invest in today’s and tomorrow’s leaders · 2019-10-24 · low inﬂation & falling...

Motilal OswalLarge and Midcap Fund

INVEST IN TODAY’S AND TOMORROW’S LEADERS

India: $5 Trillion Economy by 2025 1

‘BUY RIGHT : SIT TIGHT’

186

193

201 218

212 233 249 279 297

296 321

270 288

279 327 360 393 416

421 459

468 485 515 60

8 709 82

0 940

1217

1199 13

4216

76 1823

1828 1857 20

39 2104 22

9026

53 2726

2972

3258

3577

3924

4306

4729

0

500

1000

1500

2000

2500

Indi

a G

DP

(cur

rent

$ b

n)

3000

3500

4000

4500

5000FY

1980

FY 19

81FY

1982

FY 19

83FY

1984

FY 19

85FY

1986

FY 19

87FY

1988

FY 19

89FY

1990

FY 19

91FY

1992

FY 19

93FY

1994

FY 19

95FY

1996

FY 19

97FY

1998

FY 19

99FY

2000

FY 20

01FY

2002

FY 20

03FY

2004

FY 20

05FY

2006

FY 20

07FY

2008

FY 20

09FY

2010

FY 20

11FY

2012

FY 20

13FY

2014

FY 20

15FY

2016

FY 20

17FY

2018

FY 20

19FY

2020

EFY

2021

EFY

2022

EFY

2023

EFY

2024

E

1st US$ tn

2nd US$ tn

3rd US$ tn

4th US$ tn

Nearing 5th US$ tn

Source: statisticstimes.comPast performance may or may not sustain and does not guarantee future performanceNote - Above forward looking statements are based on external current views and assumptions and involve known and unknown risks and uncertainties that could affect actual results. Investments are subject to market risk.

According to World Bank data, India has now become the world’s sixth-largest economy

India is one of the fastest growing among major economies

2Low Inflation & Falling Interest Rate


5.40

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

Jul/

01

Feb/

02

Sep/

02

Apr/

03

Nov/

03

Jun/

04

Jan/

05

Aug/

05

Mar

/06

Oct

/06

May

/07

Dec/

07

Jul/

08

Feb/

09

Sep/

09

Apr/

10

Nov/

10

Jun/

11

Jan/

12

Aug/

12

Mar

/13

Oct

/13

May

/14

Dec/

14

Jul/

15

Feb/

16

Sep/

16

Apr/

17

Nov/

17

Jun/

18

Jan/

19

Aug/

19

Repo Rate (%)

141210

86420

-2-4-6-8

Nov

-13

Jan-

14

Mar

-14

May

-14

Jul-1

4

Sep-

14

Nov

-14

Jan-

14

Mar

-15

May

-15

Jul-1

5

Sep-

15

Nov

-15

Jan-

16

Mar

-16

May

-16

Jul-1

6

Sep-

16

Nov

-16

Jan-

17

Mar

-17

May

-17

Jul-1

7

Sep-

17

Nov

-17

Jan-

18

Mar

-18

May

-18

Jul-1

8

Sep-

18

Nov

-18

Jan-

19

Mar

-19

May

-19

3.05

2.45

WPI CPI

Past monetary easing cycles indicate that transmission takes 3-12 months to start reducing the cost of borrowing

Recently, deposits rate has started coming down (total down by 30bps), average lending rate has also come down by 35bps.

Source: Bloomberg, Spark CapitalThe above graph is used to explain the concept and is for illustration purpose only and should not be used for development or implementation of an investment strategy. Past performance may or may not be sustained in future.

WPI - Wholesale Price Index; CPI - Consumer Price Index

Crude price rise to $ 85

CAD widened (>2.7% of GDP) and fiscal deficit deteriorated

Currency depreciated to INR 72 per USD, to support currency, RBI sold USD

Liquidity concerns alongwith IL&FS and other corporate defaults

GST impact

Pressure on fiscal

Consumption demand slowdown

3Investment Environment Improving


Crude price corrected back to $60-65 range

RBI infused liquidity

Repo rate cuts by RBI getting transmitted to deposit and lending rates

Good Monsoon in 2019

Central government has accelerated spending from Jul’19

Recent steps taken by the government to boost growth

Understanding what led to the fall in demand What is improving incrementally now?

