2. 2
Source: Inventions , Inventions , Vaccination data
Thermometer
Open Heart Surgery
X-Rays
Cardiac Pacemaker
CT Scan& MRI Artificial Heart Genomics
Time taken for
vaccine innovation
has reduced
drastically
Polio 47 years COVID 1 year
Typhoid 105 years
Wireless brain
sensors
Evolution
3. 3
S&P 500, Stoxx 600, Topix 500, SHCOMP+SZCOMP, KOSPI 500 and Nifty 500 indices are considered for USA, Europe, Japan, China, South Korea and India respectively.
Data as on May 23. Source: Investec, DSP. Bubble size indicates market capitalization of healthcare sector of that country’s broad equity market.
Indices are managed and used for illustrative purposes only and are not intended to be indicative of any fund’s performance. It is not possible to invest directly in an index
USA, 5,105
Europe, 2,139
Japan, 429
China, 959
Korea, 94
India, 156
0%
5%
10%
15%
20%
4% 6% 8% 10% 12% 14% 16%
Healthcare
Market
cap
CAGR
10-Year
Weight in broad equity index of the country
• India’s healthcare market cap has
grown at a decent ~9% in the last
10 years.
• Today, share of healthcare is ~5%
of the total market capitalization
in India, is one of the lowest
compared to it’s developed and
Emerging Market peer countries.
• Over time India’s focus on
healthcare may enable bridge
this gap versus other markets.
Lower weight in Equity Index than peers, can it change?
4. 4
2.5
2.1
1.5
FY10 FY21 FY25F
Govt. Health expenditure % of GDP
Declining ‘out of pocket share’ due
to increasing insurance penetration
2000 2010 2019
72
65
55
15 12 11
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Health insurance Collection (₹)
0
100
200
300
400
500
600
700
Billions
FY19 FY20 FY21 FY22
Rising FDI in healthcare is a catalyst
0
100
400
600
800
1000
1200
USD
Million
Medicinal &
Surgical Appliances
Hospitals &
Diagnostic Sectors
Drugs &
Pharmaceuticals
Source: IRDAI Annual Handbook, GI Council for FY21-22, World Bank, Bloomberg , IBEF
Why is healthcare a structural theme? (1/2)
INDIA
USA
12% CAGR
5. 5
Why is healthcare a structural theme? (1/2)
Source: FRED, World bank. Data as on 2022.
Prosperity may come with high medical costs
0
10
20
30
40
50
60
70
0
5
10
15
20
25
30
35
40
45
Per
Capita
GDP
(PPP)
Thousands
CPI
rebased
to
100
Hundreds
CPI Medical care (USA) CPI (USA) Per Capita GDP (USA)
India’s current Per capita GDP
(~6500)
INDIA
USA
6. 6
Thematic but Diversified
Source – DSP Internal. The sector(s)/stock(s)/issuer(s) mentioned in this document do not constitute any research report/recommendation of the same and the scheme(s)/ Fund may or may not have any future position in these
sector(s)/stock(s)/issuer(s). All logos used in the image are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them. Data as on May 2023
Can be huge scope for
private players because
of increasing awareness
and low penetration
levels (<30%)
$9bn 2%
Health Insurance
Evolving and new area
of pharma innovation
Genetic Research
3%
$10bn
Medical device segment
opportunities are less in India.
In US, the sector has shown
EBITDA Growth of >9% in last
10 years
Global Medical Equipment
8%
$430bn
Unorganized accounts for
45% of market. Can be huge
beneficiary from unorganized
to organized market shift
Diagnostics
3%
$11bn
Capex cycle abating may
lead to better RoCE
Hospitals
10%
$70bn
Can be huge opportunity for
growth available for companies
that are focused on right approach
of capital allocation and business
model
Generic API
7%
$14bn
Most innovator pharma companies are
likely to be interested in asset light
model and hence prone to increasing
outsourcing
CDMO
4%
$120bn
Consistent earnings, high RoCE and
cash flow generation
India Formulations
33%
$20bn
New launches, market share gains
for existing products and
consolidation can help to drive
exports to US, Europe
Exports Formulations
30%
$20bn
Global + Domestic Approximate Market
size
Global
Approximate weight in DSP
Healthcare Fund
Domestic
7. 7
Exit Process
How we do it
Portfolio Construction
Entry
Objective
Parameters
Management
Assessment
Due
Diligence
Valuation
• Forensic Analysis
• Channel Checks
• Peer Comparisons
• Employee Feedback
• Credible
• Capable
• History of Capital
Allocation
• Corporate Governance
• Profitability Ratios
• Cash Flows
• Growth
• Operating Leverage
• Imminent Change
in these Parameter
Difference between Intrinsic
Value & Price ‘True’
Addressable Market
Structural vs. Cyclical
Opportunity
Liquidity considered for stock
sizing
Maintain judicious balance
between sub-segments
Identifying Business cycles - growth, value, TA, stability
Investment thesis does not play out as anticipated in the
expected time frame
1
Stockis near peakearnings
and peakmultiples.
