As on February 29, 2020 Invesco Large Cap Core Portfolio

Equity Market Commentary

Nifty remained volatile during Feb and fell ~7% during the month, as India continued to face a weak macro exacerbated by headwinds to global growth due to risks presented by evolving corona virus situation. India’s perceived limited vulnerability to the virus led to a short-lived bump in Nifty early-Feb, but Indian markets soon fell in line with global cues as the increase in new confirmed cases outside China led to a WHO warning of a possible global pandemic. Back home, US President Donald Trump made his maiden state visit to India but departed without delivering on a trade deal despite years of high-level negotiations. India’s supreme Court rapped telecom companies and government officials for not complying with its order to deposit the statutory dues by January 23, but news of government unlikely to invoke ’s bank guarantees provided some comfort to investors.

In terms of India’s domestic economic activity indicators, barring consumer credit growth, most other indicators like auto sales (wholesale), consumer durable production continues to remain weak. Both FIIs (Foreign Institutional Investors) and DIIs (Domestic Institutional Investors) remained net buyers to the tune of $0.7bn and $2.3bn each in February taking their YTD totals to +$2.1bn and +$2.7bn respectively. DMFs (Domestic Mutual Funds) were net buyers of $0.7bn whereas Domestic Insurance cos. also bought $1.7bn. All sectors, except Telecom (largely supported by ), closed lower, with Realty seeing the biggest fall (down 16%).

Our outlook is still for a modest cyclical economic recovery over the next 12-18 months led by moderately better global growth, steady domestic and improving global liquidity and probable incremental rural tailwinds. This recovery currently however is hostage to the corona virus situation. For now we would like to run with the assumption that while global and local economic activity will stay disrupted, it would settle down in the next 2-3 months. In the very near-term how the Government/RBI handles the reconstruction exercise and the resolution of the telecom imbroglio remains critical for the normalization of the financial sector and will likely induce short term market gyrations. The resultant adverse market reaction in the interim would give investors an opportunity to buy decent businesses as they turn more attractive on valuations.

As the economic cycle improves, market opportunities are likely to widen and investment opportunities may favour mid/small caps during the course of 2020. Mid/Small caps after a considerable underperformance have meaningfully outperformed the frontline index over the past 3-6 months. While we do take a more constructive stance on the economy and markets as a whole, we remain measured in our conduct with regard to portfolio choices. We keep our growth expectations measured while simultaneously increasing the bar on quality of businesses and balance sheets that attract us.

Portfolio Outlook Indian economy has continued to deliver strong real GDP growth over the previous 2 decades as the country has decisively migrated from being an agrarian driven to consumption and manufacturing driven. Opening up of Indian economy to the world has done wonders to the economy as the world has awakened to the Indian talent – starting from IT services to export of cars assembled in India. Simultaneously it has guided a lot of global companies to the Indian consumer who is now capable and willing to spend money.

The consumerism within Indians has started manifesting itself across products and services – fueled by aspirations. Further supporting it, is the fact that per capita GDP income has moved above US$ 2,000 p.a., a level where daily needs are taken care of and discretionary consumption takes off. Ensuring availability of products and services across all pin codes of the country has differentiated winners from losers within corporate India. This has led to opportunities for companies not only selling such products & services but also for those involved in aspects of logistics, infrastructure, software solutions etc. The government has been increasing spend on infrastructure to keep pace with rising needs of roads & ports etc.

This growth has clearly been captured by some of the companies which were ready to change and seize the opportunity. Investing in such companies, one has witnessed a journey of becoming bigger and better – both in terms of market shares and efficiencies. These companies have grown their business faster than the nominal GDP growth of India – even if it meant for them to cross borders. Traversing this journey, profitably, has been a key ingredient to the large wealth creation.

This portfolio endeavors to capture such companies which have not only established themselves in the past but also have a hunger to grow the business faster in future without compromising on profitability standards. In the medium term the slowdown in Indian economy may translate into slower growth for the companies that we own in this portfolio. However, we believe, as we have identified companies that have continued to maintain their leadership through cycles and gained market shares – profitably; these could be the wealth creators of future as well.

As of February 2020, over the previous financial year, the companies in this portfolio have delivered, on portfolio weighted basis, revenue growth of 8% YoY, EBITDA growth of 24% YoY and PAT growth of 40% YoY. The higher growth in EBITDA and PAT compared to sales growth has been contributed by Financial and Commodities sectors. Our understanding of companies in the portfolio suggests that they have a potential to grow the earnings at about 28% CAGR over the period FY19- 21E. The portfolio is available at an average P/E 18.61 on FY21 earnings estimates which we consider attractive from long term investment purpose.