Source: MOAMC Internal Analysis and Spark Capital

4Government is Listening


Corporate tax rates cut from 30% to 22% (plus surcharge)

15% tax rate for new domestic manufacturing companies incorporated after 1st October 2019

Reversal of enhanced surcharge on equity capital gains

Bank Recapitalisation : Upfront Rs 70,000 crs released to banks to improve lending

Funds worth Rs. 20,000 crs for incomplete real estate projects to help completion of about 3.5 lakh units in affordable and middle income segments

No tax will be levied on public buyback of shares announced prior to 5th July 2019

For SMEs, GST refunds to be fastracked

Note that the above statement is based on the announcement of the Finance Minister and would be subject to provisions of final Finance Act.

5Corporate Earnings to Grow


73 78 92131 169 184

236281 251 247

315 348 369 406 413 384439 451 482

60325%

19%720

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

E

FY21

E

EPS Growth:FY19-21E: 22.3%

Ni�y Returns: FY08-18: 8%EPS Growth: FY08-18: 4.8%

Ni�y Returns: FY01-08: 22.5%EPS Growth: FY01-08: 21.3%

Ni�

y EP

S

Source: Motilal Oswal Research India Strategy September 2019The statements made herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Past performance may or may not be sustained in future.

In the long run, the markets always follow the earnings pattern. For FY19-21, Nifty EPS is estimated to grow at 22.3% CAGR, which gives scope for markets to catch up.

Demand Boost - Government Spending and Good Monsoon


Source: RBI, Spark Capital Research; Data as on Sep 2019

23.0%

8.2%

31.2%

8.5%

15.2%11.2%

8.3%

3.7%7.8%

13.1% 15.5%

5.3%1.3%

23.9%

0%

5%

10%

15%

20%

25%

30%

35%Total Central Govt. Spend (%, YoY)

2.2

-10.3

-5.2

-50

-40

-30

-20

-10

0

10

20

30

1stW

2ndW

3rd W

4thW

1st W

2ndW

3rd W

4th W

1st W

2ndW

3rd W

4th W

1st W

2ndW

3rd W

4th W

June July Aug Sep

Rainfall as % of LPA

2019 2018 2017

Central Govt. expenditure picked up from Jul’19

Good rainfall bodes well for the kharif and upcoming

rabi crops

The above graph is used to explain the concept and is for illustration purpose only and should not used for development or implementation of an investment strategy. Past performance may or may not be sustained in future.

6

7Lower Commodity Prices - To Improve Corporate Margins


Around 5-30% decline in non-agri commodity prices

in the last 12 months

Coal

Petcoke

RLNG Oil Linked

Crude oil (Brent)

Steel

Aluminium

ZINC

VAM

Petrol Retail Price

Diesel Retail Price

Units Current 3M 6M 12M

Palm OilCopper

LeadTitanium Dioxide NNS

Gold

Iron Ore

Rs/tonne

Rs/MT

(Rs./SCM)

Rs/BBL

Rs/MT

Rs/MT

Rs/MT

Rs/MT

Rs./litre

Rs./litre

Rs/qtlRs./MT

Rs/MTRs./kgs

Rs./10gm

Rs/MT

-20.2%

-3.7%

-3.7%

-6.2%

-0.1%

-14.8%

2.8%

0.4%

-1.9%

6.8%0.1%

15.3%-2.6%

19.7%

-8.6%

5,197 -8.8%

-13.3%

5.6%

5.6%

-1.6%

-9.7%

-14.6%

-1.6%

-1.2%

-3.6%

4.2%-6.9%

5.3%-5.4%

26.2%

39.1%

-23.9%

-22.3%

-21.2%

-21.2%

-17.3%

-17.2%

-9.3%

-9.2%

-8.3%

-7.1%

-6.4%-4.4%

-1.3%0.8%

26.7%

42.9%

-32.0%

6,730

20

4,322

39,864

1,23,315

1,58,198

1,12,733

72

65

6,2504,04,488

1,43,966265

39,720

6,277

Non

-Agr

i

Source: Spark Capital Research; Data as on Sep 2019

The sectors mentioned herein are for general and comparison purpose only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. Past performance may or may not be sustained in future.

8Attractive Valuations: Corporate Profit to GDP


Ni�y-500 - Corporate profit to GDP

India’s corporate profit to GDP ratio for the Nifty-500 has declined from 5.5% to 2.8% - a 15 year low

The above graph is used to explain the concept and is for illustration purpose only and should not used for development or implementation of an investment strategy. Past performance may or may not be sustained in future.