2
3
Mistakes in capitalallocation
A large and expensive
acquisition with synergies
that are difficult to achieve
A large capital expenditure
without line of sight to a
reasonable return
on investment
Capex in unrelated
activities that
have questionable odds
of success
3.1 3.2 3.3
For objective parameters: companies preferred with >12% Return on Invested Capital (ROIC), >10% EBITDA growth and Operating Cash Flows of ~50% of EBITDA.
Disclaimer: The investment approach / framework/ strategy mentioned herein is currently followed by the scheme(s) and the same may change in future depending on market conditions and other factors.
8. 8
Earnings growth Price growth
Source: Bloomberg, MFIE. Data as on May 2023
Indices are managed and used for illustrative purposes only and are not intended to be indicative of any fund’s performance. It is not possible to invest directly in an index | Past performance may or may not be sustained in
the future and the same should not be used as a basis for comparison with other investments.
Why Healthcare – Consistent Earnings (1/3)
0
100
200
300
400
500
600
Jan-10
Sep-10
Jun-11
Feb-12
Oct-12
Jul-13
Mar-14
Dec-14
Aug-15
May-16
Jan-17
Oct-17
Jun-18
Feb-19
Nov-19
Jul-20
Apr-21
Dec-21
Sep-22
May-23
Index
Rebased
to
100
S&P BSE Healthcare TRI Nifty 50 TRI
50
100
150
200
250
300
350
CY22
CY21
CY20
CY19
CY18
CY17
CY16
CY15
CY14
CY13
CY12
CY11
EPS
rebased
to
100
Nifty 50 S&P BSE Healthcare
Healthcare has performed better over long term organically with earnings growth
9. 9
Why Healthcare –Lower Volatility (2/3)
5 year rolling returns 10 year rolling returns
Source: MFIE. Data from 23 August 2004 to 31 May 2023. S&P BSE Healthcare TRI data is available since 23 August 2004.
Indices are managed and used for illustrative purposes only and are not intended to be indicative of any fund’s performance. It is not possible to invest directly in an index | Past performance may or may not be sustained in
the future and the same should not be used as a basis for comparison with other investments.
S&P BSE Healthcare
TRI
S&P BSE Sensex TRI S&P BSE Healthcare
TRI
S&P BSE Sensex TRI
Median 13.3% 12.9% 15.1% 12.0%
Minimum -7.7% -0.3% 8.4% 5.6%
Standard Deviation 7.9% 5.3% 2.9% 3.1%
History depicts higher the holding period, lesser the volatility and higher the returns
6%
0% 0% 0%
18%
30%
1%
29%
52%
60%
91%
71%
24%
10% 9%
0%
S&P BSE Healthcare TRI S&P BSE Sensex TRI S&P BSE Healthcare TRI S&P BSE Sensex TRI
5 Year 5 Year 10 year 10 year
Return Distribution
Less than 0% 0% to 10% 10% to 20% Higher than 20%
10. 10
Why Healthcare – Supportive Valuations (3/3)
BSE Healthcare Index is trading at 10% discount compared to a 10% premium on an average with Nifty on EV-to-EBITDA basis
Source: MFI , Bloomberg. Data as on May 23. Indices are managed and used for illustrative purposes only and are not intended to be indicative of any fund’s performance. It is not possible to invest directly in an index | Past
performance may or may not be sustained in the future and the same should not be used as a basis for comparison with other investments.
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
0.00
5.00
10.00
15.00
20.00
25.00
Dec-12
Apr-13
Aug-13
Dec-13
Apr-14
Aug-14
Dec-14
Apr-15
Aug-15
Dec-15
Apr-16
Aug-16
Dec-16
Apr-17
Aug-17
Dec-17
Apr-18
Aug-18
Dec-18
Apr-19
Aug-19
Dec-19
Apr-20
Aug-20
Dec-20
Apr-21
Aug-21
Dec-21
Apr-22
Aug-22
Dec-22
Apr-23
Premium/Discount
EV/EBITDA
BSE HC Index Premium/Discount Average
11. 11
-2.87
-
0.00 2.87
-2.94
-
0.00 2.94
-6.36
-
0.00 6.36
-6.97
-
0.00 6.97
-7.88
-
0.80 8.68
5.95
-
6.62 0.66
4.60
-
5.09 0.49
4.22
-
4.22 0.00
3.72
-
3.72 0.00
3.46
-
6.53 3.07
Why DSP – Truly Active (1/3)
Source: DSP Internal, FactSet, MFI. Data as on May 2023. The portfolio of the scheme(s) is subject to changes within the provisions of the Scheme Information document of the scheme(s). The sector(s)/stock(s)/issuer(s)mentioned
in this document do not constitute any research report/recommendation of the same and the scheme(s)/ Fund may or may not have any future position in these sector(s)/stock(s)/issuer(s).All logos used in the image are
trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them
Top 10 Active Weight
DSP Healthcare Fund %
Category Average %
DSP Healthcare Fund %
Benchmark %
Category Average %
Large Cap
53
50
40
Small Cap
16
22
21
Mid Cap
28
25
25
0
10.8
International
Portfolio
Break-Up 56
Active share
39
20
Off benchmark
6
Portfolio Weight %
Benchmark Weight %
Overweight %
Underweight %
12. 12
Why DSP - Global Exposure (2/3)
In CY2021 1.5m surgeries were undertaken
using the 6300 Intuitive’ s robot system
installations.
