Capital t e Wealth - alfaccurate.com To Multibagger Returns 5 ... pick up in execution of infra ......
Transcript of Capital t e Wealth - alfaccurate.com To Multibagger Returns 5 ... pick up in execution of infra ......
“Rule No 1: Never lose moneyRule No 2: Never forget rule No 1.”
- Warren Buffet
2
“In the short run, the market is a voting machine, But in the long term,
it is a weighing machine”
- Ben Graham
“Successful investing is about owning businesses and reaping the huge
rewards provided by the dividends and earnings growth”
- John Bogle
We Protect Capital
3
• Unlevered portfolio• Continuous monitoring
of liquidity risk
Portfolio Liquidity
• Not averse to raise cash• Portfolio exposure increased
over a period
Staggered Approach
• Exposure limits to minimize riskso ≥ 50% in large cap USD1bn+o ≤ 10% in one stocko ≤ 30% in one sectoro ≤ 50% in the top 10 stockso Minimum investments in 30 stocks
• Tactically switching to cash from time to time
Exposure Limits
• Diversification across industries • Diversification across Mcap with
focus on liquidity• Flexible investment style – Growth
as well as Value with focus on Margin of Safety
Investment Universe
A prudent risk management strategy is the core of our investment philosophy
• Sharp Price movement triggers review of stock
• Close eye on valuation with focus on Margin of Safety
Review Points
We Create Wealth
3 Tenets to Equity investing Believe in ‘Time in the
Market’ rather than ‘Timing the market’
Growth as well as Value with focus on Margin of Safety
Diversification across sectors helps us to play sectoral
over/underweight strategy
Long term investment approach
Flexible investment style
Sectoral diversification
3M Stock Selection Approach
Identify Size of Sector Opportunity
Identify top 5 (Profitable) players in the sector
Identify the stock for investment with
Reasonable Valuation
M: Market Size
M: Market Share
M: Margin of Safety
4
Size of the opportunity should be huge to generate significant investment returns
The company be consistently profitable and should be among the leading players in the industry
The company should provide reasonable growth opportunity at reasonable Margin of Safety
Leading To Multibagger Returns
5Note: Purchase price adjusted for any corporate action like split/bonusGain % indicates return since purchase, *Stock sold as per price mentioned
Stock Purchase Date
Purchase Price (Rs)
Price(Rs)30-Apr-2017
Motherson Sumi* 28-Jan-10 41 244
Shree Cement 12-Nov-11 3983 19187
Eicher Motors* 08-Aug-13 3343 15249
Hitachi Life* 22-May-14 300 1360
Maruti Suzuki 29-Jan-14 1659 6524
Ramco Cements 28-Mar-14 213 687
Timken India 22-May-14 233 724
Eveready* 29-Sep-14 102 302
Siyaram Silk Mills 01-Aug-14 604 1687
Indo Count Industries* 19-Dec-14 297 785
Bayer Cropscience* 05-May-14 1427 3547
Welspun India* 09-Jan-14 80 198
Atlas Copco* 28-Jun-10 1115 2750
Capital Trust* 29-Jun-15 253 601
Mannapuram Finance* 16-Dec-15 29 69
HDFC Bank 28-Oct-10 670 1546
HDFC 10-Dec-10 669 1537
ITD Cementation* 23-Feb-15 65 143
Gabriel India* 01-Aug-14 55 114
L&T 11-Apr-13 869 1750
KNR Construction* 03-Dec-14 304 608
CARE* 25-Mar-14 732 1447
Honeywell Automation 30-Jun-14 5790 11024
Whirlpool Of India 02-Mar-16 644 1210
Cholamandalam Investments* 01-Mar-16 654 1185
495%
382%
356%
353%
293%
223%
211%
196%
179%
164%
149%
148%
147%
138%
135%
131%
130%
120%
108%
101%
100%
98%
90%
88%
81%
Gain (%)
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Earnings Matrix Sensex AAA IOP Sensex AAA IOP Sensex AAA IOP
FY16 FY16 FY17E FY17E FY18E FY18E
EPS G(%) -1% 15% 8% 20% 12% 24%
ROE(%) 13% 20% 14% 17% 14% 18%
P/E(x) 22.1 20.5 27.0 18.5 22.7
P/BV(x) 2.9 2.8 5.3 2.6 4.4
AAA Portfolio Superior Earnings Growth
Source: AAA Research
Source: AAA ResearchSource: AAA Research
20% 20%
24%
-1%
8%
12%
-5%
0%
5%
10%
15%
20%
25%
30%
FY16 FY17E FY18E
EPS Growth(%)
AAA IOP Sensex
17% 17%18%
13% 14%14%
-5%
0%
5%
10%
15%
20%
FY16 FY17E FY18E
ROE(%)
AAA IOP Sensex
Wealth Creation – A Case Study
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✓ Global home textile segment of $74bn growing at 5%✓ USA imports 17% made ups with imports growing at
~12%✓ Huge opportunity to improve market share for Indian
players in USA and Europe
