SMALL IS GETTING BIGGER

Market Cap of 251st Stock (Rs. Crores)

12,000
10,290 10,019
10,000

8,000

6,053
6,000 5,472
4,650
4,000 3,338 3,171
2,959 2,810
2,512 2,195
2,000
1,042

0
Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Aug
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

SMALL CAP MARKET CAP EVOLUTION AS PER NEW DEFINITION

Market Cap of Stocks on BSE  Data Source - Capitaline

OPPORTUNITY IN CHANGE

▪ SEBI Last Year specified the Market STOCKS CATEGORIZED BY

cap definition to be followed by NEW REGULATION AS FOLLOWS:
Mutual Funds

▪ Simultaneously, SEBI also specified,

minimum Large Cap and Midcap
Exposure for Large & Midcap funds

▪ These measures acted as catalyst for

Large Caps Mid Caps
overheated markets leading to fund
1st100 stocks by 101st to 250th Small Caps
portfolio’s shredding small cap
their Market Cap stocks by Beyond
allocations for large & mid caps
accentuating correction especially in their Market 250th stock
the small cap segment of the markets Cap by their
Market Cap
▪ Small Caps currently overlooked –
Opportunity for Long Term Investors
BUY SOMETHING DIFFERENT

Large Cap Mid Cap Small Cap Non Equity

Fund Category
AUM (Rs Crs) Exposure Exposure Exposure Exposure
(excl Arbitrage Funds)
(Rs Crs) (Rs Crs) (Rs Crs) (Rs Crs)

Open Ended Equity Funds (Excl Small Cap) 630,570 60% 23% 11% 6%

Hybrid Funds 299,353 51% 9% 7% 33%

Solutions (Retirement & Child Benefit) 15,123 38% 10% 10% 42%

Closed Ended & Interval 64,663 33% 11% 12% 45%

Exchange Traded Funds 92,508 98% 2% 0% 0%

Index Funds 4,794 98% 2% 0% 0%

Small Cap Funds 37,901 5% 11% 75% 8%

Total Equity Assets in MF Industry 1,144,913 57% 16% 11% 15%

ALL DIFFERENT CATEGORY OF FUNDS PROVIDE LOWER

EXPOSURE TO SMALL CAP INVESTING

* As on August 2018.  Data Source - ICRA Explorer.  Calculations Internal

EXCLUSIVE EXPOSURES
Exclusive to Small Caps Predominantly Represented by Mid & Small Caps
Air-conditioners Airlines
Ceramics & Sanitaryware Biotechnology
Couriers Breweries
Cycles And Accessories Construction
Detergents / Intermediates Domestic Appliances
Glass Electronics
Industrial Explosives Fertilizers
Industrial Gas Hospitals / Medical Services
IT Enabled Services / Business Process Hotels
Outsourcing Plastics
Laminates Retailing
Leather Products Tea
Medical Equipment Tractors
Packaging
Paper
Pollution Control Equipment
Rubber
Securities/Commodities Trading Services
Shipping & Ship Works
Soda Ash
Solvent Extraction
Starch
Sugar
Travel Agencies
Watches & Accessories
* Industry Segments as per BSE.  Data as on 31st Aug 2018
SMALL CAPS – BREEDING GROUND FOR
MULTI BAGGERS

SMALL CAPS - BREEDING GROUND FOR MULTI BAGGERS (AS ON AUGUST 31, 2018)
Small Cap - Small Cap -
Small Cap - Above
Current Market Cap Bands Large Cap Mid Cap Between 2501 Cr to Between 1000 Cr to
5000 Cr
5000 Cr 2500 Cr

Upto 25% Return 20 29 20 34 50

26% to 50% Return 5 9 2 3 6
51% to 100% Return 11 16 6 20 13
1x to 5x 52 59 52 55 111
6x to 10x 5 17 6 17 30
Above 10x 2 12 16 25 38
Upto -25% Return 4 5 1 6 8
-26% to -50% Return 3 2 6 5
-51% to -100% Return 1 3 7 5
Total 100 150 108 173 266

* 5 Year Returns as on 31st August 2018.  Data Source – Bloomberg.  Market Cap definition is as per SEBI Circular dated October 6 2017
on categorization and rationalization of Mutual Fund schemes
SMALL CAPS – BREEDING GROUND FOR
MULTI BAGGERS

SMALL CAPS - BREEDING GROUND FOR MULTI BAGGERS (AS ON JANUARY 31, 2018)
Small Cap - Small Cap -
Small Cap - Above
Current Market Cap Bands Large Cap Mid Cap Between 2501 Cr Between 1000 Cr
5000 Cr
to 5000 Cr to 2500 Cr

Upto 25% Return 56 59 40 47 69

26% to 50% Return 26 37 36 45 89
51% to 100% Return 5 21 21 40 48
1x to 5x 2 1 11

Upto -25% Return 3 8 9 19 22

-26% to -50% Return 1 1 3
Total 90 127 107 153 242

* 5 Year Returns as on 31st January 2018.  Data Source – Bloomberg.  Market Cap definition is as per SEBI Circular dated October 6 2017 on
categorization and rationalization of Mutual Fund schemes
SMALL CAPS – HIGH RETURN DISPERSION

