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DSP Focus Fund

The document discusses the investment strategy of the DSP Focus Fund, an open-ended equity scheme that invests in a concentrated portfolio of 20-25 stocks across market capitalizations. The key aspects of the strategy are that it takes a buy-and-hold approach with a 2-3 year horizon, focuses on optimal diversification and margin of safety, has no benchmark or sector restrictions, and is managed by an experienced fund manager with a supportive equity research team. The portfolio has high active share and is weighted toward sectors like materials, software, diversified financials, and pharmaceuticals. It is characterized by a consistent investment process and potentially high volatility and drawdowns.

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[Title to come] [Sub-Title to come] Strictly for Intended Recipients Only Date * DSP India Fund is the Company incorporated in Mauritius, under which ILSF is the corresponding share class DSP Focus Fund An open-ended equity scheme investing in maximum 30 stocks. The Scheme shall focus on multi-cap stocks | People | Processes | Performance | Portfolio
What can investors expect? CONCENTRATED PORTFOLIO • ~ 20-25 stocks portfolio with Optimal diversification HIGHER POSITIONING SIZE • Our position size would be driven by our conviction in the idea BUY & HOLD APPROACH • Hold stocks of companies with at least ~2-3 years time horizon if the business continues to progress according to our expectations. • Lower turnover ratio NO CONSTRAINT • No benchmark, sector and market cap restrictions CONSISTENT INVESTMENT PROCESS • Experienced fund manager with support of 20 members equity team HIGH RISK STRATEGY • Fund may witness temporary period of Volatility & drawdowns • Drawdowns could be averted by seeking adequate Margin of Safety in terms of valuation & business growth The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
3 Differentiated Portfolio Construction: High Active Share 80 50 55 60 65 70 75 80 85 2019 2020 2021 2022 Active share (% of portfolio differing from benchmark) Source – Internal ; Data as on 30 Nov 2022
4 Portfolio Snapshot For the portfolio as on 30 November-2022 Source: Factset. The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors. Key Parameters 5 58 35 2 Small Cap Large Cap Mid Cap Cash Market Cap Buckets DSP Focus Fund Nifty 500 TRI No of Securities 29 465 P/E 29.6 22.1 P/E FY1 Est 28.7 23.4 P/E FY2 Est 23.6 19.5 Price/Book 5.3 3.3 Price/Sales 3.6 2.4 Hist 3Yr EPS Growth 24.4 22.8 Est 3-5 Yr EPS Growth 18.9 19.0 ROE 18.8 17.3 Operating Margin 19.5 20.0 Net Margin 14.2 13.4 LT Debt/Capital 14.8 26.4
5 Key holdings and sector exposures Sectors DSP Focus Fund Weights (%) Key Holdings* Materials 14% Ultratech Supreme Ind Coromandel Software & Services 14% Infosys Tech Mahindra Diversified Financials 12% Bajaj Finance Chola Pharmaceuticals, Biotechnology 11% Cipla IPCA Banks 11% ICICI Bank Automobiles & Components 10% Eicher Bharat Forge Capital Goods 5% HAL Household & Personal Products 4% Emami Insurance 4% SBI life Consumer Services 3% Jubilant Transportation 3% CONCOR Real Estate 3% Phoenix *Holding with >2.5% weight Data as on 30 November-2022 Source: Factset. The sector(s)/stock(s)/issuer(s) mentioned in this document do not constitute any recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer(s).
6 Key Detractors and Contributors 1 Year 6 Months TOP-5 DETRACTORS TOP-5 DETRACTOR TECH MAHINDRA (1.9) GUJARAT GAS LTD (0.5) GUJARAT GAS LTD (1.3) SHEELA FOAM LTD (0.3) MANAPPURAM FINAN (1.1) TECH MAHINDRA LT (0.3) KANSAI NEROLAC P (0.9) CENTURY PLYBOARD (0.1) WHIRLPOOL OF IND (0.7) JUBILANT FOODWOR (0.1) TOP-5 CONTRIBUTORS TOP-5 CONTRIBUTORS CIPLA LTD 1.0 SUPREME INDS LTD 0.8 COROMANDEL INTER 1.0 CIPLA LTD 0.8 HINDUSTAN AERONA 1.2 ULTRATECH CEMENT 0.9 CHOLAMANDALAM IN 1.5 HINDUSTAN AERONA 1.0 EICHER MOTORS 1.7 EICHER MOTORS 1.2 Data as on 30 November-2022 Source: Factset. The sector(s)/stock(s)/issuer(s) mentioned in this document do not constitute any recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer(s). Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. There is no assurance of any returns/capital protection/capital guarantee to the investors in the Scheme. Refer Annexure for scheme performance in SEBI prescribed format and performance of other schemes managed by the same fund manager should be given
7 Portfolio Changes for last 6 months Company % chg Rationale SBI Life 5.8 Profit booking Chola 3.4 Profit booking Ultratech 2.7 Profit booking Infosys 1.8 US Recession concerns Gujarat Gas 1.7 Changing Competitive dynamics Top-5 Deletions Company % chg Rationale Bajaj Finance 4.0 Fastest growing retail consumer franchise <25x FY25 PER Hindustan Aeronautics 2.1 Play on indigenisation of defence procurements Bharat Forge 1.0 Diversifying from cyclical to non cyclical businesses Alkem 1.8 Strong acute care portfolio growing faster than IPM Ratnamani 1.7 Beneficiary of energy and CGD capex Top-5 Additions Data as on 30 November-2022 Source: Internal. The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
8 Valuation and Business cycle score  ~80% of the portfolio is in mid or advance business cycle.  Although 65% of the portfolio is above long term average valuation, the business cycle can provide visibility of earnings growth and hence likely to offset the valuation premium Business cycle scoring is based on percentile scoring on Earnings before Interest and Taxes (EBIT) margins and asset turns relative to its own history. For financials companies it is done on the basis of Pre-provisioning operating profits/Avg assets and Credit cost to average asset <25th Percentile = “Early”, >25th-50th Percentile = “Mid”, >50th -75th percentile = “Advance” and >75th = “Late” Valuation scoring is percentile ranks relative to its own history. <25th Percentile = “Attractive”, >25th -50th Percentile = “Low”, >50th -75th percentile = “high” and >75th = “Excessive” Business Cycle Early Mid Advance Late Total Valuation Attractive - 3% 4% 4% 11% Low - 9% 7% 6% 21% High - 10% 17% 11% 37% Excessive - 4% 24% - 28% Total - 27% 51% 20% 97% Data as on 30 November-2022 Source: Internal. The investment approach / framework/ strategy / portfolio / other data mentioned herein are dated and currently followed by the scheme and the same may change in future depending on market conditions and other factors 28% of the portfolio is above 75th percentile valuation bucket but not in late business cycle 20% of the portfolio is in late business cycle but none is in peak valuation bucket
9 Eicher: A case of Business cycle vs Valuation 0 20000 40000 60000 80000 100000 120000 0 10000 20000 30000 40000 50000 60000 70000 80000 Dec-13 Dec-14 Mar-16 Mar-17 Mar-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Mar-21 Mar-22 Sep-22 Mar-23E Monthly volumes Run Rate Monthly Runrate EV Eicher monthly volume run rate peaked in FY19 at 69000 units while EV was down >25% from peak as markets adjusted to a lower slope of growth Eicher’s EV peaked in FY18 well before the volumes The company reported pre-pandemic low of 55000 units and EV was down to Rs 390 bn The company hit a pandemic low of Rs 290 bn in Mar-20 With the success of the newly launched “Hunter” the monthly volumes were above the pre- pandemic average at 70K units in Sep-22. EV was at all time high of > 1000 bn with confidence around new model cycle While overall the CAGR from FY18 to Sep22 was 5% however the ability to pre-empt the cycle gave an opportunity to add the stock at a pre- pandemic low in Sep-19 and improve the CAGR to 25% EICHER: Enterprise value (EV) and Volumes The sector(s)/stock(s)/issuer(s) mentioned in this note do not constitute any recommendation of the same and the Fund may or may not have any future position in these sector(s) / stock(s)/ issuer. The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
10 Primary Themes In The Portfolio The figures in percentages are weights in the portfolio. These are as per our classification. The sector(s)/stock(s)/issuer(s) mentioned in this note do not constitute any recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer. The investment approach / portfolio / other data mentioned herein are dated and currently followed by the scheme and the same may change in future depending on market conditions and other factors. Data as on 30 Nov-22. 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. Lending : 23% Consumption: 19% Industrial: 8% IT: 14% Infra (Cement): 4% Insurance: 4% Pharma: 11% Utilities: 2% Agriculture: 3% 10% Key picks of the portfolios 4% 5% 3% 5% 6% 5% 4% 3% 2% 3% 3% 6% 3% 3% 3% 4%
11 Portfolio Transition We exited stocks exposed to commodities and stocks not qualifying our framework. We are overweight Financials, Healthcare and Materials GICS Sector Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Nov-22 Stocks 98 95 99 98 93 97 99 95 100 95 97 Information Technology 13 12 14 13 14 15 18 17 18 12 14 Financials 29 24 25 29 30 33 32 29 28 29 26 Materials 17 17 18 17 14 14 14 18 14 12 14 Health Care 10 7 7 10 11 10 8 10 10 11 11 Consumer Staples 7 9 8 7 7 8 8 4 5 4 4 Utilities 1 0 0 1 2 2 4 3 3 2 3 Consumer Discretionary 16 16 17 16 12 11 10 11 15 15 16 Communication Services 3 3 3 3 0 0 0 0 0 0 Industrials 2 7 8 2 2 5 5 3 5 5 8 Real Estate 0 0 0 0 0 0 0 0 1 2 3 Cash 2 5 1 2 7 3 1 5 0 5 3 Market Cap Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Nov-22 Large 78 73 79 76 70 65 66 60 63 61 57 Mid + Small 17 22 20 22 27 32 33 35 35 35 40 Data as on 30 November-2022 Source: Internal. The investment approach / framework/ strategy / portfolio / other data mentioned herein are dated and currently followed by the scheme and the same may change in future depending on market conditions and other factors. 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).