✓ Reported healthy revenue and profit growth in last 5 years
✓ Ongoing expansion will lead to healthy profit growth over next 2-3 years
✓ Purchased at one year forward PE of ~6x significantly lower considering its net profit size (Rs 100 crs+ FY14) and 45% ROE
Indo Count Industries Ltd
✓ India expected to become the 5th largest consumer durables market by 2025, reaching $400 Bn by 2020
✓ Total Size of Indian A/C industry pegged at Rs.14750 Crs, with volume growth expectation of CAGR 13-15% over FY16-20E
✓ At 3%, India is one of the lowest penetrated market, leading to significant headroom for growth
✓ Market share of ~8%✓ Entry into Tier 2&3 markets with sub premium product to
improve its market share✓ Launched new products to reach mass consumer levels✓ Strong parentage means access to new technology to
offer world class products to Indian consumers
✓ Expect significant growth in profitability backed by operating efficiency and higher volume growth
✓ Market cap at Rs 800 crs, i.e. PER of below 10x FY15E –lowest in the industry compared to all consumer MNC which trades at average PE of >20x
M1
Mar
ket
size
M2
Mar
ket
Shar
eM
3M
argi
n o
f sa
fety
Hitachi Home and Life Solutions Ltd
✓ 4th largest bed sheet exporter to USA & 13th largest globally
✓ Capacity expansion from 36 to 68 mn meters in last 5 years and further expanding to 90 mn meters
✓ Focus on improving value chain by entering premium bed linen segment leading to improved operating margins
✓ No major investment in backward integration – leading to highest ROE of 44% in the industry
The Investment Process….
Stock Identification
Analysis & Decision making Process
Portfolio Construction Monitoring & Nurturing
Exiting & Realizing Value
• Identify emerging trends and opportunities from a universe of 450 companies• Filter approach – using variety of valuation parameters• Strong intermediary relationship
• Initial screening• Corporate meeting and detailed due diligence• Presentation to investment committee seeking recommendation and approval
• Constant evaluation of valuation metrics to decide optimum return potential • Intrinsic value V/s Current Market Price to evaluate Margin of Safety• Change in underlying assumptions of investment thesis
• Combination of Top Down and Bottom Up approach with a benchmark agnostic strategy to achieve Long term investment objective
• Continuous portfolio monitoring ensures prudent risk management• Regular interaction to provide strategic inputs to strengthen systems, controls and CG
in line with best practices
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Exit Strategy As Important As Entry Strategy
Fundamental Consistency check No. of BSE 500 Stocks
PAT growth 20%+ every year during FY06-FY15 0
Revenue growth of 10%+ every year with ROE15%+ during FY06-15
16
Exit Strategy
➢ When target price of the stock is reached and the risk rewards seems unfavorable
➢ When change in business fundamentals resulting in negative earnings expectations
➢ When weightage of the stock is higher than the desired allocation
➢ When the other stock has better risk-reward
Exit from Sensex 01 Jan 2011 Vs
01 Jan 2001
Exit from Sensex 30 May 2016 vs
01 Jan 2011
ACC DLF
Ambuja Cement Hindalco
Bajaj Holdings Jaiprakash Associates
Castrol India JSPL
GSK Pharma Reliance Communication
Grasim Sterlite
HPCL Tata Power
MTNL
Novartis
Ranbaxy
Reliance Infra
Reliance Petro
Satyam
Zee
Round Up – April 2017
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➢ Globally, macro-economic data continues to be positive in April. China's exports and trade surplus increased more thanexpected in March on improved global demand. The Euro Area economy grew 1.7% YoY in Q1 2017, in line with marketconsensus. As the global economic activity is picking up, the IMF is expecting higher global GDP growth of 3.5% in 2017vs. 3.1% in 2016. Elsewhere, in the 1st round of French election, Mr. Macron (pro-Euro) is leading over Ms. Marine Le Pen(anti-Euro). The final round is on 7th May. President’s Trump’s rhetoric on protectionism seems to be softening as nothingmuch came out from the meeting with Chinese president Xi; moreover, he seems to be retracting his statement of‘withdrawing from NAFTA’.
