IIFL MULTICAP ADVANTAGE PMS (Portfolio Management Service) May 2019

Strategy Objective The portfolio manager is to take a concentrated position in portfolio of 20-25 stocks with a bias towards Large cap stocks# with an objective of generating wealth over long period. At the same time hedge the portfolio using At the Money Nifty 50 Put option to safeguard against downside risk. Investment Allocation: Equity Investment – up to 100% of corpus Put Options (for Hedging) – up to 8% of Corpus* Liquid schemes of Mutual funds and other securities as per discretion of Portfolio Manager

#Portfolio as of 31st May‘19 has a large cap weightage of over 67% *In case put options are not available in the suitable lots to hedge the equity investment(s), the Portfolio Manager may invest in available lots which may result in either hedge exposure (i.e. contract value of put option) exceeding the value of equity investment(s) or hedge exposure being lesser than value of equity investments (upto 8%). The Portfolio Manager has discretion to buy Put options across tenors (1-3 years).

Investment Philosophy - The SCDV Framework

Cyclical Growth (C) Secular Growth (S) Core Portfolio: S Capital Goods Auto & Auto Ancillaries Cement Consumer Discretionary Merck Private Corp Banks Private Retail Banks Bajaj Finance Infrastructure Non-Banking Financial Co. Logistics HDFC Bank More than More Insurance Metals Retail Oil & Gas Downstream Muthoot Finance 15% PAT Growth PAT Tactical Allocation: C & D

Value Traps (V) Defensive Growth (D) ICICI Bank RBL PSU Banks Consumer Staples Oil & Gas – Upstream Healthcare Infosys Telecom IT Services

Utilities - Power Media Biocon Less than Less Credit Access Grameen

Less than More than 15% Avoid Allocation: V SBI^

Return on Equity

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 ^SBICyclical is in Value (PAT>15%, Trap due ROE to �inancial <15%) –Companies/performance inSectors the past that but show the highrecent growth data is but positive are affected and is byexpected market to cycles improve hence further 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

Booked some gains in Merck Ltd and reduced portfolio weightage in same. Investors would be getting Rs 440 per Merck Reduced share dividend from Merck Ltd which should be paid out by the company by end of June’19

Reduced exposure to Emami Ltd as we continue to see consumer facing companies with low single digit growth and Emami Reduced this could continue for a couple of more quarters. We continue to hold Emami with a reduced weightage exposure and would be looking to add more weight at much lower levels.

We have exited from Yes Bank as we see prolonged stress on books and sluggish growth in the earnings as against Yes Bank Exited our earlier believe that things would turn around soon with the new management in place. Moreover we got concerned post the announcement of the appointment of the RBI observer on the board of Yes Bank

Increased weightage to Axis Bank as we see it one of the better valued corporate banks whose books have shown Axis Bank Added between ICICI Bank, Axis Bank and SBI to 15% in the portfolio signi�icant improvement. Addition of Axis Bank is part of our strategy to take the total exposure to corporate banks

CG Consumer Electricals Added We are continuing to add our exposure to the new position in CG Consumer which we had incorporated in the portfolio last month. We had said we would gradually building up exposure in the same

We continue to build onto our positions in capital goods & infra space through adding weightage to L&T in line with Larsen & Toubro Added our earlier view of improving order execution and pick up in private and public capex from second half of the year

IIFL Asset Management Limited (Portfolio 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 • Website: www.ii�lamc.com • CIN: U74900MH2010PLC201113 IIFL MULTICAP ADVANTAGE PMS (Portfolio Management Service) All data are as on May 31, 2019 and denominated in INR

Investment Theme & Strategy Performance (%) The objective of the strategy is to generate long Strategy/Benchmark 1 Month 3 Months 6 Months 1 Year 2 Years Since Inception term capital appreciation for investors from a portfolio of equity & equity related securities. IIFL Multicap Advantage PMS 3.95 10.98 16.88 14.65 NA 10.68 The investment strategy is to invest in companies and in sectors that are available at S&P BSE 200 TRI 1.56 9.53 8.22 8.41 NA 8.66 As IIFL Multicap Advantage PMS Strategy invest in long dated options which are not very liquid, the valuation of the said option is received from Independent provide earnings visibility. The strategy takes a signi�icant discount to their intrinsic value and concentrated position in stocks and due to multiple market factors, resulting in difference in pricing of the options, impacting the performance. As per the PUT Option price as on 31st May 2019, the returnsValuation mentioned Agencies (CRISIL)above across identi�ied period by would the Portfolio vary upto Manager. ~0.5% The on lower quotes side. received Returns for lesspurchase than oneand yearsale ofare the on said absolute option basis. provided Returns by the less Option than oneprovider year arevaries on endeavours to strategically change allocation absolute basis. Past performance may or may not be sustained in future. between sectors depending on changes in the Returns less than one year are on absolute basis. Past performance may or may not be sustained in future. business cycle. Historical Performance of Other Equity Strategies managed by the Portfolio Manager (%)

