IIFL MULTICAP PMS

(Portfolio Management Service)

October 2019

Strategy Objective
The strategy objective is to generate long term capital appreciation for investors from a portfolio of equity & equity related securities.
The portfolio manager aims to achieve achieve the investment objective by:-
> Investing in a concentrated basket of 20-25 stocks with a bias towards large Cap stocks
> Investing in stocks that are available at signi�icant discount to their intrinsic value
> Investing in stocks that provide earnings visibility
> Actively use sector rotation to align with changes in business cycles to generate Alpha
> Portfolio Manager shall follow the SCDV framework for portfolio construction

Investment Philosophy - The SCDV Framework

Cyclical Growth (C) Secular Growth (S)

Core Portfolio: S
Capital Goods
More than

Auto & Auto Ancillaries

Cement Consumer Discretionary Merck
Private Corp Banks Private Retail Banks
Infrastructure Bajaj Finance
Non-Banking Financial Co.
Logistics Insurance HDFC Bank
Metals Retail
PAT Growth

Oil & Gas Downstream Muthoot Finance

15%

Tactical Allocation: C & D

Value Traps (V) Defensive Growth (D) ICICI Bank

PSU Banks RBL

Less than

Consumer Staples
Oil & Gas – Upstream Healthcare Infosys
Telecom IT Services
Utilities - Power Media Biocon
Credit Access Grameen

Less than More than

15% Avoid Allocation: V SBI^

Return on Equity

The mentioned securities in the SCDV framework are part of the current portfolio
^SBI is in Value Trap due to �inancial performance in the past but the recent data is positive and is expected to improve further
The above statements / analysis should not be construed as an investment advice or a research report or a recommendation to buy or sell any security covered under the respective sector/s
Cyclical (PAT>15%, ROE <15%) –Companies/ Sectors that show high growth but are affected by market cycles hence need to be timed for entry and exit
Secular (PAT>15%, ROE >15%) – High growth companies / sectors which show consistent growth across market cycles
Defensive (PAT<15%, ROE >15%) – Companies / sectors that show consistent stable growth across market cycles
Value Trap (PAT<15%, ROE <15%) – Companies/ sectors that are at attractive valuation but do not show commensurate growth.

Portfolio changes during the month

Stock Action Rationale

Abbott India Ltd. Added • Focus on high growth segments: the company restructured its portfolio in to key business areas like Women’s Health,
Gastroenterology, Consumer Care, CNS, Metabolics, General Care and Vaccines to achieve a market beating performance during
past few years. Now, it is readying with new set of products in niche therapy areas like Menopause and liver disease, which
should jack up the growth.

• Reducing dependence on third party manufacturing: The company aims to reduce dependence on third party manufactur-
ing (from current ~60% of sales to 30% in next three years) by shifting key products to own manufacturing facility at Goa.

• Strong balance sheet, cash rich company with cash/share of Rs793: Abbott India Ltd. is a net cash company with low
working capital requirements. Its capital expenditure is also negligible, as most of its products are made by third-party manufac-
turer. It’s cash position increased by Rs6.5 bn to Rs16.8bn in by end of FY19.

We continue to be positively biased towards the product launches from the parent, continuing a volume growth in its brands
thus supporting a stable revenue growth.

IIFL Asset Management Limited (Portfolio Manager)

Regd Off: 6th Floor, IIFL Centre, Kamala City, Senapati Bapat Marg, Lower Parel, Mumbai -400 013
Tel: (91-22) 4876 5600 • Fax: (91-22) 4646 4706 • Website: www.ii�lamc.com • CIN: U74900MH2010PLC201113
 IIFL MULTICAP PMS
(Portfolio Management Service)
All data are as on October 31, 2019 and denominated in INR

Investment Theme & Strategy Performance (%)

The objective of the strategy is to generate long Strategy/ Since
term capital appreciation for investors from a 1 Month 2 Months 3 Months 6 Months YTD 1 Year 2 Years 3 Years
Inception
Benchmark
portfolio of equity & equity related securities.
The investment strategy is to invest in
companies and in sectors that are available at
IIFL Multicap PMS 3.27 11.55 10.47 9.58 22.45 27.27 12.73 13.84 18.87
signi�icant discount to their intrinsic value and
provide earnings visibility. The portfolio takes
a concentrated position in stocks and
endeavours to strategically change allocation
between sectors depending on changes in the S&P BSE 200 TRI 4.03 8.22 7.82 2.27 8.29 13.66 6.09 11.24 9.48
business cycle.