12 Key Takeaways • Allocation to companies which can benefit from large opportunities sets ✓ Opportunities to translate into earnings growth (primary driver of stock returns) • Selection criteria: Business quality , management evaluation and cashflows ✓ Conversion of opportunities to revenues/profit • Valuation : both absolute valuations and relative to business cycle ✓ Margin of safety ✓ Re-rating optionality • Absolute bottom up, benchmark agnostic portfolio with high active share ✓ Large deviation from benchmark ✓ Absolute returns best metric to evaluate the performance The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
Few stocks drive Index Performance 30% to 35% of the index constituents gave 2X (two times) the index returns Year BSE 200 Performance (%) Best Performing Stock (%) % age of stocks with Twice Index* Returns 2010 16 79 29 2011 -26 33 27 2012 30 288 29 2013 6 107 29 2014 32 199 24 2015 -3 73 48 2016 4 142 41 2017 32 209 24 2018 1 51 36 2019 10 76 24 2020 15 532 33 2021 29 357 42 Source: Bloomberg, IIFL | * % stocks with more than twice the index performance in a year when index was up or less than half the index fall when the index was down | Returns shown above are absolute returns during the calendar year period from January-1 to December-31. These figures pertain to performance of the index and do not in any manner indicate the returns/performance of the Scheme. Opportunity to generate alpha through a Concentrated High Conviction portfolio
14 Opportunity to generate alpha through a Concentrated High Conviction portfolio Sector Best performing company Worst performing company Communication Services Zee Entertainment Enterprises 46% Indus Towers Ltd 16% Consumer Discretionary Tata Motors Ltd 218% Hero MotoCorp Ltd -18% Consumer Staples Avenue Supermarts Ltd 69% Colgate-Palmolive India Ltd -3% Energy Oil & Natural Gas Corp Ltd 64% Petronet LNG Ltd -9% Financials Piramal Enterprises Ltd 87% Bandhan Bank Ltd -37% Health Care Apollo Hospitals Enterprise Lt 108% Aurobindo Pharma Ltd -20% Industrials Adani Enterprises Ltd 257% InterGlobe Aviation Ltd 17% Information Technology Tech Mahindra Ltd 91% Tata Consultancy Services Ltd 32% Materials Vedanta Ltd 133% Berger Paints India Ltd 2% Real Estate DLF Ltd 69% DLF Ltd 69% Utilities Adani Total Gas Ltd 357% Indraprastha Gas Ltd -6% S&P BSE 100 Index | Source: Bloomberg, IIFL | Returns shown above are absolute returns during the calendar year period from Dec 31, 2020 to Dec 31, 2021. Past performance may or may not be sustained in future. The stock(s) mentioned in this document do not constitute any recommendation of the same and the Fund may or may not have any future position in these stock(s). Performance divergence within sectors in the calendar year 2021
[Title to come] [Sub-Title to come] Strictly for Intended Recipients Only Date * DSP India Fund is the Company incorporated in Mauritius, under which ILSF is the corresponding share class INVESTMENT FRAMEWORK | People | Processes | Performance | Portfolio
16 Business Model – Identifying large opportunities Size of Company Large Large Small Small Size of Market o Lower failure rates o Company has gained scale o Examples - Insurance, Banks, IT The company has demonstrated successful model and ability to scale up Wealth destructors Steady compounders Compounding has ceased o The company has been successful in the past o The market is saturated Wealth Creator o The market has limited opportunity for growth o The company has no clear right to win What we avoid What we seek The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
17 Business Model - Competitive advantages (Moats) are what we looking for…. Company may not be able to create value and fend off competition if it does not have moats in spite of large opportunities. Key sources of competitive advantages that we look for include Intangibles Cost Structure Network Effect Switching costs Brands/Patents and Regulations* Lower cost of production which stem from process, location, scale or access to unique assets. Cost (time, hassle, capital or risk) that customer would incur from one producer or service provider to the other The value of a product increases for both new and existing customers as new customers join the network Not All Moats are equally valuable Most businesses have no moats (our default assumption for evaluating any new company) or have legacy moats i.e. no ability to reinvest in the business. We look for companies which have either large reinvestment opportunity or capital light businesses which do not need significant capital to grow * We refrain from buying stocks of companies which benefit from favourable regulations alone Eicher SBI Life CONCOR Infosys The sector(s)/stock(s)/issuer(s) mentioned in this note do not constitute any recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer. The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
18 Business Model - Quality of business  Facets of quality are • Capital Intensity – Amount of capital which can be reinvested in the business • Capital Efficiency – Returns generated on capital employed (Superiority of ROCE)  Simple businesses (with optionality of complementary extensions) with growing market shares  Quality of the business is displayed through its ability to generate superior (spread over the cost of capital), consistent, predictable and durable ROCE.  ROCE along with growth defines the magnitude of value created by the business  Size of the opportunity determines capital reinvestment which in turns drives growth  Cashflows (not earnings) defines the true character of business  Both quality of business and management are indispensable.  ROCE of the business is function of the character of business where as ROE of business is function of Business + Management.