CY2014 CY2015
Return Bands/Market
Cap Top 100 Stocks Next 150 Stocks Next 250 Stocks Top 100 Stocks Next 150 Stocks Next 250 Stocks

Above 50% 44 94 157 8 19 51

21% to 50% 32 27 37 15 42 40
0% to 20% Return 16 18 25 34 37 55
0% to -20% Return 5 8 17 26 26 54
-21% to -50% 1 2 6 12 19 35
Below -50% 1 1 1 1 5
CY2016 CY2017
Return Bands/Market
Cap Top 100 Stocks Next 150 Stocks Next 250 Stocks Top 100 Stocks Next 150 Stocks Next 250 Stocks

Above 50% 10 16 26 34 81 126

21% to 50% 16 31 55 34 37 53
0% to 20% Return 35 38 54 17 16 35
0% to -20% Return 28 35 58 4 8 20
-21% to -50% 8 17 39 2 1 4
Below -50% 2 3

STRONG CASE FOR PROFESSIONAL ACTIVE MANAGEMENT

* Top 100, 150 & 250 Stocks as per Market Capitalisation 2018.  Data Source – Capitaline & Bloomberg.
SMALL CAPS – HIGH RETURN DISPERSION

Difference in Average and Minimum returns

Nifty 100 69.39

Nifty Midcap 150 86.02

Nifty Smallcap 250 86.87

STRONG CASE FOR PROFESSIONAL ACTIVE MANAGEMENT

Data Source – ICRA  Returns calculated are 5 year CAGR as 31st Aug, 2018
VALUATIONS – OPPORTUNITY

Correction in Small Caps since January 2018 -

An Opportunity to Pick Quality stocks
120
115
Up by
110
10.58%
105
100
95
Down by
90 9.53%
85 Down by
14.09%
80
75
Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18

S&P BSE Sensex TRI S&P BSE Mid Cap TRI S&P BSE Small Cap TRI

THE RANGE OF CORRECTION IN INDIVIDUAL SMALL CAP STOCKS IS HIGHER THAN THE
REPRESENTED SMALL CAP INDEX

* 4Q Trailing PE  Data Source – NSE.COM. As on 18th September, 2018

VALUATIONS – OPPORTUNITY

S&P BSE 500 Index P/E as on 31st August P/E as on 29th December
Change in Average P/E
Stock bands 2018 2017

1-100 43.01 39.80 3.21

101-200 66.36 47.40 18.96

201-300 46.75 57.45 (10.70)

301-400 40.49 45.19 (4.70)

401-500 31.73 44.00 (12.26)

VALUATIONS HAVE COME OFF IN THE SMALL CAP SPACE

PROVIDING SELECT STOCK PICKING OPPORTUNITIES

Study of S&P BSE 500 Stocks P/E  Data source: Bloomberg.

PERCEPTION VS REALITY

NIFTY NIFTY NIFTY NIFTY NIFTY NIFTY

YEAR
50 200 MIDCAP 100 SMALLCAP 100 SMALLCAP 250 500

2006 39.83 34.64 29.01 41.59 31.03 33.99

2007 54.77 63.66 76.93 87.27 94.95 62.51

2008 (51.79) (56.61) (59.39) (70.97) (69.08) (57.13)

2009 75.76 86.58 98.97 107.01 113.92 88.57

2010 17.95 14.20 19.16 17.63 16.25 14.13

2011 (24.62) (26.97) (31.00) (33.87) (36.03) (27.19)

2012 27.70 31.64 39.16 36.81 38.19 31.84

2013 6.76 4.44 (5.10) (8.28) (8.14) 3.61

2014 31.39 35.53 55.91 54.95 69.57 37.82

2015 (4.06) (1.90) 6.46 7.21 10.20 (0.72)

2016 3.01 3.70 7.13 2.26 0.36 3.84

2017 28.65 33.43 47.26 57.30 57.28 35.91

2018 (YTD) 10.92 7.33 (5.74) (15.66) (14.84) 5.28

Absolute Calendar Year Returns – up to Aug 2018.  Data Source – ICRA Explorer  Calculations Internal
RISK IS NOT EXCLUSIVE TO SMALL CAPS

1YEAR ROLLING RETURNS

NIFTY NIFTY NIFTY NIFTY NIFTY NIFTY

DETAILS
50 200 MIDCAP 100 SMALLCAP 100 SMALLCAP 250 500

Maximum 99.50 111.97 157.48 162.26 171.21 116.27

Minimum (55.78) (59.89) (61.85) (72.20) (69.94) (60.32)
Average 13.29 14.13 18.66 17.24 19.11 14.41
Downside Risk 0.23 0.23 0.28 0.37 0.35 0.23
Risk Measures -Monthly Rolling Returns
Maximum 30.96 35.49 42.46 51.51 53.53 35.80
Minimum (37.90) (37.78) (34.97) (44.52) (40.35) (37.49)
Average 1.10 1.09 1.26 1.15 1.22 1.10
Beta 1.00 1.04 1.08 1.19 1.17 1.04
R Squared 1.00 0.98 0.82 0.74 0.75 0.97
Standard Deviation 6.63 6.99 7.92 9.15 9.01 7.01
Downside Risk 0.39 0.38 0.39 0.39 0.39 0.38