➢ CPI inflation for Mar17 came in at 3.81%, lower than Bloomberg consensus estimates at 3.94%. Core inflation onannualized basis was recorded at 4.87% vs. 4.83% in Feb17. In FY17, no consistency has been seen in industrialproduction figures, with wide fluctuation. Improvement in advanced economies, revival from demonetisation, andfocused rural spending by central and state governments are likely to improve IIP growth in FY18 from the weak growthin FY17E.
➢ 4QFY17 corporate earnings season is started. Private sector banks and retail focused NBFCs reported strong numbers andmaintained positive growth outlook for FY18. Cement companies reported better numbers compared to street estimatesand are positive about growth outlook driven by government push for affordable housing, pick up in execution of infraprojects and improvement in rural demand as 'Demon' effect fades away. Software companies, as expected, reportedmuted performance, however defined capital allocation policy will result into higher dividend pay out to shareholders.We expect 4QFY17 to remain muted (except metal, private banks) considering that remonetisation is still in process. Webelieve earnings growth recovery to start from 2HFY18 as GST implementation can distort 1Q/2QFY18 numbers.
➢ Sensex has moved up sharply by 12% in last four months. Sensex presently trades at 18.5x PER on FY18 basis - ~11%premium compared to last 10 years average. While correction in the short term cannot be ruled out, we think premiumis justified as earnings growth is about to recover in 2HFY18 and India is going through structural reforms which will havelong term positive impact on economy.
UDAY (Ujwal Distribution companies (DISCOMs) Assurance Yojana) financial turnaround and revival package for DISCOMS via improving efficiency, reducing cost, and enforcing discipline
Bankruptcy Bill and Indradhanush to improve flow of capital and recapitalise public sector banks
Auction-based allocation of natural resources (e.g., coal)
Goods and Services Tax (GST) to streamline and simplify the national tax system
Direct Benefits Transfer (through the Jan Dhan–Aadhaar–mobile trinity) to promote direct transfers of financial benefits to beneficiaries’ bank accounts
Pradhan Mantri Awaas Yojana (Housing for All by 2022) – now middle income group also to get interest subsidy
India – Ongoing Reforms…
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…that will enable faster and better economic growth
13
Source: AAA Research
2.3 2.4 2.22.8
3.33.9
4.6
7.6
2 2.2 2.23
3.64.5
5.4
9.6
0
2
4
6
8
10
12
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Gross NPA (%)
All Banks Public Sector Banks
Source: RBI, AAA Research
3
6 6
20
0
5
10
15
20
25
FY13 FY14 FY15 FY16YTD
Stressed Asset Sale (US$ bn)
142134 130
50
0
20
40
60
80
100
120
140
160
2014 2015 2016 2020E
India - Ease of business doing rankings
Source: World BankSource: RBI, AAA Research
0.5
0.25
0.5
0 0
0.25
0
0.25
0.0
0.2
0.4
0.6
0.8
1.0
4Q
FY1
5
1Q
FY1
6
2Q
FY1
6
3Q
FY1
6
4Q
FY1
6
1Q
FY1
7
2Q
FY1
7
3Q
FY1
7
Interest Rate Cuts (%)
From Cash to Digital Economy = Better Governance
14
UID Enrollments
100 Cr (80%)
5.9 Cr
(60%)
Aadhar linked MNERGS Cards
11.4 Cr
(45%)
Aadhar linked ration cards
12.3 Cr
(71%)
Aadhar linked LPG Connections
Jan Dhan
25 Cr Aadhar linked Bank
accounts opened
US$7-8bn savings annually
69
69
68
59
55
47
45
43
38
31
30
20
14
11
11
10
8
7
Indonesia
Russia
India
Thailand
Malaysia
Mexico
China
Brazil
Japan
Singapore
Korea
US
Australia
Sweden
UK
Canada
France
Belgium
Share of Cash based transactions(%)
Source: Master card Source: RBI, Ministry Of Finance
Size Of Opportunity For Organised Sector
15
Source: Edelweiss, AAA Research
Demonetisation and GST will lead to market share shift from unorganised to organised sector, leading to 3-10x increase in Size of opportunity in the listed equity space.