19 Management – Alignment of interest with shareholders Capital allocation  Ability to know where to allocate capital (and where to deny it)  Remain focussed on few areas of competence  Investing in areas with similar or higher ROCE Capital Distribution  The capital to be distributed back to share holders in excess of • Funding future growth • Funding on acquisition • Building contingencies Other Facets  Integrity and passion  Stakeholder relationship – with not only shareholders, but also employee, vendors, customers  Governance standards  Past Track record of the management Key traits of competent management = Capital Allocation + Capital Distribution
20 Valuation - Price Value Gap (way we think about valuation)  Margin of Safety : We scout for Margins of safety = Gap between Intrinsic Value and Price  Stock returns generally mirrors the earnings growth (unless the stock is incorrectly priced to begin with).  Focus on entry multiples: We focus on the entry multiples which we pay for the businesses. If entry multiples are chosen properly , we can be assured of stock returns = earnings growth.  Re-rating is not our base case: The stock re-rating can be significant driver of overall returns as the market changes its perception on the stock – “Re-rating” however is not our base case for valuation  Business cycle critical to judge value: Companies in early or mid-cycle can cover up for moderately higher valuation; Late cycle companies with excessive valuations are untenable.  Stocks held for momentum: We may not be comfortable in buying companies which are in late cycle and excessively valued, however there will be stage were our core holding get significantly “re-rated”. These are then shifted from “Core portfolio bucket” to “held for momentum tactical bucket” and are sold as the momentum starts to fade. Stock Returns can be derived as = Earnings Growth x Valuation multiple Change The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
21 Valuation – Business cycle and Valuation Business Cycle Early Mid Advance Late 1.0 2.0 3.0 4.0 Valuation Excessive 4.0 2.5 3.0 3.5 4.0 High 3.0 2.0 2.5 3.0 3.5 Low 2.0 1.5 2.0 2.5 3.0 Attractive 1.0 1.0 1.5 2.0 2.5 4 1 3 2  The characteristics of the investee companies chosen would mean valuation are unlikely to be in low bucket unless overall market valuations are undemanding  We actively seek exposure to companies in early or mid cycle Peak earnings and valuation Favoured zone given market valuations Biggest source of alpha if thesis is correct Valuation still supportive
22 : Moving towards top quartile performance ICICI Bank credit growth in-line with HDFC Bank Core PPOP as % of avg. assets close to all time high Net non-performing assets sub 1% and below FY14 level Subsidiaries account for ~20% of value for the bank Lending Weight : 23%* ICICI Weight : 10%* *Core Value = 2.7x FY25 discounted back to FY24 at COE Source: Company, 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022. PPOP – Pre provision Operating Profit 60 34 15 -3 -17 19 17 14 17 14 12 7 10 14 10 14 17 37 34 35 56 27 27 22 23 26 21 27 19 19 24 21 14 21 -20 0 20 40 60 FY06 FY08 FY10 FY12 FY14 FY16 FY18 FY20 FY22 Credit Growth YoY (%) ICICI Bank HDFC Bank 1.9 1.6 1.6 1.8 2.4 2.4 2.3 2.5 2.8 2.9 2.9 2.4 2.3 2.4 2.6 2.7 2.9 1.7 2.4 2.8 2.5 2.9 0.0 1.0 2.0 3.0 FY06 FY08 FY10 FY12 FY14 FY16 FY18 FY20 FY22 % 2.0 2.5 3.7 4.3 5.1 4.5 3.6 3.2 3.0 3.8 5.8 7.9 8.8 6.7 5.5 5.0 3.6 0.7 1.0 1.5 2.1 2.1 1.1 0.7 0.8 1.0 1.6 3.0 4.9 4.8 2.1 1.4 1.1 0.8 0.0 2.0 4.0 6.0 8.0 10.0 FY06 FY08 FY10 FY12 FY14 FY16 FY18 FY20 FY22 Asset Quality GNPA % NNPA % 937 71 60 25 61 13 46 1,121 500 600 700 800 900 1,000 1,100 1,200 Core Bank Life Ins Gen Ins Securities AMC Others Holdco Discount (20%)
23 Bajaj Finance: Steady Compounder BAF still is <2% of the banking system advances Steady compounding of AUM and PAT 3.6 3.4 3.3 5.3 21.5 20.9 16.8 22.7 0 5 10 15 20 25 - 1.0 2.0 3.0 4.0 5.0 6.0 FY12- 15 FY16- 19 FY19- 22 FY23 TTM FY12- 15 FY16- 19 FY19- 22 FY23 TTM ROE ROA ROA ROE ROA and ROE well above pre-covid levels - 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 0 50 100 150 200 250 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 % of Banking System Advances BAF AUM (Rs bn) Lending Weight : 23%* BAF Weight : 6%* 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022 - 20.0 40.0 60.0 80.0 100.0 120.0 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Rs bn HDFCB BAF PBT of HDFC Bank and BAF: BAF has outperformed except Covid Note :Y2 for HDFCB/BAF is FY01/FY10 when they had similar AUM of Rs 40-46 bn 0 10 20 30 40 50 60 70 80 - 500.0 1,000.0 1,500.0 2,000.0 2,500.0 FY08 FY12 FY16 FY22 FY08 FY12 FY16 FY22 PAT (Rs bn) AUM (Rs bn) AUM PAT
24 : Consistently superior performance Consistently better credit cost vs peers Chola has the most diversified branch network Chola is consistently outperformed peers in AUM growth Chola delivered 17-18% ROE and 2% ROA over the decade Lending : 23.0%* Chola Weight: 3.0%* Source: Company, Internal 19.0 15.1 8.13 12.2 13.2 20.7 18.7 10.45 13.3 14.2 CIFC MMFS SUF SHTF IIB 10 Year CAGR 8 Year CAGR 22% 36% 29% 28% 76% 26% 22% 6% 21% 28% 26% 52% 64% 29% 24% 16% 12% 36% 22% 24% CIFC MMFS SUF SHTF IIB AU North East South West - 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 CIFC MMFS SUF SHTF IIB AU SFB - 0.5 1.0 1.5 2.0 2.5 3.0 12.0 14.0 16.0 18.0 20.0 22.0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 LHS - RoE RHS - RoA 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022. CIFC: Cholamandalam Investment and FInance , MMFS: Mahindra and Mahindra Financial services, SUF: Sundaram Finance, SHTF: Shriram Transport Finance, IIB: Indusind Bank, AU: AU Bank
25 : Multiple tail winds SBI consistently gaining market share (Individual APE) Margin profile improving with improving product mix SBI product mix is progressively improving SBI Life is the least cost producer (Cost/Individual APE) Source: CLSA, Investec Insurance Weight: 4.0%* SBI Life Weight: 4.0%* 11 13 21 24 6 5 11 15 0 5 10 15 20 25 30 FY09 FY11 FY13 FY15 FY17 FY19 FY21 H1FY23 Mkt Share (%) Within Pvt Within Total 10% 7% 11% 1% 0% 14% 31% 19% 5% 4% 3% 4% 53% 71% 66% 0% 20% 40% 60% 80% 100% FY16 FY17 FY18 FY19 FY20 FY21 FY22 Protection Non-par Par Group savings ULIP 18.4% 19.8% 20.7% 23.2% 25.9% 31.0% 14.2% 15.4% 16.2% 17.7% 18.7% 20.4% 22.9% 0% 5% 10% 15% 20% 25% 30% 35% FY16 FY17 FY18 FY19 FY20 FY21 FY22 H1FY23 % VNB margin (Effective Tax Rate) VNB margin (Actual Tax Rate) 71.8% 21.9% 58.3% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% FY16 FY17 FY18 FY19 FY20 FY21 FY22 HDFC Life SBI Life ICICI Life 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022
26 Infosys: To sustain industry leading performance Revenue growth above peers in last two years TTM TCV post covid is 2x higher than pre-covid TTM TCV: Trailing Twelve month Total Contract Value, CC : Constant Currency Infy’s margins improving to pre-covid levels vs peer’s Clients in US$ 100mn+ revenue bucket increased 1.4x in last 3 years -8.0% -3.0% 2.0% 7.0% 12.0% 17.0% 22.0% 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 YoY CC revenue growth Infosys TCS HCLT IT Services Wipro 18 19 23 27 30 35 39 - 5 10 15 20 25 30 35 40 45 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 No. of 100 million $ clients - 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 TTM TCV (US$ bn) Average pre-covid Average post-covid 22.8% 25.6% 19.6% 15.8% 15.0% 22.5% 24.5% 18.5% 15.9% 13.4% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Infosys TCS HCLT Wipro TechM FY19 FY22 FY23E FY24E IT : 14%* Infosys Weight : 6%* 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022