Returns less than 1 year are on absolute basis and more than one year are on compounded annualised basis. Past performance may or may not be sustained in
future.
Key Terms
Sector - Top 6 Holdings Market Capitalization
Inception Date December 31, 2014 Small Cap ,
Finan cials 43.40%
11.51%
Indu strials 15.01%
Bloomberg Ticker NA
Health C are 12.08% Mid Cap ,
26.40%
Benchmark Index S&P BSE 200 TRI Information Tech nology 11.24%

Materials 9.00%

Consu mer Discretionary 5.55%

Large Cap ,
Strategy Details 58.37%
0% 10% 20% 30% 40% 50%
– Since Inception till 31st October, 2019

SI returns - IIFL Multicap PMS 18.87% Portfolio – Top 10 Holdings (%) Risk Ratios

SI returns - S&P BSE 200 TRI Company Weightage

9.48%
Beta 0.88
Outperformance/ ICICI BANK LTD. 9.50
(Underperformance) 9.38%
BAJAJ FINANCE LIMITED 8.56 Sharpe Ratio 0.92

Schedule of Charges HDFC BANK LTD 7.81

Information Ratio 14.86
AXIS BANK LIMITED 6.56
Management As per executed PROCTER & GAMBLE HEALTH LIMITED 6.29
Fee termsheet Treynor Measure 0.01
LARSEN TOUBRO LTD. 6.20
CROMPTON GREAVES CONSUMER
ELECTRICAL LIMITED 4.28 Volatility 14.55%
Exit Load As per executed
termsheet ASIAN PAINTS 3.69
All risk ratios are calculated since inception
SIEMENS LTD 3.58
*Information Ratio is a ratio of portfolio returns above the returns of a
benchmark index to the volatility of those returns.
Minimum MUTHOOT FINANCE LIMITED 3.47
Rs. 25 lakhs **Volatility measures the risk of a security by using the standard deviation of
Investment
CASH 3.71 the asset returns.
Amount

Portfolio Manager Top Gainers Since Inception Performance Top Losers Since Inception Performance
IIFL Asset Management Limited (IIFL AMC)
BAJAJ FINANCE LIMITED 281.43% TATA MOTORS LTD TYPE A SHARES (59.99%)

PROCTER & GAMBLE HEALTH LIMITED 238.67% QUESS CORP LIMITED (39.04%)
Strategy Manager Profile
- Aniruddha Sarkar CREDITACCESS GRAMEEN LIMITED 131.30% CIPLA LTD. (13.55%)
Aniruddha Sarkar, Strategy Manager for IIFL
Multicap PMS, has over a 13 years of
experience in the Financial Services sector.
NAV Movement
He is associated with IIFL Wealth IIFL Multicap PMS S&P BSE 200 TRI
Management Group for 11 years and has been
involved in identifying investment ideas 25
across various sectors and market-caps that
can generate alpha for the investors. He has 20
been one of the key members involved in
setting up the entire equity advisory desk at 15
IIFL Wealth. Prior to working with IIFL
Wealth, he was working with a UK based 10
hedge fund. He holds an MBA in Finance from
IMI, New Delhi and a Bachelor’s degree in
5
Commerce from St. Xavier’s College, Calcutta.
Dec-2014 Sep-2015 May-2016 Jan-2017 Oct-2017 Jun-2018 Feb-2019 Oct-2019

NAV shown is for the model portfolio. NAV of 10 assumed on the inception date (31-Dec-2014)

IIFL Asset Management Limited (Portfolio Manager)

Regd Off: 6th Floor, IIFL Centre, Kamala City, Senapati Bapat Marg, Lower Parel, Mumbai -400 013
Tel: (91-22) 4876 5600 • Fax: (91-22) 4646 4706 • Website: www.ii�lamc.com • CIN: U74900MH2010PLC201113
 IIFL MULTICAP PMS
(Portfolio Management Service)
All data are as on October 31, 2019 and denominated in INR

Portfolio Holdings Valuation Matrix

P/E P/B ROE
EPS CAGR
S. No Company
(FY19-21)
FY19A FY20e FY21e FY19A FY20e FY21e FY19A FY20e FY21e

