ABSL Special Opportunities Fund - Presentation (002)_1.pdf

Aditya Birla Sun Life AMC Ltd.
NFO Opens: 5th Oct 2020 | NFO Closes: 19th Oct 2020
Aditya Birla Sun Life
Special Opportunities Fund
An open ended equity scheme following special situations theme

Every challenge, every adversity,
contains within it the seeds of
opportunity and growth
~ Roy T. Bennett
(Author of The Light in the Heart)
‘‘
‘‘

500
3000
5500
8000
10500
13000
Equity creates wealth over the long term…
Nifty 50 TRI has been considered as proxy for equity. Source: Bloomberg
Equity has grown 10X in last 25 years!

500
3000
5500
8000
10500
13000
However, journey of Wealth Creation is never smooth…
Asian Financial
Crisis
Dotcom
Bubble
+
9/11
Global Financial
Crisis
Eurozone
Debt Crisis
BREXIT
Announcement
COVID-19
US China
Trade War
Great Fall of China
Demonetization
Kargil
War
SARS
Outbreak
Taper Tantrum
BJP lost in
Election
D
Nifty 50 TRI has been considered as proxy for equity. Source: Bloomberg

Different Countries, Industries or Businesses face challenges at different times…
Silver lining of these challenges create Special Situations Opportunity for those who dare to see it.
Source: Newspapers Reports

“Special Situations” create these Special Opportunities
➢ Special situation refers to unique challenges
that a business, sector or an economy may
face.
➢ Special situation leads to temporary dislocation
in price, creating wonderful investing
opportunity.
Normalcy
Uncertainty Crisis
Special
Opportunities
Management
Quality
Event
Known Unknown
High
Low
Price Dislocation
Low High

The above list is illustrative and not exhaustive; there are several other opportunities that may give rise to special situations
Special
Situations
can arise from…
Company Specific
Events
Industry Specific
Events
Regulatory
Changes
Global
Events
Macro-Economic
Changes

Management Change/
M&A/Corporate
Restructuring
Unfavourable
macro/business
cycle
Product line
changes/
disruptions
1 Company Specific Events
Certain events that can impact the trajectory of growth…

Case Study: Regulatory Disruption - Nestle India
➢ In June 2015 news of excess lead content found in Maggie
broke out
➢ Between 5 June and 1 September 2015, over 35,000 tonnes
of Maggi noodles were withdrawn and destroyed
➢ Share price of Nestle collapsed by ~29% within a few
months on panic selling and soared up by ~258% after the
issue was resolved
Price Performance
4500
9500
14500
19500
Nestle India Ltd
From To Nestle India Nifty TRI
27-May-15 29-Feb-16 -29% -15%
29-Feb-16 27-Apr-20 258% 40%
Source: Bloomberg, Investor Presentation, Newspaper
A case study for illustration purpose only. Not intended as advise
The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not constitute any research report/recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer(s).

Case Study: Management Change - Britannia Industries
➢ Around 2012-13, Britannia Industries lost market share to other
➢ Change in Management: Mr. Varun Berry joined as COO in 2013
➢ Under his leadership, company witnessed sharp growth in
revenue and significant improvement in profitability
100
1100
2100
3100
4100
Britannia Industries
From To Britannia Industries Nifty TRI
01-Jan-11 01-Jan-13 21% -1%
01-Jan-13 07-Aug-20 1470% 107%
Price Performance
~21%
Source: Bloomberg, Annual Reports
234
370
622
763
844
948
1,122
1,484
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
PAT (₹ Cr)

Case Study: Demerger - Bajaj Holdings & Investments Ltd
➢ Bajaj Auto & Bajaj Finserv was demerged from Bajaj Holdings &
Investments Ltd. in 2008 and shares allotted was in ratio of 1:1
➢ Demerger helped in significant value unlocking for Bajaj group
companies
0
500
1000
1500
2000
2500
3000
3500
Bajaj Auto
0
2000
4000
6000
Bajaj Finserv
0
1000
2000
3000
Bajaj Holdings & Investments Ltd

Case Study: Transformation of Business Model - Reliance Industries
Price Performance
0
500
1000
1500
2000
2500
Reliance Industries
- 6%
From To Reliance Industries Nifty TRI
01-Jan-10 01-Sep-16 -6% 83%
01-Sep-16 07-Aug-20 321% 34%
Since launch of Jio in Sep-2016, share price of Reliance
Industries has gone up by ~321%
Traditional energy company transforming into data rich company
64%
48%
9%
20%
24%
18%
8%
4%
6%
FY17 FY20
Others
Digital Services
Petrochemicals
Organised Retail
Refining & Marketing
Disclaimer: Revenue in each segment include intersegment revenues within the company and doesn’t add up to the
gross revenue

