Right Horizons market outlook for 2016 - stay invested

YOUR LOGO

India - Positioned to performIts not ‘2008’…limited room for downside risk

YOUR LOGO

Table of contents

India: Fundamentally sound micro story

What globe is saying about India

Why year 2016 could be strong for India

Our portfolios & Performance overview

1

2

3

5

Super Value – A bunch of next generation super stars

Flexicap – All weather PF with a perfect mix of large, mid & small cap

Nifty Plus – Opportunity to get extra over index

A

B

C

Alliance – A fair mix of both the worlds D

AUM expectations6

YOUR LOGO

India: Fundamentally sound micro story1

A recent Goldman Sachs study forecasts India to grow at a sustainable

rate of 8% growth until 2020. The current infrastructure thrust could lead

to strong uptick in economic activity.

YOUR LOGO

IMF projected 7.5% growth rate for India in FY17

7.3

5.9

30.2

31.6

7.3

5

29.8

31.1

7.5

5.3

29.6

31.1

GDP (YoY %)

CPI (YoY %)

Gross Savings (% of GDP)

Gross Investments (% ofGDP)

FY17 FY16 FY15 The macro story of India

continues to present

opportunity and nothing to

the contrary has happened

so far to change the view

The concerns in the equities

market in 2015 were on

valuations and that item also

seems to favorable now

given corporate earnings

have been steady and could

move into the robust territory

in a few quarters from now

YOUR LOGO

Redemption from ‘Emerging Markets’ impacted India, no issues over fundamentals

India, the strongest BRIC. Unlike Brazil, China, Russia and even Australia, etc; India’s position with a net commodity importer reaps rewards in the current economic situation.

Market resilience: 35 out of BSE 200 reported >10% YoY growth in operations during Dec 15 quarter; however, their stocks declined by >10% during past 1 yr

Market stress limited to: Commodity companies such as Metals, Oil Exploration, Agri, etc and PSU Banks got impacted due to global slowdown and NPAs and Bad loans respectively

Consumption theme expected to continue for a long time: Infra, Autos and other domestic consumption stories are strong positioned. Retail banking is robust.

Rural thrust augers well: Improving fundamentals and strong outlook for economy due to higher budgetary allocation towards core segments confirms that market will bounce back in the next couple of months.

YOUR LOGO

Strong fundamentals but cheap valuations

15

16

17

18

19

20

21

22

23

24

01-Jan-2013 01-Jun-2013 01-Nov-2013 01-Apr-2014 01-Sep-2014 01-Feb-2015 01-Jul-2015 01-Dec-2015

P/E of 16x was touched

historically, when the things were

really bad and economy was

growing at 5+%

There is no reason for such valuation

when economy is growing at 7+%

TTM P/E valuation of SENSEX

YOUR LOGO

Why downside appears limited; get used to volatility

Two successive monsoon failures, 3rd is expected to be better: YET 10 out ofTop15 sectors of BSE 200 reported better December quarter numbers. Normalmonsoon this year could significantly change this picture positively.

Expected Boost in Retail Investments: OROP and 7th Pay Commission couldtrigger discretionary spend and improve retail investments.The equity MF SIPbook growth is significant and now amounts to over Rs.30,000 Crores additionsannually, thereby strengthening domestic MF industry to counter FIIs sellingpressure.

Indian corporate continue to reduce debt: December 2015 earnings witnesseddecline in interest cost due to debt repayment and easing interest cycle.

Economy on the path to grow over 7% for next few years: This presents anexcellent opportunity to pick a growth economy at valuations (17x FY16) ofdeveloped economies.

YOUR LOGO

What globe is saying about India2

One Voice from all majors – “India is on right track”

YOUR LOGO

YOUR LOGO

Global view on Indian economy

Placeholder for

the headline

Prospects for India’s economy are brighter than other emerging markets. After a slow start, Mr Modi’s government in pursuing reforms more urgently

Placeholder for

your text

At a time when global economies are facing tumoil, India is poised to evolve into an even more attractive and stable destination for investors on account of favorable macroeconomic conditions

Insert your own

text here

Unlike China, India is less exposed to external headwinds and would benefit from local consumption and lower commodities. Pegs GDP growth at 7.5%, fastest in the world.

