocation Sr. No Scheme Name (%) 1 Yr 3 Yr 5 Yr 10 Yr
1 Mirae Asset Large Cap Fund(G) 15.0 54.0 15.3 16.0 15.5
2 IIFL Focused Equity Fund(G) 15.0 61.7 22.0 18.6 --
3 IDFC Low Duration Fund(G) 25.0 4.1 7.0 7.1 8.2
4 ICICI Pru Balanced Advantage Fund(G) 20.0 31.0 11.5 11.0 12.5
5 Axis Corp Debt Fund(G) 25.0 6.3 7.9 -- --
Total 100.0
Note: Returns for 1 year are absolute; Returns greater than 1 year are CAGR; Returns as on Jun 30, 2021 Source: ACE
20 Aggressive Risk Profile
The objective of the strategy is to generate substantial wealth in the long run for investors from a portfolio of aggressive equity oriented mutual fund schemes The strategy takes position in mutual funds across different market-cap and themes and endeavors to strategically change allocation within different categories depending on changes in the business cycles.
CAGR % Return Allocation Sr. No Scheme Name (%) 1 Yr 3 Yr 5 Yr 10 Yr
1 Mirae Asset Large Cap Fund(G) 20.0 54.0 15.3 16.0 15.5
2 UTI Flexi Cap Fund(G) 20.0 69.6 18.7 17.3 15.4
3 IIFL Focused Equity Fund(G) 15.0 61.7 22.0 18.6 --
4 ICICI Pru Balanced Advantage Fund(G) 20.0 31.0 11.5 11.0 12.5
5 IDFC Low Duration Fund(G) 25.0 4.1 7.0 7.1 8.2
Total 100.0
Note: Returns for 1 year are absolute; Returns greater than 1 year are CAGR; Returns as on Jun 30, 2021 Source: ACE
21 Very Aggressive Risk Profile
The objective of the strategy is to generate substantial wealth in the long run for investors from a portfolio of very aggressive equity oriented mutual fund schemes The strategy takes a concentrated position in mid cap, small cap, sector and thematic schemes and endeavors to strategically change allocation within different themes depending on changes in the business cycles.
CAGR % Return Allocation Sr. No Scheme Name (%) 1 Yr 3 Yr 5 Yr 10 Yr
1 HDFC Flexi Cap Fund(G) 20.0 66.0 14.4 14.0 12.2
2 UTI Flexi Cap Fund(G) 20.0 69.6 18.7 17.3 15.4
3 ICICI Pru Balanced Advantage Fund(G) 25.0 31.0 11.5 11.0 12.5
4 Mirae Asset Large Cap Fund(G) 20.0 54.0 15.3 16.0 15.5
5 Kotak Emerging Equity Fund(G) 15.0 83.5 19.7 17.6 19.3
Total 100.0
Note: Returns for 1 year are absolute; Returns greater than 1 year are CAGR; Returns as on Jun 30, 2021 Source: ACE
22 Non-MF Product Recommendations
23 IIFL Multicap and Multicap Advantage PMS
IIFL Multicap PMS IIFL Multicap Advantage PMS
The objective is to generate long term capital appreciation for investors from a The portfolio manager aims to take a concentrated position in portfolio of 20-25 stocks portfolio of equity & equity related securities. The portfolio manager aims to with a bias towards Large cap stocks with an objective of generating wealth over long achieve the investment objective by:- period; at the same time hedge the portfolio using At the Money Nifty 50 Put option to safeguard against downside risk Investing in a concentrated basket of 20-25 stocks with a bias towards large cap stocks Investment Allocation :- Actively use sector rotation to align with changes in business cycles to generate Alpha Equity Investment – up to 100% of corpus Portfolio Manager shall follow the SCDV framework for portfolio construction Put Options (for Hedging) – up to 8% of corpus* Liquid scheme of Mutual funds and other securities as per FM discretion
Investment Philosophy – SCDV Framework 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.