27 : Late cycle beneficiary Enterprise revenue growth trending higher (60% of revenue) Uptick in communication revenue growth (40% of revenues) Steadily improving TTM deal TCV EBIT margin maintained above 15% despite supply side pressures IT : 14%* TechM Weight : 5%* Source: Company, Internal 6% 1% 1% 3% 6% 4% 11% 16% 13% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Enterprise Rev – 2yr CAGR 6% 3% 3% 2% 5% 7% 8% 12% 17% 14% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Comm Services – 2Y CAGR 2.8 3.6 3.7 3.5 2.5 1.7 2.2 2.7 3.1 3.3 3.3 3.3 3.2 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 TTM deal TCV (US$ bn) 13% 12% 10% 14% 16% 15% 15% 13% 11% 11% 14% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 EBIT margin 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022
28 : Play on rising aspiration levels 0 5 10 15 20 25 30 35 0 50 100 150 200 250 300 350 400 450 500 Bihar UP Jharkhand Assam MP Chattisgarh Rajasthan Orissa All India Maharashtra Gujarat Kerala Tamil Nadu Karnataka Haryana Chandigarh Delhi Goa Rs 000 Per capita income (Rs) Market share (%; RHS) < All India Per Capita Eicher MS - 3% All India Avg Eicher MS - 5% > All India Per Capita Eicher MS -13% Rising aspiration levels provide scope for further expansion of cruiser segment A dominant player (>250 CC) despite entry of competition Rising Exports : Exports ASPs are higher than of domestic market Highest margins in 2W space: Lowest disruption risk Consumption : 19.0%* Eicher Weight: 5%* Source: Company, Internal 100 100 99 99 89 50 60 70 80 90 100 110 0 200 400 600 800 1,000 FY03 FY08 FY13 FY18 FY22 Market Share (%) 000 Units Market Share (%) 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 FY16 FY17 FY18 FY19 FY20 FY21 FY22 % of Revenue Rs nm Exports revenue (Rs mn) Share of exports (%; RHS) 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 FY18 FY19 FY20 FY21 FY22 Eicher Motors Bajaj Auto Hero MotoCorp 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022
29 Industry leading operating margins (5yr Averages) Market leader in several categories (>60% of revenue) 0 10 20 30 40 50 60 70 Emami Colgate P&G Hygiene ITC Nestle GCPL HUL Dabur Marico Gross Margins (%) EBITDA Margins (%) : Market Leader in several niches 68.0 66.0 64.0 55.0 Boroplus Navratna Balms Mens fairness % of Revenue - 14 % of Revenue - 20 % of Revenue - 23 % of Revenue - 6 Market Share (%) 4 6.4 50 13 9.4 42 Ecom + Modern Trade Contribution (%) Direct Reach Outlets (lakhs) Dependence on whole sale channel Widening distribution footprint Undemanding valuations -60 -40 -20 0 20 40 60 80 100 120 140 0 10 20 30 40 50 60 70 80 90 100 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Premium/Disc (%) Emami PE (x) Emami PE (x) Premium to Nifty FMCG Consumption Weight : 19%* Emami Weight : 4%* 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022
30 : Strong US respiratory pipeline High contribution from steady branded markets in India/South Africa formulations market Improving free cashflow generation Strengthening leadership in Indian respiratory market Making early in-roads in the large respiratory generics market in US Healthcare: 11%* CIPLA Weight: 5%* Source: Company, Internal 30% 35% 20% 22% 10% 15% 20% 25% 30% 35% FY17 FY18 FY19 FY20 FY21 FY22 Respiratory as a % of Cipla's India sales Cipla's market share in India's respiratory market 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% FY17 FY18 FY19 FY20 FY21 FY22 US Generics - Base business Limited competition generics 0% 20% 40% 60% 80% 100% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 India South Africa US Others -30% -20% -10% 0% 10% 20% 30% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 OCF as a % of sales FCF as a % of sales 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022. OCF – Operating Cash Flow, FCF – Free cash flow
31 : Large proxy to housing and industrial capex Ultratech will maintain its capacity market share despite its size 40 115-125 40-45 35-40 0 20 40 60 80 100 120 140 Increasing share of green power Reduction in lead distance Other efficiencies* Total savings Rs/ton Multiple levers of cost optimization as per management *increasing conversion ratio, better power consumption norms, optimizing fuel mix, operating leverage etc. Strong balance sheet despite 70% increase in installed capacity Diversified proxy to India’s cement consumption Source: Company, Internal, Emkay Estimates 22 19 21 23 18 19 15 17 24 22 Capacity Share (%) Revenue Share (%) Central North South East West 86 100 115 118 121 0.0 0.2 0.4 0.6 0.8 1.0 0 50 100 150 200 250 FY18 FY19 FY20 FY21 FY22 Installed Capacity (mt) Gross Debt (Rs Bn) Net Debt (Rs Bn) Debt/Equity (x) -10 20 50 80 110 140 170 FY15 FY20 FY22 Sep'22 FY23 FY25 Market Share (%) 15 21 21 23 23 22 Installed Capacity (mt) Infra Weight : 4%* Ultratech Weight : 4%* 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022
32 Annexure – Scheme performance in SEBI prescribed format Fund Manager 1) Vinit Sambre – Managing since Jun 2020 2) Jay Kothari – Managing since Mar 2013 Data as on 30 Nov 2022. Growth option considered ^ Fund Benchmark # Standard Benchmark
33 Annexure – Performance of other schemes managed by same fund manager Data as on 30 Nov 2022. Growth option considered
34 Annexure – Performance of other schemes managed by same fund manager Data as on 30 Nov 2022. Growth option considered
35 Product Labeling Details & Disclaimer In this document DSP Investment 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 AMC however does not warrant the accuracy, reasonableness and / or completeness of any information. The data/statistics are given to explain general market trends in the securities market, it should not be construed as any research report/research recommendation. We have included statements / opinions / recommendations in this document, which contain words, or phrases such as “will”, “expect”, “should”, “believe” and similar expressions or variations of such expressions that are “forward looking statements”. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our services and / or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc. The sector(s)/stock(s)/issuer(s) mentioned in this document presentation do not constitute any research report/recommendation of the same and the scheme may or may not have any future position in these sector(s)/stock(s)/issuer(s). The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the scheme. There is no assurance of any returns/potential/capital protection/capital guarantee to the investors in this Scheme. Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. This document indicates the investment strategy/approach/framework currently followed by the Scheme and the same may change in future depending on market conditions and other factors. All figures and other data given in this document are as on 30 Nov 2022 (unless otherwise specified) and the same may or may not be relevant in future and the same should not be considered as solicitation/ recommendation/guarantee of future investments by the DSP Mutual Fund or the AMC or its affiliates. Investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other financial implication or consequence of subscribing to the units of schemes of DSP Mutual Fund. For complete details on investment objective, investment strategy, asset allocation, scheme specific risk factors please refer the scheme information document and key information memorandum of the scheme, which are available at AMC and registrar offices and investor service centres/AMC website- https://www.dspim.com/ 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 Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Scheme Product Suitability Riskometer DSP Focus Fund Benchmark - NIFTY 500 TRI DSP Focus Fund (An open ended equity scheme investing in maximum 30 stocks. The Scheme shall focus on multi cap stocks) The Open ended equity scheme is suitable for investors who are seeking* Long-term capital growth with exposure limited to a maximum of 30 stocks from a multi cap investment universe Investment in equity and equity-related securities to form a concentrated portfolio *Investors should consult their financial advisers if in doubt about whether the Scheme is suitable for them.
For Professional Investor use only 13 #INVESTFORGOOD

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DSP Focus Fund

  • 1.