2.83.4

3.9 4.04.9

5.5

4.34.9 4.8

4.3 4.0 3.83.3

2.9 3.2 2.8

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Average 3.9

Source: MOFSL Report

9Attractive Valuations: Mid and Smallcap


0.80

1.00

1.20

1.40

1.60

1.80

2.00Ju

l-06

Jan-

04Ju

l-04

Jan-

05Ju

l-05

Jan-

06

Jan-

07Ju

l-07

Jan-

08Ju

l-08

Jan-

09Ju

l-09

Jan-

10Ju

l-10

Jan-

11Ju

l-11

Jan-

12Ju

l-12

Jan-

13Ju

l-13

Jan-

14Ju

l-14

Jan-

15Ju

l-15

Jan-

16Ju

l-16

Jan-

17Ju

l-17

Jan-

18Ju

l-18

Jan-

19Au

g-19

Ni�y Midcap 100 Index as a propor�on of Ni�y 50 Index (x)

1.31

1.09

0.99 0.20

0.40

0.60

0.80

1.00

1.20

Jan-

04Ju

n-04

Nov

-04

Apr-

05Se

p-05

Feb-

06Ju

l-06

Dec-

06M

ay-0

7O

ct-0

7M

ar-0

8Au

g-08

Jan-

09Ju

n-09

Nov

-09

Apr-

10Se

p-10

Feb-

11Ju

l-11

Dec-

11M

ay-1

2O

ct-1

2M

ar-1

3Au

g-13

Jan-

14Ju

n-14

Nov

-14

Apr-

15Se

p-15

Feb-

16Ju

l-16

Dec-

16M

ay-1

7O

ct-1

7M

ar-1

8Au

g-18

Jan-

19Ju

n-19

Ni�y Smallcap 100 Index as a propor�on to Ni�y 50 Index (x)

Ratio chart showing Nifty Midcap 100 divided by Nifty 50 and Nifty Smallcap 100 divided by Nifty 50

For Midcap there has been sharp correction to 1.31x from the peak of 1.9x levels

For Smallcap the ratio bottoms at ~0.5x and tops at 1x. Currently the ratio is at the bottom end of the range

0.50

0.460.49

Source: Bloomberg; Data as on Sep 2019

10SEBI Categorisation of Funds


Classification of Stocks according to Market Cap

` `

Large Cap(Top 100)Fund Type

Fund TypeLarge Cap

Large Cap & Mid Cap

Mid Cap

Small Cap

Multi Cap

Mid Cap(101-250)

Small Cap(Below 250)

>80% 0-20%

35 - 65% 35 - 65% 0-30%

0-35%

>65%

>65%

0-35%

0-35%

>65%

Category has 24 Funds with AuM of ~50,000 crs vs Multicap category has 33 funds with AuM of ~1.35 Lac Crs

Source: AMFI

11


The Large & Midcap category was created in 2018 due to SEBI recategorization where the category invests minimum 35% in each large and midcaps

Current inhouse asset allocation will be 50% weightage in largecap (top 100 stocks) and 50% weightage in midcap (next 150 stocks)

What is Large & Midcap

Motilal Oswal Large & Midcap Fund

Top 100 Stocks

Next 150Stocks

The above is the current in-house asset allocation and subject to change as per product construct and Fund managers discretion subject to the limits as specified in the Scheme Information Document.

Stability & Growth


Largecaps Midcaps Large and Midcaps

Bluechip companies

Market leaders in the segment

Established track record

Emerging Businesses

Above averagegrowth profile

An optimal mix of Large Caps and Mid Caps which can deliver high growth with lower volatility

Improved management and capital allocation

+ =Stabilityof Largecaps

Growth potential of Midcaps

Better riskadjusted returns

12

13Growth across Market Capitalisation


The scrip mentioned herein are for general and comparison purpose only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. Source: Capitaline and internal analysis; Data as on 31st Aug 2019; Market cap is in Crores The scrips may or may not be part of our portfolio/strategy/scheme. Past performance may or may not be sustained in the future

The ultimate objective of all investors is to profit from expansion in the value of their stocks, i.e. higher stock price and market capitalization. The growth can be both in Largecap and Midcap wherein the large companies get better and bigger and midcap companies appreciate into large cap stocks.