24 IIFL Multicap and Multicap Advantage PMS
Performance
Strategy/Benchmark 1 Month (%) 3 Month (%) 6 Month (%) 1 Year (%) 2 Year (%) 3 Year (%) Since Inception
IIFL Multicap PMS 1.9 6.4 27.2 51.9 20.7 17.8 19.4
IIFL Multicap Advantage 2.8 5.5 23.5 42.0 20.9 16.9 15.6
S&P BSE 200 TRI 0.7 9.07 28.8 53.9 14.6 11.6 11.9
Inception: IIFL Multicap PMS: Dec 2014 & IIFL Multicap Advantage PMS: Dec 2017 Returns as on 30th April 2021
Mitul Patel, Strategy Manager for IIFL Multicap PMS, has an overall experience of 14 years across areas of Equity Research, Fund Management, Private Equity Advisory and Investment banking. Apart from managing the strategies of Portfolio Management Services offered by IIFL Asset Management Limited (IIFL AMC), he also heads research for listed equities and is responsible for generating investment ideas across sectors and market capitalizations. He has been instrumental in setting up the research desk at IIFL AMC 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 management firm.
Key Terms Management fee 2.50% per annum Brokerage 0.12% of the transaction value (plus applicable statutory levies) Other charges Statutory/Other charges as applicable (STT/Demat/Custodial Charges/Service Tax, etc.) Exit fees 1st year: 3%; 2nd year: 2% ; 3rd year: 1% ; Thereafter: Nil Recommended Investment horizon 36 months and above Taxation As per equity taxation
Returns less than 1 year are absolute; Returns greater than 1 year are CAGR 25 IIFL Phoenix Portfolio PMS
IIFL Phoenix Portfolio intends to create a portfolio of such businesses with an established track record, which have the potential to see a sharp improvement in fundamentals in the future key beneficiaries of the secular growth drivers
SCDV Framework Investment Philosophy
Targeted Investment Zone: Proactive identification of companies in which a business turnaround is about to occur or has occurred, and there is improved visibility on business fundamentals. Value Creation: After a successful turnaround, sustenance of turnaround factors may further lead to compounding of value, creating new highs for the business
26 IIFL Phoenix Portfolio PMS
Factors for Turnaround
Fund Manager Mitul Patel, Strategy Manager for IIFL Multicap PMS, has an overall experience of 14 years across areas of Equity Research, Fund Management, Private Equity Advisory and Investment banking. Apart from managing the strategies of Portfolio Management Services offered by IIFL Asset Management Limited (IIFL AMC), he also heads research for listed equities and is responsible for generating investment ideas across sectors and market capitalizations. He has been instrumental in setting up the research desk at IIFL AMC 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 management firm.
Key Terms Management fee As per term sheet signed Brokerage 0.12% of the transaction value (plus applicable statutory levies) Other charges Statutory/Other charges as applicable(STT/Demat/Custodial Charges/Service Tax, etc.) Exit fees As per term sheet signed Recommended Investment horizon 36 months and above Taxation As per equity taxation Minimum Investment Amount Rs.50 lakhs
Returns less than 1 year are absolute; Returns greater than 1 year are CAGR 27 Marcellus Consistent Compounders PMS
Invests in a concentrated portfolio of maximum 20 stocks of heavily moated companies, that can drive healthy earnings compounding over long periods with very little volatility Large Cap portfolio with a focus companies which have economic moats and are leaders in their respective industry known to compound wealth over long horizon while not taking too many risks – Key steps in identifying consistent compounders being: . Identify Companies with clean accounts: using 10 accounting checks (ratios) of over six years consolidated financial . Identify Companies with superior capital allocation: using a twin-filter criteria of double digit Y-o-Y Revenue Growth & Return on Capital > Cost of Capital, each year for 10 years in a row . Amongst the companies which pass the above steps – identify those with barriers to entry: in-depth bottom-up research of 10-15 stocks which consistently compound earnings Being patient with a portfolio helps cut out ‘noise’ of trying to time entry / exit decisions. With no churn, their filter based approach also reduces transaction costs.