Packaging
Electrical Equipment
Plastics
Tiles
Apparels
Plywood
Dairy
Diagnostics
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00
Un
org
anis
ed
Sh
are
(%)
Size of Oppportunity (Organised Sector)(no of times over 10 years)
4-5x
6-9x
Improving Macro Economic Factors
16
Source: PPAC, AAA Research Source: IDFC Research, AAA Research
Source: Ace Equity, AAA Research
0.81.6
4.4 4.63.5
5.46.6
11.0 11.1
14.7
10.2
5.9
7.5
0
2
4
6
8
10
12
14
16
3Q
FY1
4
4Q
FY1
4
1Q
FY1
5
2Q
FY1
5
3Q
FY1
5
4Q
FY1
5
1Q
FY1
6
2Q
FY1
6
3Q
FY1
6
4Q
FY1
6
1Q
FY1
7
2Q
FY1
7
3Q
FY1
7
Fuel Consumption Growth(%)
Source: Ace Equity, AAA Research
-5.5 -5.2-6.6
-0.8
1.3
-6.8
-0.3
4.6
9.6
2.3
5.74.3
17.7
-10
-5
0
5
10
15
20
Feb
-16
Mar
-16
Ap
r-1
6
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
No
v-1
6
De
c-1
6
Jan
-17
Feb
-17
Exports Growth YoY(%)
6.37.0
9.48.8
10.2
6.1
9.2
11.3
9.18.2
3.7
0
2
4
6
8
10
12
1Q
FY1
5
2Q
FY1
5
3Q
FY1
5
4Q
FY1
5
1Q
FY1
6
2Q
FY1
6
3Q
FY1
6
4Q
FY1
6
1Q
FY1
7
2Q
FY1
7
3Q
FY1
7
Implied Road Traffic Growth (%)
-7.7
-4.2
-7.9 -6.8
1.4
7.5
2.54.5
6.2 6.3
14.6
2.4
6.7
17.7
1.8
11.1
-10
-5
0
5
10
15
20
1Q
FY1
4
2Q
FY1
4
3Q
FY1
4
4Q
FY1
4
1Q
FY1
5
2Q
FY1
5
3Q
FY1
5
4Q
FY1
5
1Q
FY1
6
2Q
FY1
6
3Q
FY1
6
4Q
FY1
6
1Q
FY1
7
2Q
FY1
7
3Q
FY1
7
4Q
FY1
7
PV Volume Growth(%)
Drivers Of Growth – Investment By Government
17
9900
20003621
798010000
25000
0
5000
10000
15000
20000
25000
30000
FY12 FY13 FY14 FY15 FY16 FY17E
MORTH Project Awards (Kms)
Source: MORTH, AAA Research
24.3
5.7
16.9 17.9
27.1
FY13 FY14 FY15 FY16 FY17*
States Capex Growth(%)
Source: MOSL Research, AAA Research *(01 April 2016 – 30 Sept 2016)
5
12 11
16
32
19
0
5
10
15
20
25
30
35
FY13 FY14 FY15 FY16 FY17 FY18E
Railways Expenditure growth (%)
Source: Emkay Research, AAA Research
India Economy Recovery: Likely Repeat of FY03-08
18
Source: CSO,MOSL, AAA Research
Source: RBI, AAA Research
4.2
5.4
3.8
8.07.1
9.5 9.6 9.3
6.7
8.6 8.9
6.7
4.5 4.75.5
7.67.1
0123456789
1011
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E
GDP Growth (%)
5.0
2.7
5.7
7.0
11.7
8.6
12.9
15.5
2.5
5.3
8.2
2.9
1.1
2.8 2.41.2
0
2
4
6
8
10
12
14
16
18
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E
IIP Growth(%)
Average IIP: 5.6%
Average IIP: 6.9%
Dissecting the economic recovery of FY03-08
27%
40% 39.7%
16%
31%
47.9%
26%
90%
47.3%
23%
11%
26.1%
53%
65%
45.8%
33%
60%
72.3%
43%
62%
22.0%
32%
73%
54.4%
17.6%
15.6%
52.2%
21% 21%
26.6%25%
38.7%
0%
20%
40%
60%
80%
100%
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
Re
ven
ue
PA
T
Mca
p
PA
T
Mca
p
Auto Banking Cement ConsumerFMCG
ConsumerDurables
Engineering IT Mining &Metal
Oil & Gas Pharma Sensex
Sectoral CAGR FY03-08 (%)
Source: BSE, AAA Research
Sensex Net profit CAGR: 25.0%Sensex Returns CAGR : 38.7%
Market Cap Returns > Net Profit Growth
19
0
2
4
6
8
10
12
14
16
BSE Auto BSE Banking BSEConsumer
Durable
BSE CapitalGoods
BSE FMCG BSEHealthcare
BSE IT BSE Metal Sensex
5.3x
6.6x
3.3x 3.2x 2.7x
8.7x
15x
7x
5.1x
Source: BSE
Sensex went up by 5.1xCyclical indices went up by 5-15x
Dissecting The Economic Recovery Of FY03-08
20
Focus On Stock Earnings Growth - Earnings Growth To Bounce Back
21
Source: Bloomberg , AAA Research
81 129 181
250 266 291 278 280 216 236 272
348 450
523
718 833 820 834
1,024 1,124
1,183
1,340 1,355 1,340 1,447
1,621
1,913
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
E
FY18
E
FY19
E
FY93-96EPS CAGR 45%
FY96-03: EPS CAGR 1%
FY03-08 EPSCAGR 25%
FY08-16 EPSCAGR 6.1%
FY16-19E EPSCAGR 12.6%
Sensex CAGR -1.4%
Sensex CAGR 38.7%
Sensex CAGR 6.2%
SensexCAGR
??
