pgim india large cap fund · fundamental analysis individual stock weights equity weight position...

Gain from experience

August 2020

PGIM INDIALARGE CAP FUND(An open ended equity scheme predominantly investing in large cap stocks)

2

Investment Process Overview

PGIM India Large Cap Fund

Idea Generation

Confluence of top-down and bottom up styles

In-Depth Company Analysis

Fundamental Analysis

Financial Modelling(Sell-side & Proprietary)

Portfolio Construction & Maintenance

• Macro & Thematic Analysis

• Proprietary Screeners

• External Research• Company

Meetings

Individual Stock Weights • Stock conviction• Sector limits• Stock limits

Equity Weight • Assessment of macroeconomics drivers

(global and domestic)• Statistical Risk considerations

Position Review / Risk Management• Material change in Investment case• Significant Outperformance beyond

expectations• Better idea/more efficient utilization of

risk capital

3

Investment Philosophy


A disciplined approach to Investment Management

Respect forCapital

Strong focus on Return on Capital Employed (RoCE) & Return on Equity (RoE)

OperatingLeadership

A leader or competent challenger in its operating space

SectorDominance

• Favour industries gearing up for consolidation• Avoid industries slated for fragmentation

Solid Financials• Conservative debt• Positive operating cash flows• Strong projected cash flow generation

WHY LARGE CAPS?

5

Large Cap Companies are…


Well established businesses

Financially sound

Stable and reliable growth

Good corporate

Governance

Segment or Market Leaders

Proven ability to weather downturns

and operate profitably

6PGIM India Large Cap Fund

Product Positioning - Generally less risky thanMid Cap & Thematic Funds

LOW MEDIUM HIGH

Balanced Fund

Index Fund

Diversified Fund / Multi Cap Funds/ ELSS

Mid and Small Cap Fund

Thematic Fund

Large Cap Fund

RETURN

VOLA

TILI

TY

7



Source: Internal Research, Bloomberg. For complete performance of the funds managed by the fund manager please refer to slide no. 19. For standard performance of the fund, please refer to slide 18. Data as on August 31, 2020

Investment has grown more than 17 times in 17 years . Index has grown nearly 16 times during the same time

PGIM India Large Cap Fund Regular (G) NIFTY 50

020406080

100120140160180200

Augu

st/0

4

Augu

st/0

5

Augu

st/0

6

Augu

st/0

7

Augu

st/0

8

Augu

st/0

9

Augu

st/1

0

Augu

st/1

1

Augu

st/1

2

Augu

st/1

3

Augu

st/1

4

Augu

st/1

5

Augu

st/1

6

Augu

st/1

7

Augu

st/1

8

Augu

st/1

9

Augu

st/2

0

17.28%

15.91%

8

Current themes for Large Cap


The above statements are based on the fund manager’s current views; These are subject to change without prior notice

Portfolio is structured to face the slowdown in coming quarters. Idea is to stick to quality companies, leaders in their segments

We are Overweight on Insurance, Pharma.

Capex dependent sectors like Industrials, Utilities are underweight. Consumption is structural overweight for us, currently lower weight for tactical reasons.

Within Financials, we expect large private lenders to emerge winners whereas others to suffer. We saw PSU banks suffer over last 8 years, while private banks gained. Now, within these gainers also, the winners’ list is likely to shrink. Our effort is to include stocks from this short list of potential gainers

9

Why PGIM India Large Cap Fund?


*Nifty 50 TR Index, Data as on August 31, 2020, These are based on the Fund Manager’s outlook and are subject to change

Portfolio Overlap at 68.8%% Top ideas beyond the Benchmark

68.8%

Benchmark*

PGIM IndiaLarge Cap Fund

Indiamart Intermesh Ltd

ICICI Lombard General Insurance

Divi’s Laboratories Ltd

Vinati Organics

HDFC Life Insurance

10

Quality Portfolio with low risk


Data as on August 31, 2020, Source: Bloomberg, Benchmark mentioned in the above charts is Nifty 50 TR Index

A Lower Beta with a higher Return on Equity (ROE) indicates potential to earn returns and lower risk in comparison to the benchmark