Portfolio Data Source: Factset, Internal. EBITDA: Earnings before interest, taxes, depreciation and amortization. CAGR: Compound annual growth rate. PAT: Profit after Tax. Disclaimer: Past performance may or may not be sustained in future. The estimates expressed herein are based on internal analysis of publicly available information and other sources believed to be reliable. Any such calculations made are approximations, meant as guidelines only. The recipient(s) before acting on any information herein should make his/their own investigation and seek appropriate professional advice. Page 1 of 3 As on February 29, 2020 Invesco India Large Cap Core Portfolio

Investment Objective Investment Strategy To generate steady capital appreciation by ▪ Investment Focus: Large cap stocks & fundamentally stable companies available at attractive valuations investing in companies that are fundamentally ▪ Exposure to companies which have competitive advantage strong and are available at attractive ▪ Blend of growth and value, Bottom up approach to stock selection valuations. ▪ Flexibility to move across sectors, Deviations from benchmark index to generate alpha ▪ Portfolio Composition: 15 – 25 Stocks

Key Facts Indexed Performance (In ₹ Lacs) Portfolio Benchmark 200 171.17 Portfolio Manager & Experience Mr. Amit Nigam Total Experience: 17 yrs. 150 Managing this portfolio since May 16, 2018 94.64 Benchmark Index 100 NIFTY 50

Inception Date 50 September 7, 2004

Performance Attributes 0 Standard Deviation: 3.49% Dec-08 Feb-10 Mar-11 Apr-12 Jun-13 Jul-14 Aug-15 Oct-16 Nov-17 Dec-18 Feb-20 Beta: 0.90 Values rebased to ₹ 25 Lacs, Since January 1, 2009 Sharpe Ratio: 0.15 Cumulative Performance Based on 3 yrs., monthly data points (Risk-free rate of 5.09% based on Overnight MIBOR) In % 1 mth 3 mths 6 mths 1 year 2 yrs. 3 yrs. 5 yrs. 7 yrs. 10 yrs. Since Inc. Portfolio -5.87 -6.59 5.14 6.92 5.76 11.13 8.65 15.15 13.50 N.A Market Capitalization Large Cap: 89.72% Benchmark -6.36 -7.09 1.62 3.79 3.32 8.05 4.70 10.15 8.57 N.A Mid Cap: 0.00% Since Inc.: Since Inception. NA: Not Available Small Cap: 0.00% Calendar Year Performance Average Weighted ₹ 273,452 crs. Market Capitalization: In % YTD 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Median Market ₹ 162,296 crs. Portfolio -8.30 17.00 4.72 33.29 11.82 -0.67 34.11 15.80 29.23 -17.04 21.43 Capitalization: Benchmark -7.94 12.02 3.15 28.65 3.01 -4.06 31.39 6.76 27.70 -24.62 17.95 Source: Bloomberg, Internal Past performance may or may not be sustained in future. The data given above is for model portfolio. Returns up to 1 year are absolute & over 1 year are Compounded Annualized. The returns are calculated on the basis of daily market value of the Portfolio Fundamentals Portfolio. Dividend Yield1 0.30% Price to Earnings1 FY 20 Estimate 23.45 Portfolio Holdings Sector Allocation Price to Earnings1 FY 21 Estimate 18.61 Holding % of Net Assets Sector % of Net Assets Price to Earnings1 FY 22 Estimate 15.58 HDFC Bank Ltd. 9.31 Financials 41.75 Energy 13.11 2 Year EPS CAGR (FY20-FY22)2 20.60% Ltd. 8.75 Ltd. 7.13 Information Technology 9.79 Return on Assets1 FY 20 Estimate 3.17% ICICI Bank Ltd. 7.06 Materials 8.82 Return on Equity1 FY 20 Estimate 19.97% Housing Development Finance Corp. Ltd. 6.35 Communication Services 5.93 Source: Factset, Internal. Ltd. 6.10 Consumer Discretionary 5.74 1. Weighted Harmonic Mean. 2. EPS Growth is derived Consumer Staples 4.58 from P/E ratios. Note: Excludes companies with net Bharti Airtel Ltd. 5.93 loss for appropriate results for various ratios. EPS: Motherson Sumi Systems Ltd. 5.74 Cash & Cash Equivalent 10.28 Earnings per share. Ltd. 4.91 Ltd. 4.88 Ltd. 4.77 Corporation Ltd. 4.36 Indusind Bank Ltd. 4.01 Ltd. 3.46 Returns Attributors/ Detractors for February 2020 ICICI Lombard General Insurance Co. Ltd. 3.12 Top 3 Attributors Ltd. 2.72 United Spirits Ltd. Nestle India Ltd. 1.12 Bharti Airtel Ltd. Total Equity Exposure 89.72 Nestle India Ltd.

Top 3 Detractors Motherson Sumi Systems Ltd. Housing Development Finance Corporation Ltd. Indusind Bank Ltd.