Strategy/ Benchmark 1 Year 2 Years 3 Years Since Inception Key Terms IIFL Multicap PMS 17.88 15.26 19.95 19.44

S&P BSE 200 TRI 8.41 10.82 14.59 10.26 Inception Date December 1, 2017 Returns more than one year are on compounded annualised basis. Past performance may or may not be sustained in future.

Sector - Top 6 Holdings Market Capitalization Bloomberg Ticker NA Small Cap, Banking & Financial 39.87% 10.03%

IT & IT Services 16.97% Mid Cap, Benchmark Index S&P BSE 200 TRI Pharma 11.69% 16.76%

Consumer Discretionary 7.90%

Capital Goods & Infra 6.26% Large Cap, Utilities 2.87% 67.48%

Schedule of Charges 0% 25% 50%

Portfolio – Top 10 Holdings (%) Risk Ratios Management As per executed Fee termsheet Company Weightage Beta 0.72 HDFC BANK LTD 7.47 MERCK 7.02 Sharpe Ratio 0.36 Exit Load As per executed BAJAJ FINANCE LTD 6.88 termsheet STATE BANK OF INDIA 5.97 Information Ratio* 0.61 ICICI BANK LTD 5.74 INFOSYS LIMITED 5.53 Treynor Measure 0.02 Minimum Rs. 27 lakhs Investment WIPRO 4.79 Volatility** 15.04% Amount RBL BANK LIMITED 4.23 LARSEN & TOUBRO LTD 3.40 All risk ratios are calculated since inception AXIS BANK LTD 3.36 *Information Ratio is a ratio of portfolio returns above the returns of a 10300 Dec2020 Put option 1.97 benchmark index to the volatility of those returns. Portfolio Manager **Volatility measures the risk of a security by using the standard deviation of CASH 3.76 the asset returns. IIFL Asset Management Limited (IIFL AMC)

Top Gainers in Equity (Since Inception) Performance Top losers in Equity (Since Inception) Performance

Strategy Manager Profile MERCK 197.04% TATA MOTOR DVR (60.09%) - Aniruddha Sarkar BAJAJ FINANCE LTD 100.75% QUESS CORP (30.92%)

Aniruddha Sarkar, Strategy Manager for IIFL CREDIT ACCESS GRAMEEN LIMITED 89.65% CESC LTD (26.48%) Multicap PMS, has over a 13 years of experience in the Financial Services sector. He is associated NAV Movement with IIFL Wealth Management Group for 11 years and has been involved in identifying IIFL Multicap Advantage PMS S&P BSE 200 TRI 12.00 investment ideas across various sectors and market-caps that can generate alpha for the

investors. He has been one of the key members 11.00 involved in setting up the entire equity advisory desk at IIFL Wealth. Prior to working with IIFL Wealth, he was working with a UK 10.00 based hedge fund. He holds an MBA in Finance from IMI, New Delhi and a Bachelor’s degree in Commerce from St. Xavier’s College, Calcutta. 9.00 01-Dec-2017 01-Jun-2018 30-Nov-2018 31-May-2019

NAV shown is for the model portfolio. NAV of 10 assumed on the inception date (01-Dec-2017)

IIFL Asset Management Limited (Portfolio Manager) Regd Off: 6th Floor, IIFL Centre, Kamala City, Senapati Bapat Marg, Lower Parel, Mumbai -400 013

Portfolio Holdings Valuation Matrix

P/E P/B ROE EPS S. No Company CAGR FY18A FY19e FY20e FY21e FY18A FY19e FY20e FY21e FY18A FY19e FY20e FY21e (FY18-21)