Sensex CAGR 13.9%
After reporting single digit earnings growth (FY08-16), Sensex is expected to report healthy double digit growth (FY16-19E)
Big Events during last three years
22
China Slowdown – Fall in commodity prices
China – Yuan Devaluation
BrExit – Europe Slowdown
US election – Donald Trump elected against prediction
Demonetization Impact
Performance *CNX Nifty *AAA PMS
2 Years 13.7% 42.5%
3 Years 38.9% 134.0%
5 Years 77.3% 248.7%
Uncertainty in the short term creates opportunity in the long term
*Data ending for the period 30 Apr 2017
Market Valuations
23
Sensex @29918 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E
EPS (Rs) 821 826 1,013 1,123 1,185 1,340 1355 1340 1447 1621 1913
EPS G(%) -1% 1% 23% 10% 6% 13% 1.1% -1.1% 8.0% 12.0% 18.0%
BV (Rs) 4,441 5,101 5,944 6,842 7,790 8,862 9540 10,143 10,722 11,370 12,135
P/E(x) 24.8 23.5 21.2 21.9 22.3 20.7 18.5 15.6
P/BV(x) 3.7 3.8 3.2 3.1 2.9 2.8 2.6 2.5
ROE(%) 18.5% 16.2% 17.0% 16.4% 15.2% 15.1% 14.2% 13.2% 13.5% 14.3% 15.8%Source: Bloomberg, AAA Research
Source: AAA ResearchSource: AAA Research
7
12
17
22
27
Ap
r-0
7
Ap
r-0
8
Ap
r-0
9
Ap
r-1
0
Ap
r-1
1
Ap
r-1
2
Ap
r-1
3
Ap
r-1
4
Ap
r-1
5
Ap
r-1
6
Ap
r-1
7
P/E Fwd (x)
P/E Fwd(x)
1.3
1.8
2.3
2.8
3.3
3.8
4.3
4.8
5.3
Ap
r-0
7
Ap
r-0
8
Ap
r-0
9
Ap
r-1
0
Ap
r-1
1
Ap
r-1
2
Ap
r-1
3
Ap
r-1
4
Ap
r-1
5
Ap
r-1
6
Ap
r-1
7
P/B Fwd (x)
P/B Fwd(x)
Mean 17.0x Mean 2.7x
The AlfAccurate Advisors Team
25
Rajesh Kothari Govind Agrawal
Founder and Managing Director Director
Bhushan Koli
Head Operations and Compliance
Bhushan Koli
Award Winning Investment Team
Mr. Rajesh Kothari – Managing Director (Grad CWA, MBA)
➢ Rich experience of more than 22 years in Indian capital market
➢ Expertise in both Long Only & Long Short investment strategy
➢ Former Director with Voyager Investment Advisors (US$500m) – USA based India dedicated
fund for two and half years
▪ During his tenure, fund Outperformed the benchmark indices significantly
➢ Former Fund Manager with DSP Merrill Lynch (now DSP Blackrock) Fund Managers Ltd for
more than four years
▪ During his tenure equity assets under management grew from USD100m to USD1.5bn
▪ The schemes delivered annualized return of 55% (Equity Fund) & 62% (Top100 Fund) outperforming
benchmark indices by more than 20% & 10% respectively
▪ The equity schemes maintained its “1st Quartile Ranking” consistently during his tenure
26
Achievements:
➢ Received CMA Young Achiever Award 2014
➢ Rated as “Platinum Fund Manager” by Economic Times for DSP ML Equity Fund on a risk-adjusted return
basis in July 2006
➢ Rated as “Gold Fund Manager” by Economic Times for DSP ML Balanced Fund on a risk-adjusted return
basis in July 2006
➢ CNBC TV18 - CRISIL Mutual Fund of the Year Award 2006 for DSPML Equity Fund
➢ Lipper India Fund Awards 2006 for best equity fund group for 3 years
➢ DSPML Technology.com Fund - best fund in the equity sector in the IT category (5 years, 8 eligible schemes)
➢ He was invited at Maharashtra Economic Summit to present views on Indian Infrastructure
(http: //maharashtrasummit.mieda.in/Program.aspx)
➢ Invited by Institute of Directors to present views on Governance Deficit
➢ Invited by World Council for Corporate Governance to present views on Governance
➢ Elected on the advisory panel of World CSR forum.