ROE BETA

0.91

1.00

21.1%

9.5%

0%

5%

10%

15%

20%

25%

PGIM India Large Cap Fund Benchmark PGIM India Large Cap Fund Benchmark0.860.880.900.920.940.960.981.001.02

11

High Conviction, Low Leverage


Data as on August 31, 2020, ^Ex Financials, Benchmark mentioned in the above charts is Nifty 50 TR Index Source: Bloomberg

NO. OF STOCKS TOTAL DEBT TO EQUITY^

26.7%

42.9%

PGIM India Large Cap Fund Benchmark

40

50


Benchmark

- 10 20 30 40 50 60

Fewer stocks shows higher conviction and focus Quality portfolio as measured by lower Total Debt to Equity

0%5%

10%15%20%25%30%35%40%45%50%

12

Robust Growth


Data as on August 31, 2020, Benchmark mentioned in the above charts is Nifty 50 TR Index, Source: Bloomberg The above estimates may change depending upon the market conditions and fund managers investment decisions

Quality stocks expected to trade at a premium

FY20 E P/E

PGIM India Large Cap Fund Benchmark

22.0%19.7%

0%

5%

10%

15%

20%

25%

13

Portfolio Positioning


Cash in the portfolio has always been below 10%

Data as on August 31, 2020, These are based on the Fund Manager’s outlook and are subject to change Source: Bloomberg The above estimates may change depending upon the market conditions and fund managers investment decisions

0.00

0.20

0.40

0.60

0.80

1.00

1.20

5.04

3.23

0.43

-3.13

-2.75

-2.73

-4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0

HEALTH CARE

MATERIALS

COMMUNICATION SERVICES

CONSUMER STAPLES

ENERGY

CONSUMER DISCRETIONARY

TOP 3 SECTORS OVER/UNDERWEIGHT

14

Portfolio Positioning


Data as on August 31, 2020, These are based on the Fund Manager’s outlook and are subject to change, Source: Bloomberg

1.641.571.57

1.481.37

-3.52-3.45

-2.39-1.43

-1.20

-4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0ALEMBIC PHARMACEUTICALS LTDPI INDUSTRIES LTDDIVI'S LABORATORIES LTDALKEM LABORATORIES LTDICICI LOMBARD GENERAL INSURAHOUSING DEVELOPMENT FINANCEITC LTDLARSEN & TOUBRO LTDRELIANCE INDUSTRIES LTDMAHINDRA & MAHINDRA LTD

TOP 5 STOCKS OVER/UNDERWEIGHT

15

PGIM India Large Cap Fund – Product Stability


INVESTORS WITH MODERATELY HIGH RISK PROFILE

• Those aiming to invest only in well established companies• Those aiming for higher inflation adjusted returns in the

long run

A large cap fund is a must have for any investor looking to have equity exposure It is considered to have lowest risk or volatility when compared to any other equity categories

WHO SHOULD INVEST?

?

16

PGIM India Large Cap Fund – Goal Planning


Children‘sEducation Children‘s

Marriage

Long Term Wealth

RetirementPlanning

17

Fund Manager Profile


Alok AgarwalSr. Fund Manager – Equities

CFA, CA, MS (Finance)

Alok Agarwal has over Over 16 years of experience in equity markets and finance,

Previously he has worked at:• Deutsche Asset Management Portfolio Manager – Equity • Deutsche Bank PWM Portfolio Manager – Equity• K. R. Choksey Securities PMS - Head, Portfolio Manager – Equity

18

Fund Performance


Date of Inception: Regular Plan: January 21, 2003; Direct Plan: January 01, 2013. CAGR – Compounded Annual Growth Rate.^ Scheme Benchmark. # Standard Benchmark. *Based on standard investment of `10,000 made at the beginning of the relevant period. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. Different plans have a different expense structure. Alok Agarwal has been managing the fund since July 27, 2017. For performance of other schemes managed by the fund manager please refer to slide 19. Data as on August 31, 2020

Returns (%)