1 MERCK 61.38 61.45 36.50 31.72 8.08 4.05 7.83 6.28 13.4% 8.8% 14.6% 22.0% 24.6%

2 HDFC BANK 35.14 30.59 25.19 20.89 6.00 4.44 3.90 3.39 17.9% 16.5% 16.1% 17.0% 18.9%

3 BAJAJ FINANCE 69.97 44.89 34.72 28.30 11.28 9.23 7.48 6.06 20.4% 22.6% 23.8% 23.7% 35.2%

4 INFOSYS 19.67 20.46 18.61 16.73 4.86 4.85 5.22 4.84 24.5% 23.7% 27.0% 30.0% 5.5%

5 ICICI BANK 28.44 48.67 13.02 10.82 2.02 1.96 1.73 1.52 6.6% 3.7% 12.9% 13.8% 38.0%

6 STATE BANK OF INDIA -30.96 60.56 8.88 7.08 1.07 1.06 0.95 0.85 -3.5% 1.8% 11.5% 12.9% 63.5%

7 WIPRO 16.70 19.04 17.00 15.77 2.77 2.25 1.94 2.26 16.1% 13.0% 12.3% 13.3% 1.9%

8 RBL BANK 44.42 33.09 26.97 19.70 4.22 3.80 2.75 2.45 11.5% 12.2% 12.3% 13.1% 31.1%

9 BIOCON 109.10 44.39 25.63 20.21 7.09 6.19 5.24 4.34 13.5% 14.9% 22.1% 23.5% 75.4%

10 TECH MAHINDRA 18.64 16.52 14.76 13.05 3.72 3.18 2.78 2.44 21.3% 20.7% 20.1% 19.9% 12.6%

11 MUTHOOT FINANCE 14.00 12.30 10.54 9.17 3.10 2.64 2.25 1.92 24.1% 23.2% 23.0% 22.6% 15.2%

12 CREDIT ACCESS GRAMEEN 43.44 21.10 15.54 10.53 4.73 3.17 2.69 2.20 11.8% 16.8% 16.8% 20.6% 60.4%

13 SRF 33.04 22.12 20.32 15.35 3.94 3.42 3.01 2.58 11.9% 15.5% 14.8% 16.8% 29.1%

14 PETRONET LNG 17.04 14.53 12.84 11.80 3.65 3.19 2.82 2.54 21.4% 21.9% 22.0% 21.6% 13.0%

15 SIEMENS 47.47 42.81 36.56 31.17 5.11 4.77 4.40 4.05 10.8% 11.1% 12.0% 13.0% 15.0%

16 ASIAN PAINTS 67.65 59.07 46.94 39.36 16.40 14.51 12.74 11.20 24.2% 24.6% 27.2% 28.5% 19.8%

17 QUESS CORP 34.60 38.36 26.15 20.07 4.30 3.93 3.43 2.94 15.4% 10.7% 14.0% 15.8% 19.9%

18 EMAMI 33.25 32.62 27.99 24.18 8.52 8.47 8.17 7.80 25.6% 26.0% 29.2% 32.3% 11.2%

19 AAVAS FINANCIERS 89.69 54.34 38.78 28.61 7.01 5.13 4.53 3.91 10.6% 11.5% 12.4% 14.7% 46.4%

20 AXIS BANK 70.50 41.62 19.20 15.53 3.06 2.92 2.34 2.06 0.5% 7.2% 14.0% 14.1% 256.8%

21 CESC 8.00 7.87 6.60 6.09 0.83 0.98 0.87 0.78 10.3% 12.5% 13.2% 12.7% 9.5%

22 ULTRATECH CEMENT 0.00 51.62 41.29 32.26 4.45 3.77 3.46 3.12 8.8% 7.9% 8.7% 10.2% 13.3%

23 CROMPTON GREAVES 45.18 38.87 31.41 25.57 18.53 13.99 11.59 9.46 41.0% 36.0% 36.9% 37.0% 20.9% CONSUMER

24 LARSEN & TOUBRO 26.73 22.61 18.71 16.17 3.48 3.10 2.73 2.40 13.0% 13.7% 14.6% 14.8% 18.2%

25 CIPLA 32.23 30.82 25.75 21.28 3.12 2.89 2.65 2.41 10.5% 9.7% 10.7% 11.9% 14.8%

26 TATA MOTORS 5.21 -2.18 9.36 7.46 0.74 1.19 1.12 1.02 7.2% -54.3% 12.0% 13.4% -11.3%

27 L&T INFOTECH 25.06 18.62 16.22 14.06 7.26 5.86 4.80 3.97 34.2% 34.9% 32.5% 30.9% 21.2%

Source : IIFL AMC Research’