    [Title to come] [Sub-Titleto come] Strictly for Intended Recipients Only Date * DSP India Fund is the Company incorporated in Mauritius, under which ILSF is the corresponding share class DSP Focus Fund An open-ended equity scheme investing in maximum 30 stocks. The Scheme shall focus on multi-cap stocks | People | Processes | Performance | Portfolio
  • 2.
    What can investorsexpect? CONCENTRATED PORTFOLIO • ~ 20-25 stocks portfolio with Optimal diversification HIGHER POSITIONING SIZE • Our position size would be driven by our conviction in the idea BUY & HOLD APPROACH • Hold stocks of companies with at least ~2-3 years time horizon if the business continues to progress according to our expectations. • Lower turnover ratio NO CONSTRAINT • No benchmark, sector and market cap restrictions CONSISTENT INVESTMENT PROCESS • Experienced fund manager with support of 20 members equity team HIGH RISK STRATEGY • Fund may witness temporary period of Volatility & drawdowns • Drawdowns could be averted by seeking adequate Margin of Safety in terms of valuation & business growth The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
  • 3.
    3 Differentiated Portfolio Construction:High Active Share 80 50 55 60 65 70 75 80 85 2019 2020 2021 2022 Active share (% of portfolio differing from benchmark) Source – Internal ; Data as on 30 Nov 2022
  • 4.
    4 Portfolio Snapshot For theportfolio as on 30 November-2022 Source: Factset. The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors. Key Parameters 5 58 35 2 Small Cap Large Cap Mid Cap Cash Market Cap Buckets DSP Focus Fund Nifty 500 TRI No of Securities 29 465 P/E 29.6 22.1 P/E FY1 Est 28.7 23.4 P/E FY2 Est 23.6 19.5 Price/Book 5.3 3.3 Price/Sales 3.6 2.4 Hist 3Yr EPS Growth 24.4 22.8 Est 3-5 Yr EPS Growth 18.9 19.0 ROE 18.8 17.3 Operating Margin 19.5 20.0 Net Margin 14.2 13.4 LT Debt/Capital 14.8 26.4
  • 5.
    5 Key holdings andsector exposures Sectors DSP Focus Fund Weights (%) Key Holdings* Materials 14% Ultratech Supreme Ind Coromandel Software & Services 14% Infosys Tech Mahindra Diversified Financials 12% Bajaj Finance Chola Pharmaceuticals, Biotechnology 11% Cipla IPCA Banks 11% ICICI Bank Automobiles & Components 10% Eicher Bharat Forge Capital Goods 5% HAL Household & Personal Products 4% Emami Insurance 4% SBI life Consumer Services 3% Jubilant Transportation 3% CONCOR Real Estate 3% Phoenix *Holding with >2.5% weight Data as on 30 November-2022 Source: Factset. The sector(s)/stock(s)/issuer(s) mentioned in this document do not constitute any recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer(s).
  • 6.
    6 Key Detractors andContributors 1 Year 6 Months TOP-5 DETRACTORS TOP-5 DETRACTOR TECH MAHINDRA (1.9) GUJARAT GAS LTD (0.5) GUJARAT GAS LTD (1.3) SHEELA FOAM LTD (0.3) MANAPPURAM FINAN (1.1) TECH MAHINDRA LT (0.3) KANSAI NEROLAC P (0.9) CENTURY PLYBOARD (0.1) WHIRLPOOL OF IND (0.7) JUBILANT FOODWOR (0.1) TOP-5 CONTRIBUTORS TOP-5 CONTRIBUTORS CIPLA LTD 1.0 SUPREME INDS LTD 0.8 COROMANDEL INTER 1.0 CIPLA LTD 0.8 HINDUSTAN AERONA 1.2 ULTRATECH CEMENT 0.9 CHOLAMANDALAM IN 1.5 HINDUSTAN AERONA 1.0 EICHER MOTORS 1.7 EICHER MOTORS 1.2 Data as on 30 November-2022 Source: Factset. The sector(s)/stock(s)/issuer(s) mentioned in this document do not constitute any recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer(s). Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. There is no assurance of any returns/capital protection/capital guarantee to the investors in the Scheme. Refer Annexure for scheme performance in SEBI prescribed format and performance of other schemes managed by the same fund manager should be given
  • 7.
    7 Portfolio Changes forlast 6 months Company % chg Rationale SBI Life 5.8 Profit booking Chola 3.4 Profit booking Ultratech 2.7 Profit booking Infosys 1.8 US Recession concerns Gujarat Gas 1.7 Changing Competitive dynamics Top-5 Deletions Company % chg Rationale Bajaj Finance 4.0 Fastest growing retail consumer franchise <25x FY25 PER Hindustan Aeronautics 2.1 Play on indigenisation of defence procurements Bharat Forge 1.0 Diversifying from cyclical to non cyclical businesses Alkem 1.8 Strong acute care portfolio growing faster than IPM Ratnamani 1.7 Beneficiary of energy and CGD capex Top-5 Additions Data as on 30 November-2022 Source: Internal. The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
  • 8.
    8 Valuation and Businesscycle score  ~80% of the portfolio is in mid or advance business cycle.  Although 65% of the portfolio is above long term average valuation, the business cycle can provide visibility of earnings growth and hence likely to offset the valuation premium Business cycle scoring is based on percentile scoring on Earnings before Interest and Taxes (EBIT) margins and asset turns relative to its own history. For financials companies it is done on the basis of Pre-provisioning operating profits/Avg assets and Credit cost to average asset <25th Percentile = “Early”, >25th-50th Percentile = “Mid”, >50th -75th percentile = “Advance” and >75th = “Late” Valuation scoring is percentile ranks relative to its own history. <25th Percentile = “Attractive”, >25th -50th Percentile = “Low”, >50th -75th percentile = “high” and >75th = “Excessive” Business Cycle Early Mid Advance Late Total Valuation Attractive - 3% 4% 4% 11% Low - 9% 7% 6% 21% High - 10% 17% 11% 37% Excessive - 4% 24% - 28% Total - 27% 51% 20% 97% Data as on 30 November-2022 Source: Internal. The investment approach / framework/ strategy / portfolio / other data mentioned herein are dated and currently followed by the scheme and the same may change in future depending on market conditions and other factors 28% of the portfolio is above 75th percentile valuation bucket but not in late business cycle 20% of the portfolio is in late business cycle but none is in peak valuation bucket
  • 9.
    9 Eicher: A caseof Business cycle vs Valuation 0 20000 40000 60000 80000 100000 120000 0 10000 20000 30000 40000 50000 60000 70000 80000 Dec-13 Dec-14 Mar-16 Mar-17 Mar-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Mar-21 Mar-22 Sep-22 Mar-23E Monthly volumes Run Rate Monthly Runrate EV Eicher monthly volume run rate peaked in FY19 at 69000 units while EV was down >25% from peak as markets adjusted to a lower slope of growth Eicher’s EV peaked in FY18 well before the volumes The company reported pre-pandemic low of 55000 units and EV was down to Rs 390 bn The company hit a pandemic low of Rs 290 bn in Mar-20 With the success of the newly launched “Hunter” the monthly volumes were above the pre- pandemic average at 70K units in Sep-22. EV was at all time high of > 1000 bn with confidence around new model cycle While overall the CAGR from FY18 to Sep22 was 5% however the ability to pre-empt the cycle gave an opportunity to add the stock at a pre- pandemic low in Sep-19 and improve the CAGR to 25% EICHER: Enterprise value (EV) and Volumes The sector(s)/stock(s)/issuer(s) mentioned in this note do not constitute any recommendation of the same and the Fund may or may not have any future position in these sector(s) / stock(s)/ issuer. The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
  • 10.