13432

155026CAGR 28%

103154

847889CAGR

23%

24824

273380CAGR 27%

Asian Paints HDFC Bank

Kotak Mahindra Bank TCS

62768

609433CAGR 26%

1249

44369CAGR 43%

4195

96714CAGR 37%

714

20807

CAGR 40%

Eicher Motors Bajaj Finance

Page Industries

Large grows Bigger Mid grows to Large

IndusInd Bank

747

193250CAGR 74%

*Market Cap change in the last 10 years (` in crores)

Large Midcap vs Multicap


Data as on 31st Aug 2019; Source: MFI explorer and internal analysis Past performance may or may not be sustained in the future.

The above graph has used Nifty LargeMidcap 250 TRI to illustrate 50%-50% allocation to Largecap and Midcap

9.05

8.39

13.04

10.13

7.37

8.74

13.25

10.63

12.21

9.72

14.78

11.49

1 Year 5 Years 7 Years 10 Years

Ni�y 500 TRIS&P BSE 200 TRINIFTY Large Midcap 250 TRI

14

15About the Scheme and Portfolio Construct


The investment objective is to provide medium to long-term capital appreciation by investing primarily in Large and Midcap stocks. However, there can be no assurance or guarantee that the investment objective of the Scheme would be achieved

High conviction ideas with improved risk-adjusted return characteristics

Bottom-up stock selection

Investment Horizon: Medium to Long Term

Equity and Equity related instruments of other than above: 0% - 30%

Units of liquid/ debt schemes, Debt, Money Market Instruments, G-Secs, Cash and Cash at call, etc: 0% - 30%

Units issued by REITs and InvITs: 0% -10%

Equity & Equity related instruments of Large cap companies:

Equity and Equity related instruments of Mid cap companies:

35% - 65% 35% - 65%

At Motilal Oswal Asset Management Company (MOAMC), our investment philosophy is centered on 'Buy Right : Sit Tight’ principle.

Buy and Hold: We are strictly buy and hold investors and believe that picking the right business needs skill and holding onto these businesses to enable our investors to benefit from the entire growth cycle needs even more skill.

Focus: Our portfolios are high conviction portfolios of around 25 stocks being our ideal number. We believe in adequate diversification as over-diversification results in diluting returns for our investors and adding market risk

‘Q’uality denotes quality of the business and management

‘G’rowth denotes growth in earnings and sustained RoE

‘L’ongevity denotes longevity of the competitive advantage or economic moat of the business

‘P’rice denotes our approach of buying a good business for a fair price rather than buying a fair business for a good price

Our Investment Philosophy


16

Why Invest in Motilal Oswal Large & Mid Cap?


Buy Right :Sit Tight

Holding quality companies for a long

period of time

Discipline of Allocation

Minimum allocation to both large and

midcaps

Risk Adjusted Return

Less volatile Largecaps and High growth

Midcaps

Concentrated Portfolio

Around 25 stocks#

#Can change as per fund managers discretion subject to the limits as specified in the Scheme Information Document.

17

Fund Details


Large and Midcap Fund - An open ended equity scheme investing in both large cap and mid cap stocks

Large and Midcap Fund

Type of Scheme

Scheme Category

The investment objective is to provide medium to long-term capital appreciation by investing primarily in Large and Midcap stocks. However, there can be no assurance or guarantee that the investment objective of the Scheme would be achieved

Investment Objective

NIFTY Large Midcap 250 TRI

Benchmark

Regular Plan and Direct Plan

Plans

Dividend (Payout and Reinvestment) and Growth

Options (Under each plan)

Rs. 500/- and in multiples of Re. 1/- thereafter

Minimum Application Amount


Additional Application Amount

Rs. 500/- and in multiples of Re. 1/- thereafter or account balance, whichever is lower.

Minimum Redemption Amount


Rs. 500 and in multiples of Re.1/- thereafter (Minimum Installment – 12)

Rs. 1,500 and in multiples of Re.1/- thereafter (Minimum Installment – 4)

Rs. 6,000 and in multiples of Re. 1/- thereafter (Minimum Installment – 1)

The Dates of Auto Debit Facility shall be on the 1st, 7th, 14th ,21st or 28th of every month.