➢ Actively involved with Arham Yuva Group - a philanthropic initiative
Award Winning Investment Team
27
Glimpses Of Superior Performance To Benchmark Index
28Note: Past performance may or may not be sustained in future
Consistent Superior returns to Benchmark Index
*(FY10 is from 23 Nov 2009 - 31 Mar 2010)*(01 Apr 2017 – 30 Apr 2017)
-50
0
50
100
150
FY03 FY04 FY05 FY06 Jun06-08 FY10* FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 YTD#
DSP MerillLynch MF Voyager AlfAccurate Advisors
Funds Managed by Rajesh Benchmark Index
0200400600800
10001200140016001800200022002400260028003000
FY03 FY04 FY05 FY06 Jun06-Dec08
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18YTD#
Funds managed by Rajesh(%) BSE 500 Index(%)
27.2% CAGR
13.6% CAGR
Rs 10,000 invested in Mar02 is worth presently Rs 2,86,200
Mr. Govind Agrawal – Director (FCA – Chartered Accountant, LLB)
➢ Rich experience of 28 years in finance out of which last 22 years in Indian capital market
➢ Former Fund Manager with Reliance Capital Asset Management Company (USD 20bn) for over
four years.
▪ Reliance Emergent India Fund (USD 100m offshore fund) outperformed benchmark indices by 35% since
its inception.
▪ Travelled intensely across globe to meet the investors and presented the firm for India and Emerging
Market as Investment Theme
▪ Played instrumental role in setting up Macro Economic Research desk
➢ Former Executive Director with UBS Securities India Pvt Ltd, a Swiss Bank subsidiary, for 4 years
▪ Responsible for India Account Manager for large FIIs
▪ Guided the portfolio managers for right country, sectors and stocks weightings
Award Winning Investment Team
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➢ Former Senior VP – Equity Sales with Motilal Oswal Securities Ltd for 10 years
▪ Played key role in establishing institutional equity broking business, systems and processes
▪ Was account manager for major institutional domestic and foreign accounts advising the clients on sectoral allocation
and stock selection
Achievements
➢ Represented Reliance AMC on international platforms and panel discussion on Emerging Markets and Indian
Equity Market
➢ Addressed investors’ meet and the private banking teams of large banks in Middle East, Asia, London,
Europe and in India
➢ At UBS, was voted as the “Best Equity Sales Person‐Mega Funds category, Asia Money 2006”
➢ Won several awards at Motilal Oswal for consistently contributing to Institutional Equity Sales
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Award Winning Investment Team
AlfAccurate Advisors
To be the world’s most admired investment advisor
We are specialists in Indian capital markets with combined experience of 70+ years
Protect Capital , Create Wealth
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Our Guiding Principles
Ambition
Entrepreneurship
Accountability
Passion
Excellence
Commitment
Teamwork
Integrity
Meritocracy
33
Investment Philosophy...
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Fundamental Research core ofour investment management
Long Term Horizon
Constant endeavor to be ahead of the Market
Emphasis on value research Vs commodity research
Benchmark aware but not driven
Flexible investment style
Focus on margin safety
Combined With Investment Discipline...