    10 Primary Themes InThe Portfolio The figures in percentages are weights in the portfolio. These are as per our classification. The sector(s)/stock(s)/issuer(s) mentioned in this note do not constitute any recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer. The investment approach / portfolio / other data mentioned herein are dated and currently followed by the scheme and the same may change in future depending on market conditions and other factors. Data as on 30 Nov-22. 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. Lending : 23% Consumption: 19% Industrial: 8% IT: 14% Infra (Cement): 4% Insurance: 4% Pharma: 11% Utilities: 2% Agriculture: 3% 10% Key picks of the portfolios 4% 5% 3% 5% 6% 5% 4% 3% 2% 3% 3% 6% 3% 3% 3% 4%
  • 11.
    11 Portfolio Transition We exitedstocks exposed to commodities and stocks not qualifying our framework. We are overweight Financials, Healthcare and Materials GICS Sector Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Nov-22 Stocks 98 95 99 98 93 97 99 95 100 95 97 Information Technology 13 12 14 13 14 15 18 17 18 12 14 Financials 29 24 25 29 30 33 32 29 28 29 26 Materials 17 17 18 17 14 14 14 18 14 12 14 Health Care 10 7 7 10 11 10 8 10 10 11 11 Consumer Staples 7 9 8 7 7 8 8 4 5 4 4 Utilities 1 0 0 1 2 2 4 3 3 2 3 Consumer Discretionary 16 16 17 16 12 11 10 11 15 15 16 Communication Services 3 3 3 3 0 0 0 0 0 0 Industrials 2 7 8 2 2 5 5 3 5 5 8 Real Estate 0 0 0 0 0 0 0 0 1 2 3 Cash 2 5 1 2 7 3 1 5 0 5 3 Market Cap Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Nov-22 Large 78 73 79 76 70 65 66 60 63 61 57 Mid + Small 17 22 20 22 27 32 33 35 35 35 40 Data as on 30 November-2022 Source: Internal. The investment approach / framework/ strategy / portfolio / other data mentioned herein are dated and currently followed by the scheme and the same may change in future depending on market conditions and other factors. 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).
  • 12.
    12 Key Takeaways • Allocationto companies which can benefit from large opportunities sets ✓ Opportunities to translate into earnings growth (primary driver of stock returns) • Selection criteria: Business quality , management evaluation and cashflows ✓ Conversion of opportunities to revenues/profit • Valuation : both absolute valuations and relative to business cycle ✓ Margin of safety ✓ Re-rating optionality • Absolute bottom up, benchmark agnostic portfolio with high active share ✓ Large deviation from benchmark ✓ Absolute returns best metric to evaluate the performance The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
  • 13.
    Few stocks driveIndex Performance 30% to 35% of the index constituents gave 2X (two times) the index returns Year BSE 200 Performance (%) Best Performing Stock (%) % age of stocks with Twice Index* Returns 2010 16 79 29 2011 -26 33 27 2012 30 288 29 2013 6 107 29 2014 32 199 24 2015 -3 73 48 2016 4 142 41 2017 32 209 24 2018 1 51 36 2019 10 76 24 2020 15 532 33 2021 29 357 42 Source: Bloomberg, IIFL | * % stocks with more than twice the index performance in a year when index was up or less than half the index fall when the index was down | Returns shown above are absolute returns during the calendar year period from January-1 to December-31. These figures pertain to performance of the index and do not in any manner indicate the returns/performance of the Scheme. Opportunity to generate alpha through a Concentrated High Conviction portfolio
  • 14.
    14 Opportunity to generatealpha through a Concentrated High Conviction portfolio Sector Best performing company Worst performing company Communication Services Zee Entertainment Enterprises 46% Indus Towers Ltd 16% Consumer Discretionary Tata Motors Ltd 218% Hero MotoCorp Ltd -18% Consumer Staples Avenue Supermarts Ltd 69% Colgate-Palmolive India Ltd -3% Energy Oil & Natural Gas Corp Ltd 64% Petronet LNG Ltd -9% Financials Piramal Enterprises Ltd 87% Bandhan Bank Ltd -37% Health Care Apollo Hospitals Enterprise Lt 108% Aurobindo Pharma Ltd -20% Industrials Adani Enterprises Ltd 257% InterGlobe Aviation Ltd 17% Information Technology Tech Mahindra Ltd 91% Tata Consultancy Services Ltd 32% Materials Vedanta Ltd 133% Berger Paints India Ltd 2% Real Estate DLF Ltd 69% DLF Ltd 69% Utilities Adani Total Gas Ltd 357% Indraprastha Gas Ltd -6% S&P BSE 100 Index | Source: Bloomberg, IIFL | Returns shown above are absolute returns during the calendar year period from Dec 31, 2020 to Dec 31, 2021. Past performance may or may not be sustained in future. The stock(s) mentioned in this document do not constitute any recommendation of the same and the Fund may or may not have any future position in these stock(s). Performance divergence within sectors in the calendar year 2021
  • 15.
    [Title to come] [Sub-Titleto come] Strictly for Intended Recipients Only Date * DSP India Fund is the Company incorporated in Mauritius, under which ILSF is the corresponding share class INVESTMENT FRAMEWORK | People | Processes | Performance | Portfolio
  • 16.
    16 Business Model –Identifying large opportunities Size of Company Large Large Small Small Size of Market o Lower failure rates o Company has gained scale o Examples - Insurance, Banks, IT The company has demonstrated successful model and ability to scale up Wealth destructors Steady compounders Compounding has ceased o The company has been successful in the past o The market is saturated Wealth Creator o The market has limited opportunity for growth o The company has no clear right to win What we avoid What we seek The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
  • 17.
    17 Business Model -Competitive advantages (Moats) are what we looking for…. Company may not be able to create value and fend off competition if it does not have moats in spite of large opportunities. Key sources of competitive advantages that we look for include Intangibles Cost Structure Network Effect Switching costs Brands/Patents and Regulations* Lower cost of production which stem from process, location, scale or access to unique assets. Cost (time, hassle, capital or risk) that customer would incur from one producer or service provider to the other The value of a product increases for both new and existing customers as new customers join the network Not All Moats are equally valuable Most businesses have no moats (our default assumption for evaluating any new company) or have legacy moats i.e. no ability to reinvest in the business. We look for companies which have either large reinvestment opportunity or capital light businesses which do not need significant capital to grow * We refrain from buying stocks of companies which benefit from favourable regulations alone Eicher SBI Life CONCOR Infosys The sector(s)/stock(s)/issuer(s) mentioned in this note do not constitute any recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer. The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
  • 18.
    18 Business Model -Quality of business  Facets of quality are • Capital Intensity – Amount of capital which can be reinvested in the business • Capital Efficiency – Returns generated on capital employed (Superiority of ROCE)  Simple businesses (with optionality of complementary extensions) with growing market shares  Quality of the business is displayed through its ability to generate superior (spread over the cost of capital), consistent, predictable and durable ROCE.  ROCE along with growth defines the magnitude of value created by the business  Size of the opportunity determines capital reinvestment which in turns drives growth  Cashflows (not earnings) defines the true character of business  Both quality of business and management are indispensable.  ROCE of the business is function of the character of business where as ROE of business is function of Business + Management.
  • 19.
    19 Management – Alignmentof interest with shareholders Capital allocation  Ability to know where to allocate capital (and where to deny it)  Remain focussed on few areas of competence  Investing in areas with similar or higher ROCE Capital Distribution  The capital to be distributed back to share holders in excess of • Funding future growth • Funding on acquisition • Building contingencies Other Facets  Integrity and passion  Stakeholder relationship – with not only shareholders, but also employee, vendors, customers  Governance standards  Past Track record of the management Key traits of competent management = Capital Allocation + Capital Distribution
  • 20.