Systematic Investment Plan (SIP)

Entry : NilExit : 1% - If redeemed on or before 15 days from the date of allotment. Nil - If redeemed after 15 days from the date of allotment. A switch-out or a withdrawal shall also be subjected to the Exit Load like any Redemption. No Exit Load applies for switch between MOF25, MOF30, MOF35, MOFEH & MOFDYNAMIC. No Load for switch between Options within the Scheme. Further, it is clarified that there will be no exit load charged on a switch-out from Regular to Direct plan within the same scheme. No Load shall be imposed for switching between Options within the Scheme.

Entry/Exit Load

Weekly SIP

Quarterly SIP

Annual SIP

Fortnightly SIP Monthly SIP

18

Product Labelling


Name of the Scheme This product is suitable for investors who are seeking*

Motilal Oswal Large and Midcap Fund (MOFLM)

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Long term capital appreciation

Investment predominantly in equity and equity related instruments of large and midcap stocks

(Large and Midcap Fund - An open ended equity scheme investing in both large cap and mid cap stocks)

19

For Equity Component

Mr. Aditya has overall 14 years of experience in the Indian equity markets as an investment professional, out of which the last 10 have been in the role of a portfolio manager. Prior to joining Motilal Oswal Asset Management Company Ltd., He was associated with HSBC AMC for over 10 years. Further, he has also worked in esteemed organizations like SBI Mutual Fund, ICICI Prudential AMC and Morgan Stanley Advantage Services.

Fund Manager


He also manages Motilal Oswal Long Term Equity Fund

He completed his MBA (Finance) from Indian Institute of Management Lucknow and Bachelor of Commerce from St. Xaviers College, Kolkata.

For Debt Component

Aditya Khemani(Fund Manager)

Abhiroop Mukherjee: He is a B.com (H), MBA with over 10 years of experience in trading Fixed Income Securities viz. G-secs, T-bills, Corporate Bonds CP, CD, etc. He has earlier worked with PNB GILTS LTD. as a WDM Dealer for the period 2007-2011

Funds Managed: Motilal Oswal Ultra Short Term Fund and Motilal Oswal Liquid Fund. He is also the Fund manager for the debt component of Motilal Oswal Focused 25 Fund, Motilal Oswal Midcap 30 Fund, Motilal Oswal Multicap 35 Fund, Motilal Oswal Dynamic Fund, Motilal Oswal Hybrid Fund and Motilal Oswal Long Term Equity Fund.

20

This presentation has been prepared and issued on the basis of internal data, publicly available information and other sources believed to

be reliable. The information contained in this document is for general purposes only and not a complete disclosure of every material fact

and terms and conditions and features of Motilal Oswal Large and Midcap Fund. The information / data herein alone is not sufficient and

shouldn't be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any

party. All opinions, figures, charts/graphs, estimates and data included in this presentation are as on date and are subject to change without

notice. While utmost care has been exercised while preparing this document, Motilal Oswal Asset Management Company 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. The statements contained herein may include statements of future expectations and other forward-looking statements that

are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results,

performance or events to differ materially from those expressed or implied in such statements. Readers shall be fully responsible/liable for

any decision taken on the basis of this presentation. No part of this document may be duplicated in whole or in part in any form and/or

redistributed without prior written consent of the Motilal Oswal Mutual Fund/Motilal Oswal Asset Management Company Limited. Readers

should before investing in the Scheme make their own investigation and seek appropriate professional advice. Past performance of the

Sponsor / AMC / Mutual Fund and its affiliates does not indicate the future performance of the scheme and may not provide a basis of

comparison with other investments. Please Read Scheme Information Document (SID) and Statement of Additional Information (SAI)

carefully before investing.

Scheme Specific Risk Factors: In line with its investment objective, the scheme will be required to maintain a minimum exposure of 35%

each to both the large cap and the mid cap market segments at all times regardless of the prevailing market conditions/outlook for these

market cap segments. The Scheme is subject to the principal risks described below. Some or all of these risks may adversely affect Scheme’s

NAV, yield, return and/or its ability to meet its objectives.

Statutory Details: Constitution: Motilal Oswal Mutual Fund has been set up as a trust under the Indian Trust Act, 1882.

Trustee: Motilal Oswal Trustee Company Ltd. Investment Manager: Motilal Oswal Asset Management Company Ltd. (CIN:

U67120MH2008PLC188186) Sponsor: Motilal Oswal Financial Services Ltd.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Disclaimer


21

Call: 81086 22222 or 022-4054 8002 Email: [email protected] Website: www.motilaloswalmf.com

invest in today’s and tomorrow’s leaders · 2019-10-24 · low inﬂation & falling...

Documents