Parameter Rules Current Position
Cap Exposure At least 50% in large cap(More than USD1bn) 61.0% invested in large cap
Sector Weightage Not more than 30% in one sector Maximum exposure in a given sector is 19.6%
Stock WeightageNot more than 10% in a given stock and not more than 50% in the top 10 Stocks
Maximum Exposure in a given stock is 3.6%. Top 10 stocks as percentage of portfolio is 27.5%
Number of Stocks Minimum 30 Stocks 57 stocks
Stock Universe 450 Corporates 450 Corporates
Number of Stocks: 57Number of Sectors: 16Top 10 Stocks as % of portfolio: 27.5%Data as on 30 Apr 2017 35
Sector Allocation
Agri Input Airlines Auto Auto AncillaryBanking Cement Chemicals ConstructionConsumer Engineering Oil & Gas OthersPharma Power Software TextilesCash & Cash Equivalent
61%
24%
14% 2%
Portfolio Allocation
Large Mid Small Cash
Leading To Superior Performance
Performance (%)FY18YTD#
FY17 FY16 FY15 FY14 FY13 FY12 FY11 Since Inception*
AAA India Opp. Plan 7.3 28.2 2.5 71.7 29.0 11.2 9.6 18.6 376.7
BSE 500 Index 2.7 24.0 (7.8) 33.2 17.1 4.8 (9.1) 7.5 94.9
BSE Sensex 1.0 16.9 (9.4) 24.9 18.8 8.2 (10.5) 10.9 74.1
CNX Nifty 1.4 18.5 (8.9) 26.7 17.9 7.3 (9.2) 11.1 82.3
*(23 Nov 2009 – 30 Apr 2017)(Management fees adjusted); #(01 April 2017 – 30 April 2017)
AAA India Opp. plan consistently not only outperformed but also generated Positive return in volatile markets
Note: Returns of individual clients may differ depending on time of entry in the Strategy. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments
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18.69.6 11.2
29.0
71.7
2.5
28.2
7.37.5
-9.1
4.8
17.1
33.2
-7.8
24.0
2.7
-20
0
20
40
60
80
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18YTD#
AAA India Opportunity Plan - Equity Vs BSE 500 Index (%)
AAA India Opportunity Plan - Equity BSE 500 Index
Leading To Superior Performance
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AAA India Opp Plan ranks # 1 compared with 141 diversified funds of each reputed fund house
Average Monthly Rolling Returns Since Inception(%)
Note: Returns of individual clients may differ depending on time of entry in the Strategy. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments
Compounded Annual Returns (%)
1 YEAR 2 YEARS 3 YEARS 5 YEARS Since Inception*
AAA India Opp. Plan 32.4 19.4 32.8 28.4 23.4
BSE 500 Index 24.7 10.2 15.9 14.1 9.4
BSE Sensex 16.8 5.2 10.1 11.6 7.8
CNX Nifty 18.5 6.6 11.6 12.1 8.4
*(23 Nov 2009 – 30 Apr 2017 )(Management fees adjusted)
*Since Inception (23 Nov 2009 – 30 Apr 2017 )(Management fees adjusted)
Performance Vs leading Mutual Funds Since Inception(%)
376.6
211.2
150.2121.0
72.494.9
74.1 82.3
AAA IndiaOpp.Plan*
Quartile 1 Quartile 2 Quartile 3 Quartile 4 BSE 500Index
BSESensex
S&P CNXNifty
Source: Bloomberg
24.326.2 25.2
9.6 10.6 9.7
0
5
10
15
20
25
30
1 Year 3 year 5 Year
AAA India Opp. Plan BSE 500 Index
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Risk Analysis : AAA IOP PMS Performance Compared To Benchmark
Parameters How to read ratioAAA IOP
PMSBSE500 Index
AAA IOP PMS performance
BetaLess than 1 beta is good sign as it denotes lower volatility of the
portfolio0.85 1.0
Beta of 0.85 shows AAA PMS has lesser volatility compared to BSE500 Index
Sharpe Ratio Excess return per unit of
deviation. Higher the Sharpe ratio, better it is.
1.1 0.10Top Performing Midcap MFs have Sharpe Ratio 0.75+. AAA IOP PMS Sharpe ratio is
one of the best in the industry.
Standard DeviationStandard deviation denotes
amount of variation14.5 15.4
AAA IOP SD is less than Benchmark as well as peer group which shows portfolio has
lower risk
Upside capture It denotes overall performance
of PMS during up markets. 157.5 100.0
Upside capture ratio of more than 100 indicates that fund has outperformed Benchmark during positive markets.
Downside captureIt denotes overall performance of PMS during down markets.
78.8 100.0Ratio of less than 100 indicates, fund has
outperformed Benchmark during negative markets.
Capture Ratio
Capture ratio >1 indicates, Investment Manager has gained
more during up (positive) markets and lost less during
down (negative) markets.