Placeholder for

your text

Modernization of infrastructure underway, Indian productivity growth on the rise and civil servant pay hike set to boost the domestic consumption. Among all emerging markets, India will be the leading grower for next 3-5 years

What are the big guys saying on India?

YOUR LOGO

Why year 2016 could be strong for India3

YOUR LOGO

Factors to play in 2016

POSITIVES NEGATIVES

Growth in Domestic Consumption Exports to struggle

Modest revenue growth for ‘Prosumer’ Geopolitical instability

Lower commodities: Lower inflation &

Higher marginsSales to drag for commodity players

Stable currency Uncertainty over Monsoon

Higher infra spending PSU Bank NPAs

Lower interest rates: Lower interest

expense & higher operating cash flow

Better balance sheet

Investment climate favorable

YOUR LOGO

Year 2016 offers a strong foundation

Consumption continues to be resilient and demand would pick up

Commodity price weakness expected to continue and is expectedto keep infaltion in check

Policy level movement has started and budgetary support could bea major boost

Market bouyancy expected to return with expected resilientearnings on the back of continued margin strength due to lowercommodity prices and easing interest rates

We believe that the SENSEX could end year 2016 comfortablyover 30,000; a 22% upside from current level.

YOUR LOGO

Our portfolios & Performance overview5

We invest in what we understand

We have been consistently outpacing the best 4 STAR or 5 STAR

rated MF offerings of industry

YOUR LOGO

RH NIFTY PLUS

RH FLEXICAP

RH SUPER VALUE

A mix of Mid & Small

cap stocks which

have a strong intrinsic

value and have ability

to become large cap

in long run

A perfect blend of

Large, Mid & Small

cap stocks selected

rigorously from CNX

500 list only.

A tightly aligned

scheme to CNX Nifty

along with few names

of high quality value

mid caps from BSE

200 list

A perfect categorization of value investing…

YOUR LOGO

We are comparing with the top performing 4-5 star rated Midcap Equity MFs

Performance 1 Month 3 Months 6 Months 1 Year

RH Super Value 7.42% -5.03% -3.74% -4.13%

Nifty Midcap 100 Index 6.10% -3.96% -3.22% -6.31%

DSP BR Small & Midcap 3.65% -6.56% -5.40% -8.96%

HDFC Midcap Opportunities 3.76% -5.81% -5.94% -8.30%

ICICI Prudential Value Discovery 4.70% -5.81% -6.21% -11.02%

Best performance in all time frames.

Scheme remains a value based highly rated mid-cap stock strategy and we have

demonstrated that superior 5 star rated consistent performance is possible by

sticking to value based approach

Performance overview

SUPER VALUE – A bunch of next generation super stars(A)

All returns are net returns as on 11th Mar 2016 for the respective periods (including Fees & Expense Ratios)

YOUR LOGO

We are comparing with the top performing 4-5 star rated Multi-Cap Equity MFs


RH Flexi cap 6.36% -5.92% -6.28% -8.49%

Nifty 500 Index 7.11% -2.60% -3.89% -12.18%

HDFC Equity 9.10% -8.15% -9.85% -17.13%

Franklin India Flexi cap 5.00% -2.97% -4.79% -8.80%

Birla Sun Life Equity 7.37% -1.93% -4.19% -9.48%

Competitive performance in all time frames.

Restructuring of this scheme started during March 2015 for legacy portfolios and

expected to improve its 1 year ranking by the end of FY16 due to recent

transformation.

RH Flexicap remains a perfect blend of top performing large, mid and small cap,

which are value based and highly rated stocks in CNX 500.