Timing entry / exit from CCP does not make sense, while trying to time Index might make a lot of sense Long Term Exit Price (after Performance Does Timing Investment Entry Price Type of Company Downside Earnings 10 yrs) (CAGR) make sense? Growth Sensex (pre-2008 crash) 100 300 12% Mediocre Quality High Low Yes Sensex (bottom of the 30 300 26% Company crash) High Quality Low High No CCP (pre-2008 crash) 100 1000 26% Company CCP (bottom of the crash) 70 1000 30%
28 Marcellus Consistent Compounders PMS
Performance Strategy/Benchmark 1 Month (%) 3 Month (%) 6 Month (%) 1 Year (%) 2 Year (%) Since Inception (%)
Marcellus CCP -0.1 4.8 19.7 38.2 26.9 24.4
Nifty 50 TRI -0.4 7.6 26.1 49.9 12.9 14.3 Inception – December 2018 Returns as on 30th April,2021 About the Investment Manager Marcellus Investment Managers was founded in 2018 and currently has US$300m in assets under management and advisory. The founders have worked together for the past 15years: • Saurabh Mukherjea, CFA – Chief Investment Officer; former CEO of Ambit Capital where assets under advisory were $800mn. MSc in Economics from London School of Economics; Member of SEBI’s Asset Management Advisory Committee. • Rakshit Ranjan, CFA, Portfolio Manager at Marcellus formerly, Portfolio manager of Ambit Capital's Coffee Can PMS, which was one of India’s Top Performing Equity products during 2018. He is a B.Tech from IIT (Delhi)
KEY TERMS Minimum Investment 50 Lakh Management fee 2.0% per annum (Fixed) Variable/Performance Fee Nil Exit fees Nil Recommended Investment horizon 36 months and above Taxation As per equity taxation
*Returns less than 1 year are absolute; Returns greater than 1 year are CAGR 29 White Oak India Pioneers Equity Portfolio PMS
Investment Philosophy:
Believe outsized returns are earned over time by investing in great businesses at attractive values A great business is one that is well managed, has a scalable long-term opportunity, and generates superior returns on incremental capital along with a strong track record of execution and governance Look for companies where the estimate of cash flow or earnings, and hence intrinsic value, is significantly different from what the market has priced into the stock. Valuation is attractive when the current market price is at a substantial discount to intrinsic value Tend to focus on economic free cash flows instead of accounting cash flows and ascribe terminal value based on greatness of business
Investment Objective
Achieve absolute performance through bottom-up, fundamental research Have a balanced portfolio of select companies agnostic to the benchmark Focus on ensuring that alpha generation is purely a function of stock selection Aim to consciously avoid market timing or sector rotation or other such top-down bets
30 White Oak India Pioneers Equity Portfolio PMS
Performance Since Inception Strategy/Benchmark 1 Month (%) 3 Month (%) 6 Month (%) 1 Year (%) 2 Year (%) (%) White Oak India Pioneer PMS Strategy 7.2 - 24.5
BSE 500 TRI 7.9 - 32.3
Inception date – April 2019 Returns as on 30th April, 2021 Investment Manager The fund house – “White Oak Capital Management”, is a Mumbai-based boutique investment management and investment advisory firm founded by Mr. Prashant Khemka, former CIO and Lead Portfolio Manager of India Equity and Global Emerging Markets Equity at Goldman Sachs Asset Management. Prashant founded White Oak Capital Management in June 2017. He was the CIO and lead portfolio manager of GS India Equity at Goldman Sachs Asset Management (GSAM) during March 2007 to March 2017, and also for the Global Emerging Markets (GEM) Equity during June 2013 to March 2017. Currently, the firm manages an AUM of approximately ~USD 3.8 Bn (INR 30k crores) in long only equity strategies from both offshore and domestic investors.
KEY TERMS Minimum Investment 50 Lakh Management fee 2.50% per annum Exit fees Nil Recommended Investment horizon 36 months and above Taxation As per equity taxation
Returns less than 1 year are absolute; Returns greater than 1 year are CAGR 31 Renaissance Investment Managers PMS
Investment Philosophy Renaissance invests into good quality growth businesses that can deliver superior growth over the medium term to long term. The Investment approach follows the SQGARP (Sustainable Quality Growth at Reasonable Price) framework. The objective is to deliver superior risk-adjusted returns over medium term.