Disruption
due to New
Entrant
Intense
Competition
Domino
Effect
Industry Specific Events
Events can help create / unlock value…
2

Case Study: Disruption due to New Entrant - Telecom
➢ With entry of new player and price disruption, every incumbent player lost
market share
➢ Market share of Bharti Airtel declined from 35% in Q1FY18 to 27% in Q4FY19
➢ During this period, Bharti Airtel leveraged tech, invested in network, and
gradually gained market share from competitors
➢ Stabilized market share of Bharti at 30% from Q1FY20 and improvement in
ARPU reflected in stock price movement
Price Performance
200
350
500
650
Bharti Airtel
From To Bharti Airtel Nifty TRI
01-Jan-18 11-Oct-18 -46% -1%
11-Oct-18 07-Aug-20 114% 12%
Source: Bloomberg, Investor Presentation, CLSA Report
42 43 36 37 38 35 33 32 32 28 27 26 27
34 35
31 31 32 32 31 30 27 30 30 31 30
12 16 20 22 26 30 32 31 35 35 34
26 25 21 16 11 12 10 9 9 11 7 8 9
0
20
40
60
80
100
Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20
Revenue Market Share (%)
Vodafone Idea Bharti Airtel Reliance Jio Others

Case Study: Industry Crisis - NBFC
➢ Default of payment by IL&FS Financial Services created crisis
of confidence amongst lenders and triggered a cash crunch in
NBFC sector
➢ Share prices of NBFCs & HFCs fell sharply on negative
sentiment
➢ Strong balance sheet, access to liquidity and well diversified
product portfolio helped Bajaj Finance gain market share
➢ This AUM growth is well reflected in price performance
Price Performance
1000
2000
3000
4000
5000
Bajaj Finance
From To Bajaj Finance Nifty TRI
28-Aug-18 8-Oct-18 -33% -12%
8-Oct-18 31-Jan-20 121% 17%
- 33%
Source: Bloomberg, Investor Presentation
-33%
-26%
-12%
Bajaj Finance NBFC Average Nifty 50 TRI
Price Correction; (Period: 28.08.2018 - 08.10.2018)

Amendment in
Regulations
Govt.
Reforms
Changes in
Tariffs / Taxes
Regulatory Changes
Govt. actions can affect profits…
3

Case Study
➢ The Government through divestment sells stocks at prices that are
usually not commensurate to their true value & scale of operations
➢ Historically, change of management brings better operational efficiency
which helps in value unlocking
➢ Previous examples of Strategic Divestment like Maruti Suzuki (previously
Maruti Udyog) & Hindustan Zinc have generated good returns for
investors
Govt Reforms - Strategic Divestment Regulatory Challenges - Pharma & Healthcare
Since 2015, Indian generic pharmaceutical companies corrected by more
than 50%, largely owing to:
➢ Issues on plant compliance and resultant impact on new product
approvals
➢ Customer consolidation in the largest pharma market of US
Increased demand amid COVID crisis, faster product approvals post resolution
of plant issues led to sharp growth of pharma & healthcare sector
7500
9000
10500
12000
13500
15000
16500
Nifty Pharma TRI
0
40
80
120
Hindustan Zinc
Divestment
Source: BseIndia & Bloomberg

Fluctuations
in Commodity
Prices
Inflation Forex
Reserves
Macro Economic Changes
Macro economic changes can create opportunity for faster growth…
4

Case Study: Fall in Crude Oil Price
➢ Crude prices fell from $ 114 in June 2014 to around $ 52 in
October 2016
➢ Fall in oil price is favourable for companies like Asian Paints as
decline in raw material prices lead to higher gross operating
margin
➢ From June 2014 to October 2016, share price of Asian Paints
went up by ~117%
Price Performance
From To Crude Oil Price Asian Paints Nifty TRI
18-Jun-14 12-Oct-16 -55% 117% 19%
20
40
60
80
100
120
400
700
1000
1300
Asian Paints
Asian Paints Crude Oil Price
41.9
42.9 43.1
44.4
42.0 42.1 42.6
45.3
47.1
Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
Gross Operating Profit Margin (%)
Source: Bloomberg, Investor Presentation, B&K Securities
Crude Oil Price: -55%
Asian Paints: 117%