FLEXICAP – All weather PF with a perfect mix of large, mid & small cap(B)


YOUR LOGO

We are comparing with the top performing 4-5 star rated Large Cap Equity MFs


RH Nifty Plus 5.54% -6.34% -8.59% -14.02%

Nifty 50 Index 7.65% -1.32% -3.58% -13.68%

HDFC Top 200 8.94% -6.02% -7.71% -15.97%

ICICI Prudential Focused Blue-chip 5.71% -4.10% -4.65% -12.47%

Birla Sun Life Top 100 6.51% -2.33% -3.88% -9.91%

RH NiftyPlus is a tightly aligned portfolio of maximum 25 stocks, out of which 18-

20 are Nifty 50 large cap names.

Though the scheme’s objective is to provide ‘PLUS’ return over CNX Nifty which it

has already reported; however, continued decline in marquee names and volatility

in market impacted the 12 months performance.

NIFTY PLUS – Opportunity to get extra over index(C)


YOUR LOGO

We are comparing with the top performing 4-5 star rated Balanced MFs


RH Alliance 2.75% -2.93% -3.72% -1.37%

VR Balanced Index 5.76% -1.10% -2.60% -10.49%

HDFC Prudence 5.71% -6.92% -6.43% -11.25%

ICICI Prudential Balanced 5.15% -2.80% -2.41% -6.72%

Franklin Balanced 4.01% -0.68% -1.49% -3.58%

RH Alliance is a tightly aligned portfolio of maximum 25 securities, out of which 10-

15 are equity securities and rest in debt.

Though the scheme’s objective is to provide stable return over VR Balanced Index

which it has already reported; however, continued decline in marquee names and

volatility in market impacted the 12 months performance.

ALLIANCE – A fair mix of both the worlds(D)


YOUR LOGO

AUM addition – Going for the kill !6

The base of the foundation is good; with the outlook presented earlier; it is

the right time to increase exposure to equties.

Get the momentum going – Take the AUM to 100 crores.

We believe that the quality Large & Mid cap segment with good

corporate governance and also sound fundamentals would see

smart rallies.

YOUR LOGO

Top-ups required to fuel numbers

85

160

65

125

200

225

125

175

0

50

100

150

200

250

RH Flexicap RH Nifty Plus RH Super Value RH Alliance

INR

Mil

lio

n

AUM: Current & Targetted

Current Ideal

135%

41%

92%

40%

Market growth could be 20-25% for equities, and for balanced it might be 15%; however, to get

maximum in expected rally we need a higher base

1 Cr a

month 50

lacs a

month

25-30

lacs a

month

25-30

lacs

each a

month

YOUR LOGO

Currently our Equity AUM is at Rs.43.5 Cr. Despite recent infusions happened in past 3

months, the AUM level is stagnant due to continued fall in market. To get the maximum out of

upcoming rally, we need to focus strategically over our equity schemes. We could target at least

Rs.30 Cr of additional AUM by the end of Dec 2016.

Flexicap Portfolio Despite its perfect blend and turnaround in recent past, AUM

allocation towards portfolio is lesser than it deserves.

Nifty Plus Portfolio Continued decline in large caps impacted PF performance;

however, its elements are marquee names of Nifty 50 and have sound fundamentals.

Though it’s a largest PF amongst our equity offerings; however a continued infusion would

provide descent exposure to Large caps to the clients

Super Value Portfolio Despite its exposure to Mid & Small cap stocks; we have

operated it as ‘Value Investing’ model. All the names have good corporate governance and

well known brands in their respective market. Investors with adequate risk apettite could go

for such schemes

Alliance Portfolio A fair mix of debt and large cap equities. Though the scheme could

underperform in short term with equity indices; however it’s a perfect offering for retirement

planning of 10-15 years

Top-ups required…contd.

YOUR LOGO

Reach us:[email protected]; [email protected]

+91 22 4100 2018

Want more details…?

mailto:[email protected]

mailto:[email protected]

Right Horizons market outlook for 2016 - stay invested

Economy & Finance

Transcript of Right Horizons market outlook for 2016 - stay invested