Renaissance Opportunities Portfolio
It’s a Concentrated Portfolio of 15 stocks built on best opportunity basis with absolute return focus It’s a Large Cap Portfolio with Blend of Growth & Value within the SQGARP framework Due to concentrated nature of the portfolio, it’s also a high conviction portfolio of good business that can deliver superior Growth over medium term Portfolio Companies are leaders in their respective business
Renaissance Alpha Portfolio
High Quality, High Growth Focused Portfolio of 15-20 stocks Strict stock selection filters around Growth, Size (Market Cap), Free Cash Flow generation, and Leverage to ensure that the portfolio is growth focused with low risk Portfolio Companies are leaders in the business with high growth and low leverage
32 Renaissance Investment Managers PMS
Performance Strategy/Benchmark 1 Month (%) 3 Month (%) 6 Month (%) 1 Year (%) 3 Year (%) Since Inception Renaissance Opportunities Portfolio -1.0 - 31.1 60.0 7.6 - Nifty 200 0.2 - 27.7 51.1 9.4 - Renaissance Alpha Portfolio 0.1 - 13.0 41.0 - 18.9 Nifty 50 -0.4 - 25.7 48.4 - 14.1
Inception: Opportunities Portfolio PMS: Jan 2018 & Alpha Portfolio PMS: Jan 2020 Returns as on 30th April, 2021 Investment Manager Renaissance Investment Managers is founded by Mr. Pankaj Murarka. He has over 24 yrs. of experience in Equities Fund Management and has had an excellent track record of fund performance over the course of his career. Pankaj has worked with various institutions over the course of his career including UTI Mutual Fund, Rare Enterprise, Merrill Lynch and Axis Mutual Fund. In his last role, Pankaj was the part of the founding team and CIO for Axis Mutual Fund. He has won various awards for his fund performance over the course of his career. Renaissance has built a good team of Investment professionals with deep experience with leading institutions in India. KEY TERMS Minimum Investment 50 Lakh Management fee As per Termsheet signed Exit fees 1% within 2 years; Nil thereafter Recommended Investment horizon 36 months and above Taxation As per equity taxation
Returns less than 1 year are absolute; Returns greater than 1 year are CAGR 33 Other PMS Offerings
Since PMS Name Inception Date Benchmark 1 Month 3 Month 6 Month 1 Year 2 Year 3 Year Inception PMS 1.0 2.2 21.2 45.4 -0.2 0.0 20.8 Alchemy High Growth May 2002 BSE 500 1.2 7.1 32.0 76.6 13.2 11.5 15.9
Alchemy High Growth PMS 1.3 7.4 29.2 61.7 5.9 6.5 19.8 Dec 2008 Select Stock BSE 500 1.2 7.1 32.0 76.6 13.2 11.5 15.9 PMS 0.1 0.3 19.1 29.5 3.5 3.3 10.9 Alchemy Leaders Dec 2006 Nifty 50 1.1 5.1 30.6 70.9 12.4 13.2 9.9 PMS 2.5 7.9 19.1 56.7 13.9 1.7 11.7 Invesco R.I.S.E Apr 2016 S&P BSE 500 0.5 9.5 29.4 54.8 13.5 9.4 13.6 PMS 1.12 8.65 28.9 49.6 10.8 5.9 3.7 Invesco DAWN Aug 2017 S&P BSE 500 0.5 9.5 29.4 54.8 13.5 9.4 10.6 PMS 4.8 10.8 15.2 51.4 15.9 10.2 16.7 ASK ISP Jan 2010 BSE 500 6.9 8.7 23.9 69.6 12.5 10.3 6.9 PMS 4.7 10.2 19.6 69.3 13.8 19.2 4.7 ASK IEP Jan 2010 BSE 500 6.9 8.7 23.9 69.6 12.5 10.6 6.9
*Returns less than 1 year are absolute; Returns greater than 1 year are CAGR. As as on 30th April 2021 (As on 31st March, 34 2021 for Alchemy PMS ) Other PMS Offerings
Inception Since PMS Name Benchmark 1 Month 3 Month 6 Month 1 Year 2 Year 3 Year Date Inception PMS 5.4 17.1 33.9 74.3 24.5 12.5 18.0 Sundaram S.E.L.F. June 2010 Nifty Midcap 2.1 15.7 41.8 79.2 17.4 6.0 10.5
PMS -0.9 11.9 26.7 59.0 21.1 11.9 18.3 Sundaram SISOP Feb 2010 Nifty 500 0.4 9.4 29.0 54.3 13.1 9.2 10.4
PMS -0.9 6.2 26.2 50.9 11.7 6.2 15.4 MOSL NTDOP Aug 2007 Nifty 500 0.5 9.6 29.5 55.7 14.4 10.5 10.4
PMS -0.6 9.4 26.6 54.6 6.1 -1.7 8.4 MOSL IOP Feb 2010 Nifty Smallcap 100 5.6 19.6 47.8 111.7 16.4 1.8 9.7
PMS 1.2 8.2 24.8 40.9 13.6 8.5 19.9 MOSL Value Feb 2003 Nifty 50 -0.4 7.6 26.1 49.9 12.9 12.2 17.1
Abakkus Emerging PMS 9.1 25.9 52.8 - - - 52.6 Aug 2020 Opportunities Approach BSE Midcap 0.6 12.3 36.3 - - - 34.6
*Returns less than 1 year are absolute; Returns greater than 1 year are CAGR. As on 30th April, 2021 35 Unlisted Shares
Many young companies grow much faster than mature companies due to their lower base, and hence tend to significantly outperform the benchmark returns. However, a lot of this growth happens before the company goes public with an IPO. Hence, participating in such companies in the Growth / Pre-IPO stage can provide superior returns to the investor.