1 ICICI BANK LTD.^ 68.45 25.06 16.29 2.34 2.74 2.38 3.2% 10.5% 14.4% 30.0%

2 BAJAJ FINANCE LIMITED 57.64 40.42 31.87 11.69 9.39 7.45 22.5% 0.2% 22.3% 35.1%

3 HDFC BANK LTD 28.05 24.07 19.07 4.07 4.14 3.62 16.5% 17.7% 19.8% 29.1%

4 PROCTER & GAMBLE HEALTH LIMITED 77.69 42.58 38.45 5.13 9.59 7.67 8.8% 15.5% 22.2% 40.9%

5 AXIS BANK LIMITED 41.10 25.08 14.15 2.88 2.36 2.05 7.2% 10.7% 15.5% 69.2%

6 LARSEN TOUBRO LTD. 24.01 20.48 16.68 2.99 2.39 2.14 12.4% 11.7% 12.8% 19.9%

CROMPTON GREAVES CONSUMER

7 41.81 31.06 26.62 14.24 10.90 8.53 34.1% 35.1% 32.0% 25.2%
ELECTRICAL LIMITED

8 ASIAN PAINTS 80.90 60.47 51.30 18.35 16.19 14.40 22.7% 26.8% 28.1% 25.2%

9 MUTHOOT FINANCE LIMITED 14.34 11.26 9.43 3.07 2.58 2.17 23.2% 24.9% 25.0% 23.5%

10 AAVAS FINANCIERS LIMITED 67.27 43.77 33.85 6.88 5.93 5.07 11.6% 14.4% 15.3% 41.0%

11 SIEMENS LTD 55.10 44.15 38.21 6.55 5.96 5.40 11.9% 13.5% 14.1% 20.2%

12 INFOSYS LIMITED 17.79 18.04 16.25 4.44 5.13 4.90 25.0% 26.9% 30.8% 6.6%

13 TECH MAHINDRA LIMITED 15.56 15.27 13.52 3.19 2.90 2.72 21.2% 19.7% 20.8% 6.2%

14 CREDITACCESS GRAMEEN LIMITED 28.74 18.17 13.88 3.91 3.19 2.60 16.9% 19.3% 20.6% 43.2%

15 GREAVES COTTON LTD 19.86 16.90 13.28 3.47 3.67 3.30 17.5% 21.7% 24.9% 23.4%

16 TATA CONSULTANCY SERVICES LTD 27.12 25.94 23.60 9.18 8.87 8.34 35.0% 34.9% 36.4% 7.6%

17 QUESS CORP LIMITED 27.07 26.83 19.93 2.55 2.55 2.28 9.8% 9.9% 12.1% 21.9%

18 IPCA LABS LTD 27.86 23.02 17.77 3.93 3.39 2.88 15.2% 15.9% 17.5% 25.6%

19 P I INDUSTRIES LTD 47.21 37.86 30.99 8.47 7.26 6.07 17.9% 19.2% 19.6% 24.6%

20 SRF LIMITED 25.02 20.82 16.78 3.89 3.45 2.92 15.5% 16.5% 17.4% 24.3%

21 ABBOTT INDIA LTD 56.13 40.46 33.93 12.62 10.45 8.76 24.7% 28.1% 28.1% 27.8%

22 LARSEN TOUBRO INFOTECH LIMITED 19.42 19.34 17.33 6.03 5.08 4.27 34.6% 28.7% 26.8% 6.6%

23 CIPLA LTD. 23.48 21.92 17.96 2.43 2.25 2.06 10.6% 10.7% 12.0% 14.6%

24 STATE BANK OF INDIA^ 23.21 14.00 9.42 0.89 1.41 1.29 0.4% 9.7% 13.0% 30.0%

25 TATA MOTORS LTD TYPE A SHARES NA 84.94 17.89 0.98 0.95 0.93 3.0% 8.0% 10.6% 14.2%

40.74 28.62 22.19 5.73 5.36 4.55 15.6% 15.9% 19.5% 27.8%

Source : IIFL AMC Research’; The estimates are subject to change depending on prevailing market conditions
^The EPS CAGR for the portfolio has been adjusted downwards after adjusting for the earnings of SBI and ICICI which have very low base in FY19. If we had taken their expected earnings growth on actual base over FY19-21,
then the CAGR for the earnings growth of the portfolio comes to around 44%

IIFL Asset Management Limited (Portfolio Manager)

Regd Off: 6th Floor, IIFL Centre, Kamala City, Senapati Bapat Marg, Lower Parel, Mumbai -400 013
Tel: (91-22) 4876 5600 • Fax: (91-22) 4646 4706 • Website: www.ii�lamc.com • CIN: U74900MH2010PLC201113
 IIFL MULTICAP PMS
(Portfolio Management Service)
All data are as on October 31, 2019 and denominated in INR