IIFL Asset Management Limited (Portfolio Manager) Regd Off: 6th Floor, IIFL Centre, Kamala City, Senapati Bapat Marg, Lower Parel, Mumbai -400 013

Commentary Curtains have been drawn on the greatest exercise of democratic rights in the World and we have a clear winner in Mr Modi with a bigger mandate than before. With the nation being in the grip of election drama for over a year now spread across state elections and culminating with the central government elections, we had seen

signi�icant swings in popularity of the incumbent BJP government and markets were nervous about the �inal mandate. We cannot overstate the signi�icance of this political outcome from a continuity perspective. While the �irst term of the government went into setting the house in order and policy announcements, we believe the second term would be more dynamic and would involve strong growth push and effort to �ire up India’s growth engine and address unemployment issues.

increasinglyMuch was achieved play out in inthe the �irst years term ahead, to improve some India’s further productivity key productivity and growth boosting pro�ile reforms including are theneeded implementation in the land ofand GST, labour Corporate markets, Insolvency and these Resolution reforms Law,have JAM the potentialTrinity (Jan to takeDhan, India Aadhar to a &different Mobile), trajectory improving of the growth ease altogether.of doing business and the opening of the economy to greater FDI. Whilst many bene�its of these reforms will When talking of growth, it would not be right on our part to not highlight the current slowdown in the economy. Economy is going through a rough patch currently and we could attribute some part of that to the delayed spending by both consumers and corporates due to the elections. However one major reason for the slowdown is related to the credit supply issues (NBFC stress and PSU bank constraints) and liquidity in the system owing to tight monetary conditions in the system which is hitting credit demand. We believe the most important task at hand for the government and RBI would be to resolve the liquidity crisis in the system and kick off credit growth. We also believe both private and public capex would pick up in the second half of the year. Unemployment is another animal which needs attention. Unemployment numbers are at its worst in several decades and is one major pain point for the government.

wage growth has also risen by ~8% in FY19, lower than 10-year average. Low wage growth leads to lower purchasing power translating into low demand thus effectivelyWhile low foodslowing prices down have consumption kept the CPI in in�lation the economy. levels Welow expectfor the the past ‘counter-cyclical’ �ive years, so have spending been the by rural the government wage growth for which boosting averaged aggregate below demand 3% mark. to continue Private sector along with pro-growth policy announcements in a declining interest rate environment which should provide support to medium term earnings outlook.

Portfolio performance during the month During the month of May’19, the IIFL Multicap Advantage PMS portfolio was up by 3.95% as compared to BSE 200 TRI Index rising by 1.56% and Nifty-50 rising by 1.49%. During the last 6 months the portfolio has gained by 16.88% as compared to BSE-200 TRI rising by 8.22% and Nifty-50 rising by 9.62%. The PMS portfolio has been outperforming the benchmarks consistently over all time periods tabulated above and the Portfolio manager aims to generate favorable risk adjusted returns for the portfolio in all time periods and it’s been our focus to ensure the portfolio gets the best risk adjusted returns in all time periods.

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.

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 orThis indicative document returns is for throughinformational these services.purposes The only returns and should mentioned not be anywhere regarded in as this an offerdocument to sell are or notas apromised solicitation or guaranteedof an offer toin buyany themanner. securities While or utmost other careinvestments has been mentioned exercised while in it. Allpreparing opinions, this �igures, document, charts/graphs, 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.

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 Returns are dependent on prevalent market factors, liquidity and credit conditions. Strategy returns depicted are in the current context and may be signi�icantly different in the future. The contents of this document should not be suited to all categories of investors. Recipient shall understand that the aforementioned statements cannot disclose all the risks and characteristics. exclusive and con�idential 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

availability or use would be contrary to law, regulation or which would subject IIFL AMC to any registration or licencing requirement within such jurisdiction. 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,

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 transactsIIFL Asset through Management and maintain Limited dematand its account(s) group and withassociate IIFL Securitiescompanies Limited are engaged (associate in providing broker &various depository �inancial participant) services and IIFLfor the Wealth said servicesManagement may earnLimited fees (Holding or remuneration Company in of form IIFL ofAMC). arranger fees, referral fees, advisory

IIFL Asset Management Limited (Portfolio 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 • Website: www.ii�lamc.com • CIN: U74900MH2010PLC201113