    20 Valuation - PriceValue Gap (way we think about valuation)  Margin of Safety : We scout for Margins of safety = Gap between Intrinsic Value and Price  Stock returns generally mirrors the earnings growth (unless the stock is incorrectly priced to begin with).  Focus on entry multiples: We focus on the entry multiples which we pay for the businesses. If entry multiples are chosen properly , we can be assured of stock returns = earnings growth.  Re-rating is not our base case: The stock re-rating can be significant driver of overall returns as the market changes its perception on the stock – “Re-rating” however is not our base case for valuation  Business cycle critical to judge value: Companies in early or mid-cycle can cover up for moderately higher valuation; Late cycle companies with excessive valuations are untenable.  Stocks held for momentum: We may not be comfortable in buying companies which are in late cycle and excessively valued, however there will be stage were our core holding get significantly “re-rated”. These are then shifted from “Core portfolio bucket” to “held for momentum tactical bucket” and are sold as the momentum starts to fade. Stock Returns can be derived as = Earnings Growth x Valuation multiple Change The investment approach / framework/ strategy mentioned herein are currently followed by the scheme and the same may change in future depending on market conditions and other factors.
  • 21.
    21 Valuation – Businesscycle and Valuation Business Cycle Early Mid Advance Late 1.0 2.0 3.0 4.0 Valuation Excessive 4.0 2.5 3.0 3.5 4.0 High 3.0 2.0 2.5 3.0 3.5 Low 2.0 1.5 2.0 2.5 3.0 Attractive 1.0 1.0 1.5 2.0 2.5 4 1 3 2  The characteristics of the investee companies chosen would mean valuation are unlikely to be in low bucket unless overall market valuations are undemanding  We actively seek exposure to companies in early or mid cycle Peak earnings and valuation Favoured zone given market valuations Biggest source of alpha if thesis is correct Valuation still supportive
  • 22.
    22 : Moving towardstop quartile performance ICICI Bank credit growth in-line with HDFC Bank Core PPOP as % of avg. assets close to all time high Net non-performing assets sub 1% and below FY14 level Subsidiaries account for ~20% of value for the bank Lending Weight : 23%* ICICI Weight : 10%* *Core Value = 2.7x FY25 discounted back to FY24 at COE Source: Company, 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022. PPOP – Pre provision Operating Profit 60 34 15 -3 -17 19 17 14 17 14 12 7 10 14 10 14 17 37 34 35 56 27 27 22 23 26 21 27 19 19 24 21 14 21 -20 0 20 40 60 FY06 FY08 FY10 FY12 FY14 FY16 FY18 FY20 FY22 Credit Growth YoY (%) ICICI Bank HDFC Bank 1.9 1.6 1.6 1.8 2.4 2.4 2.3 2.5 2.8 2.9 2.9 2.4 2.3 2.4 2.6 2.7 2.9 1.7 2.4 2.8 2.5 2.9 0.0 1.0 2.0 3.0 FY06 FY08 FY10 FY12 FY14 FY16 FY18 FY20 FY22 % 2.0 2.5 3.7 4.3 5.1 4.5 3.6 3.2 3.0 3.8 5.8 7.9 8.8 6.7 5.5 5.0 3.6 0.7 1.0 1.5 2.1 2.1 1.1 0.7 0.8 1.0 1.6 3.0 4.9 4.8 2.1 1.4 1.1 0.8 0.0 2.0 4.0 6.0 8.0 10.0 FY06 FY08 FY10 FY12 FY14 FY16 FY18 FY20 FY22 Asset Quality GNPA % NNPA % 937 71 60 25 61 13 46 1,121 500 600 700 800 900 1,000 1,100 1,200 Core Bank Life Ins Gen Ins Securities AMC Others Holdco Discount (20%)
  • 23.
    23 Bajaj Finance: SteadyCompounder BAF still is <2% of the banking system advances Steady compounding of AUM and PAT 3.6 3.4 3.3 5.3 21.5 20.9 16.8 22.7 0 5 10 15 20 25 - 1.0 2.0 3.0 4.0 5.0 6.0 FY12- 15 FY16- 19 FY19- 22 FY23 TTM FY12- 15 FY16- 19 FY19- 22 FY23 TTM ROE ROA ROA ROE ROA and ROE well above pre-covid levels - 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 0 50 100 150 200 250 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 % of Banking System Advances BAF AUM (Rs bn) Lending Weight : 23%* BAF Weight : 6%* 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022 - 20.0 40.0 60.0 80.0 100.0 120.0 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Rs bn HDFCB BAF PBT of HDFC Bank and BAF: BAF has outperformed except Covid Note :Y2 for HDFCB/BAF is FY01/FY10 when they had similar AUM of Rs 40-46 bn 0 10 20 30 40 50 60 70 80 - 500.0 1,000.0 1,500.0 2,000.0 2,500.0 FY08 FY12 FY16 FY22 FY08 FY12 FY16 FY22 PAT (Rs bn) AUM (Rs bn) AUM PAT
  • 24.
    24 : Consistently superiorperformance Consistently better credit cost vs peers Chola has the most diversified branch network Chola is consistently outperformed peers in AUM growth Chola delivered 17-18% ROE and 2% ROA over the decade Lending : 23.0%* Chola Weight: 3.0%* Source: Company, Internal 19.0 15.1 8.13 12.2 13.2 20.7 18.7 10.45 13.3 14.2 CIFC MMFS SUF SHTF IIB 10 Year CAGR 8 Year CAGR 22% 36% 29% 28% 76% 26% 22% 6% 21% 28% 26% 52% 64% 29% 24% 16% 12% 36% 22% 24% CIFC MMFS SUF SHTF IIB AU North East South West - 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 CIFC MMFS SUF SHTF IIB AU SFB - 0.5 1.0 1.5 2.0 2.5 3.0 12.0 14.0 16.0 18.0 20.0 22.0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 LHS - RoE RHS - RoA 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022. CIFC: Cholamandalam Investment and FInance , MMFS: Mahindra and Mahindra Financial services, SUF: Sundaram Finance, SHTF: Shriram Transport Finance, IIB: Indusind Bank, AU: AU Bank
  • 25.
    25 : Multiple tailwinds SBI consistently gaining market share (Individual APE) Margin profile improving with improving product mix SBI product mix is progressively improving SBI Life is the least cost producer (Cost/Individual APE) Source: CLSA, Investec Insurance Weight: 4.0%* SBI Life Weight: 4.0%* 11 13 21 24 6 5 11 15 0 5 10 15 20 25 30 FY09 FY11 FY13 FY15 FY17 FY19 FY21 H1FY23 Mkt Share (%) Within Pvt Within Total 10% 7% 11% 1% 0% 14% 31% 19% 5% 4% 3% 4% 53% 71% 66% 0% 20% 40% 60% 80% 100% FY16 FY17 FY18 FY19 FY20 FY21 FY22 Protection Non-par Par Group savings ULIP 18.4% 19.8% 20.7% 23.2% 25.9% 31.0% 14.2% 15.4% 16.2% 17.7% 18.7% 20.4% 22.9% 0% 5% 10% 15% 20% 25% 30% 35% FY16 FY17 FY18 FY19 FY20 FY21 FY22 H1FY23 % VNB margin (Effective Tax Rate) VNB margin (Actual Tax Rate) 71.8% 21.9% 58.3% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% FY16 FY17 FY18 FY19 FY20 FY21 FY22 HDFC Life SBI Life ICICI Life 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022
  • 26.
    26 Infosys: To sustainindustry leading performance Revenue growth above peers in last two years TTM TCV post covid is 2x higher than pre-covid TTM TCV: Trailing Twelve month Total Contract Value, CC : Constant Currency Infy’s margins improving to pre-covid levels vs peer’s Clients in US$ 100mn+ revenue bucket increased 1.4x in last 3 years -8.0% -3.0% 2.0% 7.0% 12.0% 17.0% 22.0% 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 YoY CC revenue growth Infosys TCS HCLT IT Services Wipro 18 19 23 27 30 35 39 - 5 10 15 20 25 30 35 40 45 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 No. of 100 million $ clients - 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 TTM TCV (US$ bn) Average pre-covid Average post-covid 22.8% 25.6% 19.6% 15.8% 15.0% 22.5% 24.5% 18.5% 15.9% 13.4% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Infosys TCS HCLT Wipro TechM FY19 FY22 FY23E FY24E IT : 14%* Infosys Weight : 6%* 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022
  • 27.