Commentary
Indian equities stayed buoyant with mainline indices closing just shy of all-time highs in October, which is seasonally a strong period for the markets. Positive global
cues also bolstered the FII sentiment and led to net in�lows of more than INR 12,000 crs in the month. The willingness of the government to take extra measures to
support economic growth also aided the positive sentiment. Despite weak consumer sentiment and macroeconomic data, Q2 quarterly corporate earnings have been
higher than expectations. Across most corporates, weakness in the top line were counterbalanced by growth in the bottom line, with pro�its being higher due to tax cut
bene�its. This may be a lead indicator for economic health and growth in the near term.
To complement �iscal reforms and to revive growth and investment cycle, Reserve Bank of India (RBI) cut the policy rate by 25 basis points at its October meeting. At
the same time, RBI downgraded its �iscal year 2020 growth target to 6.1% from 6.9% earlier. With in�lation expectations being under 4% for the year ahead, RBI
highlighted that an accommodative stance will remain for as long as necessary. As economic data continues to re�lect the deterioration in domestic demand indicators,
we expect the RBI and government to continue growth orientated policies going ahead.
Globally, concerns of slowing growth and in�lation continued but positive news came in the forms of Fed rate cut and progress in the US-China trade talks. The fed rate
cut coupled with its $60 Bn per month asset purchase will help increase the much-needed dollar liquidity to fuel the global money supply. This in turn may moderate
dollar strength in the near term and increase the manufacturing and trade activity globally. The developments in the US-China trade deal are encouraging but a
long-term trade deal is still uncertain. Markets will also take cues from the Brexit deadline which has been extended by 3 months.

Market & Portfolio Activity

Market divergence within India continued with the Nifty mid-cap index outperforming large caps (Nifty mid-cap up 4.96% versus Nifty 3.70% total returns) whilst
small-cap indices underperformed. During the month of Oct’19, the IIFL Multicap PMS portfolio was up by 3.27%. In 2019 YTD the portfolio has gained by 22.45% as
compared to BSE-200 TRI at 8.29% and Nifty-50 rising by 9.34%.

Outlook
We believe Indian equities are attractively positioned for the longer-term investor. We currently have the unusual combination of both monetary and �iscal reforms to
improve growth. Many, if not the most, comments coming from companies when reporting their latest earnings have been downbeat about the slowdown in demand,
particularly from the rural economy. This has led to lower growth estimates being built in, and any revival in consumption may lead to a positive surprise for earnings
and valuations in FY 20 and 21.
We continue to seek growth opportunities in the secular (S), cyclical (C) and defensive (D) segments and avoid value traps (V). Over the past few months, we continue
to remain over-weight on Financials and Industrials to play the impending cyclical recovery. From a risk-reward perspective, we continue to believe that the mid and
small cap segment is still attractive after its sharp under performance vis-à-vis large caps over the last 6 quarters.

Disclaimer:

Securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Strategy will be achieved. As with any securities investment, the value of a portfolio can go up or down
depending on the factors and forces affecting the capital markets. Past performance of the Portfolio Manager may not be indicative of the performance in the future.

This document is for informational purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy the securities or other investments mentioned in it. All opinions, �igures, charts/graphs,
estimates and data included in this document are as on date and are subject to change without notice. The past performance of the Strategy is not indicative of its future performance. Client(s) are not being offered any guaranteed
or indicative returns through these services. The returns mentioned anywhere in this document are not promised or guaranteed in any manner. While utmost care has been exercised while preparing this document, IIFL Asset
Management Limited does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. While we endeavor to update on a reasonable
basis the information discussed in this document, there may be regulatory, compliance, or other reasons that prevent us from doing so.

Returns are dependent on prevalent market factors, liquidity and credit conditions. Strategy returns depicted are in the current context and may be signi�icantly different in the future. The contents of this document should not
be treated as advice relating to investment, legal or taxation matters. For tax consequences, each investor is advised to consult his / her own professional tax advisor. This communication is for private circulation only and for the
exclusive and con�idential use of the intended recipient(s). Any other distribution, use or reproduction of this communication in its entirety or any part thereof is unauthorized and strictly prohibited. The investments may not
be suited to all categories of investors. Recipient shall understand that the aforementioned statements cannot disclose all the risks and characteristics.

This document is not directed or intended for Distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdictions, where such distribution, publication,
availability or use would be contrary to law, regulation or which would subject IIFL AMC to any registration or licencing requirement within such jurisdiction.

IIFL Asset Management Limited and its group and associate companies are engaged in providing various �inancial services and for the said services may earn fees or remuneration in form of arranger fees, referral fees, advisory
fees, management fees, trustee fees, Commission, brokerage, transaction charges, underwriting charges, issue management fees and other fees. For the purpose of trading and investments in securities, the Portfolio Manager
transacts through and maintain demat account(s) with IIFL Securities Limited (associate broker & depository participant) and IIFL Wealth Management Limited (Holding Company of IIFL AMC).

IIFL Asset Management Limited (Portfolio Manager)

Regd Off: 6th Floor, IIFL Centre, Kamala City, Senapati Bapat Marg, Lower Parel, Mumbai -400 013
Tel: (91-22) 4876 5600 • Fax: (91-22) 4646 4706 • Website: www.ii�lamc.com • CIN: U74900MH2010PLC201113