Geo-political
events
Terrorist
Attack
Pandemic
Global Events
Development can arise from disruption…
5

Global Events
Asian Financial
Crisis
9/11 Attack SARS Outbreak Global Financial
Crisis
Eurozone Debt
Crisis
Taper Tantrum
BREXIT
Announcement
US China
Trade War
COVID 19
1997 2001 2003 2008 2011
2020 2018 2016 2013

The Road Ahead:
Special Opportunities in
Current Market Scenario

Special Opportunities in Current Market Scenario - Aviation & Real Estate
Source: Edelweiss research report
➢Stocks within the sector corrected sharply on demand concerns
due to COVID related disruption
➢Indian airline industry is expected to grow at robust pace after
normalization mainly due to Under-penetration in India
➢We believe the surviving companies can emerge stronger
11.9
11.8
11.5
12.3
12.9
13.0
12.8
12.4
7.8
0.3
2.0
2.1
1.8%
3.9%
1.1%
4.0%
11.2%
2.9%
2.5%
9.2%
-32.8%
-100.0%
-97.7%
-83.5%
-82.2%
-120.0%
-100.0%
-80.0%
-60.0%
-40.0%
-20.0%
0.0%
20.0%
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Total Domestic Passengers (millions) YoY (%)
Aviation Real Estate
Source: Bloomberg, MOSL Report, DGCA website
➢Amid COVID crisis, Real estate sector stocks corrected by ~51%
within 3 months on demand concern and supply side disruption
➢Recovery in demand on back of low interest rates, discounts and
correction in property prices shall drive growth
➢Organised players with healthy balance sheet and established
brands shall survive through crisis and gain market share

Special Opportunities in Current Market Scenario - Digital & Telecom
➢ COVID led change in lifestyle (Work from Home, Learn
from Home trend and video conferencing) has benefitted
Telecom companies and accelerated pace of digital
revolution
➢ We believe companies which are well prepared with
online presence and are further investing in digital
technology shall emerge stronger
➢ Telecom companies with larger market share, good
network and strong balance sheet shall benefit from rise
in demand
1,259
662
285
152 127
China India USA Indonesia Brazil
Mobile Internet Users (mn)
476
299
98 90 78
India China Nigeria Indonesia USA
Top countries with highest Gen Z
population: India leads
3.2%
32.0%
42.7%
65.1%
26.7%
78.0%
61.7%
84.1%
22.3%
72.0%
90.1% 86.5%
E-Com penetration Shopper penetration Internet penetration Smartphone penetration
Under penetration in India
India
China
USA
Source: Euromonitor, Company data, Morgan Stanley Research, TRAI, Statista

Special Opportunities in Current Market Scenario - PSUs
➢ PSU Banks valuations are at decadal low levels (more than 53%
below their long term average) which provides good margin of
safety
➢ PSU banks can see consolidation or recapitalization support
from Govt. and hence have potential to get re-rated
0.55
0.00
0.50
1.00
1.50
2.00
2.50
3.00 Nifty PSU Bank - PB Ratio
P/B Average + 1 SD - 1 SD
Average: 1.17
Divestment PSU Banks
➢ Given the current monetary and fiscal situation, divestment
remains imperative
➢ Strategic divestment of Bharat Petroleum Corporation (BPCL),
The Shipping Corporation of India (SCI) and Container
Corporation of India (CONCOR) was announced in Nov 2019
➢ Historically, divestment has helped in value unlocking and
created significant wealth for investors
0
400
800
1200
Divestment
Maruti Suzuki Ltd.
Source: NSE website

Opportunities come infrequently.
When it rains gold, put out the bucket,
not the thimble.
“
~ Warren Buffett
(Chairman & CEO of Berkshire Hathaway)
“

Presenting
Aditya Birla Sun Life Special
Opportunities Fund
(An Open Ended Equity Scheme following Special Situations theme)

Aditya Birla Sun Life Special Opportunities Fund: Positioning & Approach
The Scheme does not guarantee/indicate any returns. There can be no assurance that the schemes’ objectives will be achieved.
35-40 stocks portfolio
with high active share
Bottom up approach of
stock selection
Portfolio will follow “Price-Target approach” to derive value from
tactical opportunities arising due to any special situation that any
company may face.
May have higher turnover due to the nature of the scheme
➢ An open ended thematic equity fund following Special Situations theme
➢ Portfolio will be Sector and Market cap Agnostic
Fund Positioning
The fund is suitable for Long term Equity Investors with High risk appetite with an
Investment horizon of 5 years and above
Bottom-up Approach
Focused Portfolio Opportunistic Portfolio
Investment Approach
Suitability