 Absolute Rolling Returns Since January 2006 to August 2018  Data Source – ICRA Explorer. Calculations Internal  Downside Risk: It is the probability
of negative returns based on historical returns.
UNDER RESEARCHED POTENTIAL

33 Large Cap Average Analyst Coverage

15 Mid Cap Average Analyst Coverage

8 Small Cap Average Analyst Coverage

 As on 31st August 2018. Data Source – Bloomberg  About 8 Midcap Stocks as per SEBI Classification are part of Nifty Small Cap 250 Index
UNDER OWNERSHIP
BSE 500 Constituents - Ownership Analysis

Top 100 52.70 23.05 15.29 8.96

101-250 58.05 15.73 15.03 11.19

Above 250 52.46 13.94 16.91 16.69

Promoter holdings FII DII/Institutions Retail

FOREIGN INVESTOR EXPOSURE IS EVIDENTLY LOWER IN SMALL CAP COMPANIES -

OPPORTUNITIES FOR EARLY PICKINGS

Latest available as on August 2018.  Data Source – Capital Line

UNDER OWNERSHIP

OWNERSHIP PATTERN - MARKET CAP WISE

LARGE CAP 53.57 22.59 14.95 8.89

MID CAP 57.84 16.28 14.75 11.14

SMALL CAP - ABOVE 5000

55.22 14.15 16.34 14.26
CR

SMALL CAP - BETWN 2501

55.61 12.53 15.57 16.29
CR TO 5000 CR

SMALL CAP - BETWN 1000

57.52 7.79 12.84 21.82
CR TO 2500 CR

Promoter holdings FII DII/Institutions Retail

A STUDY OF 797 STOCKS LISTED ACROSS NSE, BSE & MSE

WITH MARKET CAP ABOVE 1000 CRORES
Latest available as on August 2018. Data Source – Capital Line  MSE stands for Metropolitan Stock Exchange
SMALL CAP INVESTING

Strong
Balance Sheet

Niche &
Scalable Promotor
Business Ownership
Model

Corporate
Governance

Entrepreneur
Valuations
Led Business

Representation
in Indices
WHY TATA SMALL CAP FUND?

Actively managed Ideal for Investors Diligent Risk

Small Cap Equity
Fund
▪ Closely monitors macro-
economic environment
and other major industry
drivers
▪ Active allocations in Small
Cap segment stocks
with Aggressive
Risk profile
▪ Aims to identify small cap
stocks which might have
potential for high growth
▪ Places high importance on
fundamental strengths of
the business and company
▪ Portfolio of well
Researched companies
Management
▪ Diversification across
stocks/sectors
▪ Liquidity of stocks play an
important role in risk
management
▪ Regular monitoring of
Exposure limits
INVESTMENT PROCESS

Aims for above average returns

 FUND FACTS

Scheme Name TATA SMALL CAP FUND

NFO Dates Opens on 19th October, 2018. Closes on 2nd November, 2018
The investment objective of the scheme is to generate long term capital appreciation
by predominantly investing in equity and equity related instruments of small cap
companies. There is no assurance or guarantee that the investment objective of the
Scheme will be achieved. The Scheme does not assure or guarantee any returns.
Investment Objective
Definition of Small Cap Companies: Small Cap companies are those companies which
are classified as small cap companies by Securities and Exchange Board of India(SEBI) or
Association of Mutual Funds in India (AMFI). At present Small Cap: 251st company
onwards in terms of full market capitalization.
Type Of Scheme An Open Ended Equity Scheme predominantly investing in small cap stocks.

Fund Manager Chandraprakash Padiyar

Benchmark Nifty Small cap 100 TRI Index

Min. Investment Amount Rs. 5,000/- and in multiple of Re.1/- thereafter

Entry Load: Nil; Exit Load: 1% of the applicable NAV, if redeemed or switch out from the
Load Structure
scheme on or before expiry of 24 Months from the date of allotment of units.
Plans & Options Regular & Direct Plans with Growth & Dividend Options
FUND MANAGER –
CHANDRAPRAKASH PADIYAR

Chandraprakash Padiyar joined Tata Asset Management as a senior fund manager (equities),
in September 2018.

Chandraprakash previously worked with Alchemy Capital Management Pvt Ltd. as portfolio
manager for the onshore long-only strategies.

Chandraprakash has over 18 years of experience in research and fund management.

Chandraprakash is an M.B.A. (Finance) from Symbiosis Institute of Business Management

affiliated to the University of Pune and has cleared all 3 levels of CFA Program from The CFA
Institute, USA.
RISK FACTOR

Mutual Fund Investments are subject to market risks,

read all scheme related documents carefully

Presentation as on 25th September, 2018

Toll Free Number : 1800-209-0101 | SMS: TMF to 57575 | www.tatamutualfund.com