1.99 1AAA PMS 1.99 capture ratio is healthy as
it protected capital during negative markets and building wealth consistently.
Data is analysed since inception of AAA IOP PMS data i.e. 23 Nov 2009-30 Apr 2017
AAA IOP PMS Rolling Return Analysis
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Note: Returns of individual clients may differ depending on time of entry in the Strategy. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments
Since Inception (23 Nov 2009 – 30 Apr 2017 )(Management fees adjusted)
Monthly Rolling Returns Analysis(%)
AAA IOP 1 Year
BSE500 Index 1 Year
AAA IOP3 Years
BSE500Index 3 Years
AAA IOP 5 Years
BSE500 Index 5 years
No of obervations 79.0 79.0 55.00 55.00 31.00 31.00
No of Positive Observations 73.0 59.0 55.00 49.00 31.00 31.00
No of Negative Observations 6.0 20.0 0.00 6.00 0.00 0.00
Loss Probability (%) 7.6% 25.3% 0.0% 10.9% 0.0% 0.0%
Average Returns (%) 24.3% 9.6% 26.2% 10.6% 25.2% 9.7%
Median Returns (%) 18.3% 5.8% 30.9% 12.3% 24.8% 9.5%
Maximum Returns (%) 88.8% 51.3% 41.0% 22.9% 28.5% 14.1%
Minimum Returns (%) -13.8% -27.4% 6.2% -4.2% 21.9% 5.6%
➢ AAA has delivered average returns of 24.3%, 26.2% and 25.2% for 1 year, 3 years and 5 years respectively on monthly rolling return basis
➢ Negative returns for 3 years and 5 years rolling periods are 0
Note: Equity return scenarios are assumed expected returns.
The Power Of Compounding – A Scenario Analysis
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Scenarios based on investment of Rs 5 Crores
The real power of compounding is seen only over the long term
12% CAGR 15% CAGR 20% CAGR
30Yrs
150 Cr
9 Cr
20Yrs5Yrs 10Yrs
16 Cr
48Cr
331 Cr
20 Cr
5Yrs
82 Cr
20Yrs 30Yrs10Yrs
10 Cr
10Yrs 30Yrs
717 Cr
20Yrs
137 Cr
26 Cr
5Yrs
11 Cr
30Yrs20Yrs
1,187 Cr
5Yrs
31 Cr
192 Cr
10Yrs
12 Cr
18% CAGR
Why We Should Be Your Choice Of Investment Advisory
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Strong domain knowledge in Indian Capital markets
Expertise in both – Long Only and Long Short Investment Strategy
Sound Research capabilities
Award winning investment team and track record Process driven organization
Adequate infrastructure to support scalability
Integrity and ethics as the core of the business
Access to Founders – founders are fund managers
Staggered investment approach
Client centric business model
No conflict of interest
Product Features
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Name of plan AAA India Opportunity Equity PMS Plan
Objective Long Term Capital Appreciation
Investment ThemeTo invest in listed companies with combination of high growth stocks as well as value stocks
Principal Officer Rajesh Kothari
Director Govind Agrawal
Custodians Deutsche Bank, India
Fund Accountant Deutsche Bank, India
Depository Participant IL&FS, India
Mode of payment Fund transfer/cheque/stock transfer
Awards and Recognitions
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Dr. Jitendra Singh, Union Minister of State (I/C), Prime Minister Office, giving Certificate of Merit – CMA Young Achiever Award – 2014
Lipper Fund Award – India 2007
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Thank You Rajesh KothariT: +91 22 42360301M:+91 98200 [email protected]
Govind AgrawalT: +91 22 42360 311M: +91 93208 [email protected]
AlfAccurate Advisors Pvt. Ltd503, B Wing, Naman Midtown,Elphinstone Road, Mumbai - 400 013, IndiaT: +91 22 42360300; F: +91 22 42360333 [email protected]
Disclaimer: Equity Investments are subject to market risks , read all plan related documents carefully. This document is not for public distribution and has been furnished to you solely foryour information and may not be reproduced or redistributed to any other person. This material is for the personal information of the authorized recipient. The material is based uponpublicly available information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon. Opinions expressed are our currentopinions as of the date appearing on this material only. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject tochange without notice. Past performance may or may not be sustained in future. No part of this material may be duplicated in any form and/or redistributed without AlfAccurate AdvisorsPvt Ltd.'s prior written consent. In so far as this report includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot beguaranteed. Alfaccurate Advisors Pvt. Ltd and any person connected with the firm, does not accept any liability arising from the use of this document.
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