Large Cap:1st100th company in terms of full market capitalization. Mid Cap:101stto 250thcompany in terms of full market capitalization. Small Cap:251stcompany onwards in terms of full market capitalization. All data provided above is for model portfolio. The returns of model portfolio given above are for illustration purpose only. Model portfolio returns does not take into account expenses/charges and Profit/Loss on account of derivative transactions. Returns under client wise portfolio may vary vis‐à‐vis returns of model portfolio due to various factors viz. timing of investment/additional investment in client’s portfolio, timing of withdrawals in client’s portfolio, mandates given by respective client, profit/loss on account of derivative transactions, expenses charged to respective portfolio, dividend income in the respective portfolio etc. The stocks referred above should not be construed as recommendations from Invesco Asset Management (India) Private Ltd. (“IAMI” / “Portfolio Manager”). There has been change in return disclosure format for PMS pursuant to amendment in SEBI Portfolio Managers Regulations 2020, which will be implemented in due course. The Portfolio may or may not have any present or future positions in these stocks or in any other portfolios offered by IAMI. The performance of above stocks should not be construed as performance of the portfolio as the portfolio would be constituted of number of stocks having different weights and the individual stock held by the portfolio may or may not give positive returns. Disclaimer: The Portfolio manager does not offer guaranteed or assured returns. Securities investments are subject to market risks, please read the Disclosure Document carefully before investing. Invesco Asset Management (India) Private Ltd. -Portfolio Manager –Registration No. PM/INP000005273 Page 2 of 3 As on February 29, 2020 Invesco India Large Cap Core Portfolio

New entries in the model portfolio during the month of February 2020

United Spirits Ltd.

▪ United Spirits Ltd. (UNSP) has strong market share (value) of ~50% in spirt market, robust portfolio across price points, strong sales network, wide manufacturing footprint and access to parent portfolio. ▪ Targeted market activation strategy for premium portfolio and franchise route for non-premium portfolio will boost operating profits and ROCE on sustainable basis. ▪ Continuing efforts to drive out cost efficiencies and productivity –optimizing employee strength, manufacturing footprint, glass bottle sourcing and ethanol outsourcing, etc. ▪ Superior EBIDTA growth over revenue, and lower working capital cycle along with debt reduction via sale of non-core assets would help UNSP to improve ROE from 8% (FY15-17) to upwards of 30% over mid to longer term.

Exits in the model portfolio during the month of February 2020

I T C Ltd.

▪ Steep increase in indirect tax announced in budget FY20 is a departure from our investment argument which in turn will hurt volume growth and encourage illicit trade. ▪ Despite significantly higher investments in non-cigarette FMCG business than competition, the revenue traction is not significantly superior to competition. ▪ Capital allocation continues to remain weak; hence we have exited the stock.

Data Source: Internal, Bloomberg ROCE: Return on Capital Employed, EBITDA: Earnings before interest, tax, depreciation and amortization, ROE: Return on Equity Disclaimer: Past performance may or may not be sustained in future. The estimates expressed herein are based on internal analysis of publicly available information and other sources believed to be reliable. Any such calculations made are approximations, meant as guidelines only. The stock referred above should not be construed as recommendation, advice to buy, sell or in any manner transact in this stock and neither should it be considered as Research Report from IAMI. IAMI may or may not have any present or future positions in this stock or in any other portfolios offered by IAMI The performance of above stock should not be construed as performance of IAMI portfolio offerings as each portfolio would be constituted of number of stocks having different weights and the individual stock held by the portfolio may or may not give positive returns.The recipient(s) before acting on any information herein should make his/their own investigation and seek appropriate professional advice. Disclaimer: This document does not solicit any action based on the material contained herein. Invesco Asset Management (India) Private Ltd. (“the Portfolio Manager / the Company”) will not treat recipients as clients by virtue of their receiving this document. The document does not constitute a personal recommendation or take into account the particular investment objectives, financial situation / circumstances and the particular needs of any specific person who may receive this document. The Companies / Stocks referred in this document are only for the purpose of explaining the concept of Portfolio and should not be construed as recommendations from Portfolio Manager. The Portfolio may or may not have any present or future positions in these stocks / sector. The Portfolio(s) discussed in the document may not be suitable for all the investors. The recipient of this material alone shall be fully responsible / liable for any decision taken based on this material. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Persons who may receive this document should consider and independently evaluate whether it is suitable for his / her / their particular circumstances and are requested to seek professional / financial advice. Past performance is not a guide for future performance. Future returns are not guaranteed, and a loss of principal may occur. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. The Company and its affiliates accept no liabilities for any kind of loss arising out of the use of this document. With respect to all information found in this document the Company has obtained data from sources it considers reliable however, the Company and its directors, officers, agents, or employees and its affiliates make no warranty, express or implied, including the warranties of merchantability and fitness for a particular purpose, or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information contained therein and the Company shall not be liable for any indirect, incidental or consequential damages sustained or incurred in connection with the use, operation, or inability to use this document and information contained therein. Under no circumstances will the Portfolio Manager be liable for any loss or damage caused by anyone’s reliance on information contained in this document. The Portfolio Manager does not offer guaranteed or assured returns. Securities investments are subject to market risks, please read the Disclosure Document carefully before investing. Page 3 of 3