Absolute % Return
Stock 3M 6M 9M Current Offer Price# Chennai Super Kings -1.28 18.55 51.09 80.91 HDB Financials -3.87 5.59 15.12 964.59 HDFC Securities 35.56 38.74 54.05 12,819.15 Hero Fincorp -8.33 2.13 23.07 1,040.24 Mohan Meakin 7.90 47.59 68.15 1,077.02 Motilal Oswal Home Finance -0.76 -14.45 44.30 13.03 Reliance Retail 35.06 47.62 45.05 2,185.56 TATA Technologies 13.45 33.43 91.27 2,038.46
Price and Returns as on 6th, July, 2021
36 Bonds – Secondary Market
Taxable Bonds Security Coupon Maturity Interest Payment Yield# (%) Rating L&T FINANCE (Secured) 9.95% 28-Mar-25 30-Mar 6.45% AAA BY CRISIL & ICRA PGC LTD (Secured) 7.30% 19-Jun-27 19-Jun 6.27% AAA BY CRISIL & ICRA NHAI (Secured) 8.27% 28-Mar-29 28-Mar 6.81% AAA BY CRISIL, ICRA & CARE FCI (Secured) 7.64% 12-Dec-29 12-Dec 6.81% AAA BY CRISIL & CARE NHPC LTD (Secured) 7.13% 11-Feb-30 11-Feb 6.78% AAA BY CRISIL & ICRA
Perpetual Bonds Security Coupon (%) Call / Put Option Interest Payment Yield# (%) Rating HDFC Bank Perpetual 8.85% 12-May-22 15-May 5.00% AA+ CRISIL / CARE BOB Perpetual 8.25% 17-Jul-25 17-Jul 7.30% AA+ by CRISIL/IND State Bank of India 7.73% 24-Nov-25 24-Nov 7.27% AA+ CRISIL/ICRA Floating Rate Savings Bonds, 2020 (Taxable) Interest Tax Eligible Issuer Coupon (%) Tenure Lock-In Option Limitations Payment Treatment Investors 7.15% p.a. (reset 7 years but premature As per tax bracket of Individuals Not tradeable in the secondary market, Reserve Non- 1st Jan & 1st half-yearly: NSC + 7 years withdrawal is allowed investor, TDS & HUF Not eligible as collateral for availing Bank India Cumulative July 35 bps) for senior citizen applicable loans
#Yields as on July 6th, 2021 *Bond yields are indicative and subject to availability and market movement. Please confirm yields as well as availability before finalizing any deal.