    27 : Late cyclebeneficiary Enterprise revenue growth trending higher (60% of revenue) Uptick in communication revenue growth (40% of revenues) Steadily improving TTM deal TCV EBIT margin maintained above 15% despite supply side pressures IT : 14%* TechM Weight : 5%* Source: Company, Internal 6% 1% 1% 3% 6% 4% 11% 16% 13% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Enterprise Rev – 2yr CAGR 6% 3% 3% 2% 5% 7% 8% 12% 17% 14% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Comm Services – 2Y CAGR 2.8 3.6 3.7 3.5 2.5 1.7 2.2 2.7 3.1 3.3 3.3 3.3 3.2 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 TTM deal TCV (US$ bn) 13% 12% 10% 14% 16% 15% 15% 13% 11% 11% 14% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 EBIT margin 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022
  • 28.
    28 : Play onrising aspiration levels 0 5 10 15 20 25 30 35 0 50 100 150 200 250 300 350 400 450 500 Bihar UP Jharkhand Assam MP Chattisgarh Rajasthan Orissa All India Maharashtra Gujarat Kerala Tamil Nadu Karnataka Haryana Chandigarh Delhi Goa Rs 000 Per capita income (Rs) Market share (%; RHS) < All India Per Capita Eicher MS - 3% All India Avg Eicher MS - 5% > All India Per Capita Eicher MS -13% Rising aspiration levels provide scope for further expansion of cruiser segment A dominant player (>250 CC) despite entry of competition Rising Exports : Exports ASPs are higher than of domestic market Highest margins in 2W space: Lowest disruption risk Consumption : 19.0%* Eicher Weight: 5%* Source: Company, Internal 100 100 99 99 89 50 60 70 80 90 100 110 0 200 400 600 800 1,000 FY03 FY08 FY13 FY18 FY22 Market Share (%) 000 Units Market Share (%) 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 FY16 FY17 FY18 FY19 FY20 FY21 FY22 % of Revenue Rs nm Exports revenue (Rs mn) Share of exports (%; RHS) 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 FY18 FY19 FY20 FY21 FY22 Eicher Motors Bajaj Auto Hero MotoCorp 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022
  • 29.
    29 Industry leading operatingmargins (5yr Averages) Market leader in several categories (>60% of revenue) 0 10 20 30 40 50 60 70 Emami Colgate P&G Hygiene ITC Nestle GCPL HUL Dabur Marico Gross Margins (%) EBITDA Margins (%) : Market Leader in several niches 68.0 66.0 64.0 55.0 Boroplus Navratna Balms Mens fairness % of Revenue - 14 % of Revenue - 20 % of Revenue - 23 % of Revenue - 6 Market Share (%) 4 6.4 50 13 9.4 42 Ecom + Modern Trade Contribution (%) Direct Reach Outlets (lakhs) Dependence on whole sale channel Widening distribution footprint Undemanding valuations -60 -40 -20 0 20 40 60 80 100 120 140 0 10 20 30 40 50 60 70 80 90 100 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Premium/Disc (%) Emami PE (x) Emami PE (x) Premium to Nifty FMCG Consumption Weight : 19%* Emami Weight : 4%* 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022
  • 30.
    30 : Strong USrespiratory pipeline High contribution from steady branded markets in India/South Africa formulations market Improving free cashflow generation Strengthening leadership in Indian respiratory market Making early in-roads in the large respiratory generics market in US Healthcare: 11%* CIPLA Weight: 5%* Source: Company, Internal 30% 35% 20% 22% 10% 15% 20% 25% 30% 35% FY17 FY18 FY19 FY20 FY21 FY22 Respiratory as a % of Cipla's India sales Cipla's market share in India's respiratory market 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% FY17 FY18 FY19 FY20 FY21 FY22 US Generics - Base business Limited competition generics 0% 20% 40% 60% 80% 100% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 India South Africa US Others -30% -20% -10% 0% 10% 20% 30% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 OCF as a % of sales FCF as a % of sales 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022. OCF – Operating Cash Flow, FCF – Free cash flow
  • 31.
    31 : Large proxyto housing and industrial capex Ultratech will maintain its capacity market share despite its size 40 115-125 40-45 35-40 0 20 40 60 80 100 120 140 Increasing share of green power Reduction in lead distance Other efficiencies* Total savings Rs/ton Multiple levers of cost optimization as per management *increasing conversion ratio, better power consumption norms, optimizing fuel mix, operating leverage etc. Strong balance sheet despite 70% increase in installed capacity Diversified proxy to India’s cement consumption Source: Company, Internal, Emkay Estimates 22 19 21 23 18 19 15 17 24 22 Capacity Share (%) Revenue Share (%) Central North South East West 86 100 115 118 121 0.0 0.2 0.4 0.6 0.8 1.0 0 50 100 150 200 250 FY18 FY19 FY20 FY21 FY22 Installed Capacity (mt) Gross Debt (Rs Bn) Net Debt (Rs Bn) Debt/Equity (x) -10 20 50 80 110 140 170 FY15 FY20 FY22 Sep'22 FY23 FY25 Market Share (%) 15 21 21 23 23 22 Installed Capacity (mt) Infra Weight : 4%* Ultratech Weight : 4%* 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). PPOP: Pre-provisioning operating profit. 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 30-Nov-2022
  • 32.
    32 Annexure – Schemeperformance in SEBI prescribed format Fund Manager 1) Vinit Sambre – Managing since Jun 2020 2) Jay Kothari – Managing since Mar 2013 Data as on 30 Nov 2022. Growth option considered ^ Fund Benchmark # Standard Benchmark
  • 33.
    33 Annexure – Performanceof other schemes managed by same fund manager Data as on 30 Nov 2022. Growth option considered
  • 34.
    34 Annexure – Performanceof other schemes managed by same fund manager Data as on 30 Nov 2022. Growth option considered
  • 35.
    35 Product Labeling Details& Disclaimer In this document DSP Investment 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 AMC however does not warrant the accuracy, reasonableness and / or completeness of any information. The data/statistics are given to explain general market trends in the securities market, it should not be construed as any research report/research recommendation. We have included statements / opinions / recommendations in this document, which contain words, or phrases such as “will”, “expect”, “should”, “believe” and similar expressions or variations of such expressions that are “forward looking statements”. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our services and / or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc. The sector(s)/stock(s)/issuer(s) mentioned in this document presentation do not constitute any research report/recommendation of the same and the scheme may or may not have any future position in these sector(s)/stock(s)/issuer(s). The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the scheme. There is no assurance of any returns/potential/capital protection/capital guarantee to the investors in this Scheme. Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. This document indicates the investment strategy/approach/framework currently followed by the Scheme and the same may change in future depending on market conditions and other factors. All figures and other data given in this document are as on 30 Nov 2022 (unless otherwise specified) and the same may or may not be relevant in future and the same should not be considered as solicitation/ recommendation/guarantee of future investments by the DSP Mutual Fund or the AMC or its affiliates. Investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other financial implication or consequence of subscribing to the units of schemes of DSP Mutual Fund. For complete details on investment objective, investment strategy, asset allocation, scheme specific risk factors please refer the scheme information document and key information memorandum of the scheme, which are available at AMC and registrar offices and investor service centres/AMC website- https://www.dspim.com/ 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 Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Scheme Product Suitability Riskometer DSP Focus Fund Benchmark - NIFTY 500 TRI DSP Focus Fund (An open ended equity scheme investing in maximum 30 stocks. The Scheme shall focus on multi cap stocks) The Open ended equity scheme is suitable for investors who are seeking* Long-term capital growth with exposure limited to a maximum of 30 stocks from a multi cap investment universe Investment in equity and equity-related securities to form a concentrated portfolio *Investors should consult their financial advisers if in doubt about whether the Scheme is suitable for them.
  • 36.
    For Professional Investoruse only 13 #INVESTFORGOOD