➢ The scheme will follow a bottom-up approach to stock-picking
➢ Stock selection will be based on:
Aditya Birla Sun Life Special Opportunities Fund: Investment Philosophy
➢ The scheme will take position in companies facing temporary challenges on back of special situation such as corporate restructuring,
Government policy change and/or regulatory changes. Holding period will differ on case to case basis
Size of the
Opportunity
Prospects of future
growth and scalability
Potential of Growth
in Return on Equity
Margin of
Safety

Why Invest in Aditya Birla Sun Life Special Opportunities Fund now?
Opportunities + Margin of Safety + Fund Management Capability
=>
Potential for higher returns
➢ Companies facing special situation are usually available at lower valuations than
their fair value which provides good margin of safety
➢ Amid Covid crisis there is an increase in possibility of consolidation and emergence
of new trends across sectors
➢ The current environment is by far the most uncertain period since WWII
➢ Many companies have witnessed downgrading on demand and growth concerns –
significant rerating opportunity as things normalise
➢ Abundance of liquidity is favourable for equities
It's not always easy to do
what's not popular, but
that's where you make your
money. Buy stocks that look
bad to less careful investors
and hang on until their real
value is recognized.
‘‘ ‘‘
~John Neff
Fund Manager, Vanguard Windsor Fund
(1964 - 1995)

Scheme Name Aditya Birla Sun Life Special Opportunities Fund
Fund Manager Anil Shah, Chanchal Khandelwal, Vinod Bhat for Overseas Investments
Scheme Type An open ended equity scheme following special situations theme
Investment
Objective
The investment objective of the Scheme is to provide long term capital appreciation by investing in opportunities presented by special
situations such as corporate restructuring, Government policy change and/or regulatory changes, companies going through temporary but
unique challenges and other similar instances.
The Scheme does not guarantee/indicate any returns. There can be no assurance that the schemes’ objectives will be achieved.
Scheme Benchmark S&P BSE 500 Total Return Index (TRI)
Asset Allocation
Equity & Equity Related instruments of special situations theme: 80% - 100%. Other Equity & Equity Related instruments: 0-20%.
Debt, Units of Mutual Fund schemes, Money Market Instruments and Cash & Cash Equivalents: 0-20%. Units issued by REITs & InvITs: 0-10%
Plans & Options
Regular Plan and Direct Plan; Both plans will have two options: Growth and Dividend. Dividend option will have Payout and Reinvestment
Facility
Entry & Exit Load
Entry Load : NIL; | Exit Load : For redemption / switch-out of units within 90 days from the date of allotment: 0.5% of applicable NAV.
For redemption / switch-out of units after 90 days from the date of allotment: Nil
NFO Open Date 5th Oct 2020
NFO Close Date 19th Oct 2020
Note: For details, refer SID/KIM of the scheme.
Aditya Birla Sun Life Special Opportunities Fund: Features & Asset Allocation

Aditya Birla Sun Life Special Situations Fund: Risk Factors & Suitability

Disclaimer:
The document is solely for the information and understanding of intended recipients only. If you are not the intended recipient, you are
hereby notified that any use, distribution, reproduction or any action taken or omitted to be taken in reliance upon the same is prohibited
and may be unlawful. Wherever possible, all the figures and data given are dated, and the same may or may not be relevant at a future
date. In the preparation of the material contained, ABSLAMC has used information that is publicly available including information
developed in-house. Information gathered and material used in this document is believed to be from reliable sources. Further the opinions
expressed and facts referred to in this document are subject to change without notice and ABSLAMC is under no obligation to update the
same. While utmost care has been exercised, ABSLAMC or any of its officers, employees, personnel, directors make no representation or
warranty, express or implied, as to the accuracy, completeness or reliability of the content and hereby disclaim any liability with regard to
the same. Recipients of this material should exercise due care and read the scheme information document (including if necessary,
obtaining the advice of tax/legal/accounting/financial/other professional(s) prior to taking of any decision, acting or omitting to act.
Further, the recipient shall not copy/circulate/reproduce/quote contents of this document, in part or in whole, or in any other manner
whatsoever without prior and explicit approval of ABSLAMC. The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not
constitute any research report/recommendation of the same and the Fund may or may not have any future position in these
sector(s)/stock(s)/issuer(s).
For internal & private circulation only
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

ABSL Special Opportunities Fund - Presentation (002)_1.pdf

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ABSL Special Opportunities Fund - Presentation (002)_1.pdf