37 IIFL Home Loan Bonds – Issue Details
Issuer IIFL Home Finance Ltd. Series I II III
Frequency of Interest Annual Monthly Maturity Issue Size ₹ 1,000 Cr / ₹ 10,000 mn Payment
Unsecured Subordinated Redeemable Non-Convertible Minimum Application ₹ 10,000 (10 NCDs) across all series Instrument Debentures of face value of ₹1,000/- each eligible for Tier Face Value/ Issue Price II Capital ₹ 1,000 (Rs/NCD) Coupon rate & Annual - 10.0% / Monthly - 9.6% / Cumulative – NA frequency Tenor 87 Months
Tenor 87 Months Coupon (% per annum) 10.00% 9.60% NA
Effective Yield (% per Credit Rating CRISIL AA/Stable ; BWK AA+/Negative 10.00% 10.03% 10.03% annum)
Amount (Rs/Per NCD) on ₹ 1,000 ₹ 1,000 ₹ 2,000 Use of Onward lending, financing and repayment/prepayment of Maturity Proceeds existing loans and general corporate purpose Unsecured Subordinated Redeemable Nature of Indebtedness Non-Convertible Debentures Issue Opens: 6th July 2021 Issue Period Issue Closes: 28th July 2021 (may close earlier) Mode of Interest Payment Through various modes available
38 IIFL Home Loan Bonds – Reasons to Invest
Return, Tenor and Frequency . 10.00% p.a. For Tenor of 87 months available with various interest payment options like monthly, annual and cumulative Liquidity
. Proposed to be listed on BSE and NSE. (NSE shall be the designated Stock Exchange) . Trading will be in dematerialized form only Taxation . No TDS since the holding will be in demat mode
Credit Rating
. Instrument rated AA with Stable Outlook - carrying high degree of safety regarding timely servicing of financial obligations
Allotment on first come first serve basis . The allotment in the Issue shall be made on the basis of date of upload of each application into the electronic book of the stock exchanges. However, on the date of oversubscription, the allotments should be made to the applicants on proportionate basis Ease of investment
. UPI mechanism added for retail investors (application amount of upto ₹ 2 lacs)
39 Disclaimer
Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Nothing in this document constitutes investment, legal, accounting or tax advice or a representation that any investment or strategy is suitable or appropriate to the investor's specific circumstances. The details included are based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. Investors should consult their financial advisers if in doubt about whether the product is suitable for them. The fund may or may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs. This document may not be taken in substitution for the exercise of independent judgment by any investor. The investor should independently evaluate the investment risks. India Infoline Ltd. or any of its director/s or principal officer/employees and associate companies (IIFL) does not assure/give guarantee for accuracy of any of the facts/interpretations in this document, and shall not be liable to any person including the beneficiary for any claim or demand for damages or otherwise in relation to this opinion or its contents. The aimed returns mentioned anywhere in this document are purely indicative and are not promised or guaranteed in any manner. Returns are dependent on prevalent market factors, liquidity and credit conditions. Instrument returns depicted are in the current context and may be significantly different in the future. The group company of India Infoline Limited, IIFL Wealth Management Limited is the Sponsor of IIFL Mutual Fund and holding company of the Investment Manager & Trustee Company of IIFL Mutual Fund. IIFL or its subsidiaries & affiliates may be holding all or any of the units of the scheme(s), referred in the document. The information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of IIFL. While due care has been taken in preparing this document, IIFL and its affiliates accept no liabilities for any loss or damage of any kind arising out of any inaccurate, delayed or incomplete information nor for any actions taken in reliance thereon. 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 jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject IIFL or its affiliates to any registration or licensing requirement within such jurisdiction. IIFL and/or its associates receive compensation/ commission for distribution of Mutual Funds from various Asset Management Companies (AMCs). IIFL hosts the details of the commission rates earned by IIFL from Mutual Fund houses on our website https://ttweb.indiainfoline.com/trade/downloads/brokerage%20file.pdf. Hence, IIFL or its associates may have received compensation from AMCs whose funds are mentioned in the report during the period preceding twelve months from the date of this report for distribution of Mutual Funds or for providing marketing advertising support to these AMCs. IIFL group, associate and subsidiary companies are engaged in providing various financial services and for the said services (including the service for acquiring and sourcing the units of the fund) 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. Please refer to http://www.indiainfoline.com/research/disclaimer and http://www.indiainfoline.com/mf/disclaimer for additional recommendation parameter, analyst disclaimer and other disclosures. Please refer to http://www.indiainfoline.com/research/disclaimer for recommendation parameter, analyst disclaimer and other disclosures. IIFL Group | IIFL Securities Ltd (CIN No.:L99999MH1996PLC132983) IIFL House, Sun Infotech Park, Road No. 16V, Plot No. B-23, MIDC, Thane Industrial Area, Wagle Estate, Thane - 400604. Tel.: (91-22) 2580 6650 *Customer Service: 40071000 *Stock Broker SEBI Regn: INZ000164132 *NSE: 10975 *BSE: 0179 *MCX:55995 *NCDEX:378 *Depository: INDP185 2016 *MF Distributor ARN: 47791, *PMS SEBI Regn.: INP000002213, *Investment Adviser SEBI Regn. : INA000000623, *Research Analyst SEBI Regn:- INH000000248 | Kindly refer to www.indiainfoline.com for detailed disclaimer and risk factors. For Research related queries, write at [email protected] For Sales and Account related information, write to customer care: [email protected] or call on 91-22 4007 1000
40