PGIM India Large Cap Fund(G) – Regular Plan

1.712.416.06

17.28

3.143.887.63

11.78

1 Year3 Years5 YearsSince Inception

1 Year

3 Years

5 Years

Since Inception

PGIM India Large Cap Fund(G)-Direct Plan

10,171.4610,741.7513,426.08

1,65,960.00

10,314.3811,211.6414,449.1223,486.13

10,434.8811,916.7315,221.25

1,34,884.54

10,434.8811,916.7315,221.2521,056.66

4.346.018.76

15.91

4.346.018.76

10.20

10,461.6012,614.5115,670.68

1,50,170.58

10,461.6012,614.5115,670.6821,930.38

4.608.049.39

16.62

4.608.049.39

10.78

Value (INR)*Nifty 50 TRI^Fund S&P BSE SENSEX TRI#

Returns (%) Value (INR)* Returns (%) Value (INR)*

19

Performance of other schemes managed by Fund Manager


Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. The above returns are of Regular Plan - Growth Option of respective schemes. All the above returns are CAGR. CAGR - Compounded Annual Growth Rate. Different plans have a different expense structure. Returns for the benchmark have been calculated using TRI values. Mr. Alok Agarwal is managing 6 schemes of PGIM INDIA Mutual Fund. On account of difference in scheme features, the performance of these schemes are not strictly comparable. *Comanaged with Kumaresh Ramakrishnan. Data as on August 31, 2020

Period Period Last 1 Year Last 3 Years Last 5 YearsBenchmark Managing

sinceScheme Name Scheme (%)

Benchmark (%)

Scheme (%)

Benchmark (%)

Scheme (%)

Benchmark (%)

PGIM India Global Equity Opportunities

MSCI All Country World Index Jul-17

Jul-17

PGIM India Euro Equity Fund

MSCI EMU Index Aug-16

PGIM India Hybrid Equity Fund*

70% Nifty 50 Arbitrage + 30%

Nifty 50 TRI Aug-16PGIM India

Equity Savings *

PGIM India Dual Advantage Fund - 1*

CRISIL Hybrid - 85+15 –

ConservativeIndex

Aug-16

16.91 8.67 5.99 5.46 4.14 6.58

8.39 11.02 3.57 8.1 NA NA

2.37 9.13 1.51 6.71 3.76 9.43

1.88 4.5 4.15 5.55 5.5 6.53

60.44 14.5 29.51 10.5 15.19 8.65

CRISIL Hybrid 35+65 Aggressive

Index

Investors understand that their principalwill be at moderately high risk

This product is suitable for investors who are seeking*:• Capital growth over the long term• Investment predominantly in equity and equity related securities of

Large Cap companies• Degree of risk – MODERATELY HIGH

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

Large Cap Fund - An Open - Ended Equity Scheme Predominantly Investing in Large Cap Stocks

3

Important Disclosures: The information contained herein is provided by PGIM India Asset Management Company (erstwhile known as DHFL Pramerica Asset Managers Pvt Ltd) (the AMC) (on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. However, the AMC cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance* (or such earlier date as referenced herein) and is subject to change without notice. The AMC has no obligation to update any or all of such information; nor does the AMC make any express or implied warranties or representations as to its completeness or accuracy. There can be no assurance that any forecast made herein will be actually realized. These materials do not take into account individual investor’s objectives, needs or circumstances or the suitability of any securities, financial instruments or investment strategies described herein for particular investor. Hence, each investor is advised to consult his or her own professional investment / tax advisor / consultant for advice in this regard. The information contained herein is provided on the basis of and subject to the explanations, caveats and warnings set out elsewhere herein. These materials are not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation. Distribution of these materials to any person other than the person to whom it was originally delivered and to such person’s advisers is unauthorized, and any reproduction of these materials, in whole or in part without the prior consent of the AMC, is prohibited. The views of the Fund Manager should not be construed as an advice and investors must make their own investment decisions regarding investment/ disinvestment in securities market and/or suitability of the fund based on their specific investment objectives and financial positions and using such independent advisors as they believe necessary. © 2020 Prudential Financial, Inc. (PFI) and its related entities. PGIM, the PGIM logo, and the Rock symbol are service marks of PFI and its related entities, registered in many jurisdictions worldwide. Mutual fund investments are subject to market risks, read all scheme related documents carefully.

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Document Date: 10-09-2020 Document Number: CO98/2020-21

pgim india large cap fund · fundamental analysis individual stock weights equity weight position...

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