Abbott has sold tests worth $20bn
related to Covid over a period in
2020-2022. Abbott’s nutrition
brands like Pediasure are household
names globally
Medical Devices Genomics
Is a one of the few spine
implant companies with its
own system for robot assisted
surgeries.
is a global leader in the next
gen gene sequencing
technology and has been
instrumental in making gene
sequencing affordable and
more widely available.
Is also playing a pivotal role to
find cures for complex diseases
like ALS, Parkinson’s,
Alzheimer’s.
provides a low cost exposure to
global companies involved in genetic
research and biotechnology.
Source: DSP Internal
13. 13
13
Why DSP – Outperformance & lower drawdowns (3/3)
1 YEAR 3 YEAR
2 YEAR
DSP Healthcare Fund
S&P BSE Healthcare
TRI
Category Average
YTD
Source: MFI, Data as on May 2023. Indices are managed and used for illustrative purposes only and are not intended to be indicative of any fund’s performance. It is not possible to invest directly in an index | Past performance may or
may not be sustained in the future and the same should not be used as a basis for comparison with other investments. Refer page no. 15 for performance in SEBI prescribed format and other schemes managed by same fund manager.
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
Nov-18 Feb-19 May-19 Aug-19 Nov-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 May-22 Aug-22 Nov-22 Feb-23 May-23
S&P BSE Healthcare TRI DSP Healthcare Fund
9.8% 2.9% 19.2% 1.2%
6.2% -1.1% 15.5% 3.1%
6.5% -0.7% 14.7% 2.4%
DSP Healthcare fund has had lower drawdowns compared to it’s benchmark
14. 14
Fund Product Suitability Scheme Riskometer
Benchmark Riskometer
S&P BSE HEALTHCARE TRI
DSP Healthcare Fund
(An open ended equity scheme
investing in healthcare and
pharmaceutical sector)
This open ended equity scheme is
suitable for investors who are
seeking*-
• Long term capital growth
• Investment in equity and equity
related Securities of healthcare
and pharmaceutical Companies
*Investors should consult their financial advisors if in doubt about whether the product is suitable for them.
Disclaimers
15. 15
Disclaimers -Performance in SEBI Format (Growth Option)
Growth option considered. Data as on 31 May 2023
Fund Managers
• Vinit Sambre – Managing since Nov
2018
• Chirag Dagli – Managing since Dec 2020
• Jay Kothari – Managing since Nov 2018
16. 16
Disclaimers –Performance of other schemes managed by same fund manager
Growth option considered. Data as on 30 Apr 2023
Offshore funds managed by Vinit
Notes:
1.Past performance may or may not be sustained in the future.
2.Above performance of permitted category FPI portfolio is not comparable with the performance of the scheme(s) of DSP
Mutual Fund due to differing investment objective/s and fundamental differences in asset allocation, investment strategy and
the regulatory environment.
3.The said disclosure is pursuant to SEBI Circular No. Cir/IMD/DF/F/2012 dated February 28, 2012 pertaining to Regulation
24(b) of SEBI (Mutual Funds) Regulations, 1996. FPI – Foreign Portfolio Investor.
4.Returns upto 1 year are absolute and >1 year are compounded annualised (CAGR).
5.If the base currency of the permitted cateogry FPI portfolio and respective benchmark is in the currency other than INR,
then the base NAV is converted to INR (used for performance calculations) using USDINR closing rate sourced from Bloomberg
17. 17
Growth option considered. Data as on 31 May 2023
Disclaimers –Performance of other schemes managed by same fund manager
18. 18
Growth option considered. Data as on 31 May 2023
Disclaimers –Performance of other schemes managed by same fund manager
19. 19
This document is for information purposes only. In this material DSP Asset Managers Private Limited (the AMC) has used information that is publicly
available, including information developed in-house. Information gathered and used in this material is believed to be from reliable sources. The statements
contained herein may include statements of future expectations and other forward-looking statements that are based on prevailing market conditions /
various other factors 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. While utmost care has been exercised while preparing this document, the AMC nor any person
connected 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. The recipient(s) before acting on any information herein should make his/their own investigation and seek appropriate professional advice.
Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. All opinions, figures,
charts/graphs and data included in this document are as on May 31, 2023 (unless otherwise mentioned) and are subject to change without notice. There is
no assurance of any returns/capital protection/capital guarantee to the investors in this/these scheme(s) of DSP Mutual Fund. For scheme specific risk
factors, Asset Allocation details, load structure, investment objective and more details, please read the Scheme Information Document and Key Information
Memorandum of the scheme(s) available on ISC of AMC and also available on www.dspim.com.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully
Disclaimers
