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India Opportunities Fund PPT Investor
India Opportunities Fund PPT Investor
ICICI Prudential
India Opportunities Fund
(An Open Ended Equity Scheme following Special Situation theme)
NFO PERIOD:
DEC 26, 2018 TO JAN 09, 2019
India – One Of The Fastest Growing Economies
4
% YoY
-1
-6
2018E -2.6% 1.4% 6.6% 7.3% 5.1% 1.1% 2.2% 1.9% 1.7% 0.8% 4.6% 3.5% 2.9% 2% 3.7%
2019E -1.6% 2.4% 6.2% 7.4% 5.1% 0.9% 2.5% 2.3% 1.8% 1.4% 3.9% 0.4% 2.5% 1.9% 3.7%
2020E 2.2% 2.3% 6.2% 7.7% 5.2% 0.3% 2.7% 2.5% 1.8% 1.7% 3.7% 2.6% 1.8% 1.7% 3.7%
GDP 0.5 1.9 13.5 2.7 1.0 5.1 1.2 0.4 1.6 0.4 0.5 0.7 20.5 13.7 84.8
(US$ Tn)
Data as on Oct 2018. Source: IMF, World economic outlook (2018), E: estimates. Past performance may or may not be sustained in the future.
2
Improvement In Macro With Falling Crude Prices
Inflation (%)
4 3.89
$ per bbl
70
65.8 71.6
65 3 3.69 3.77
60
59.9 62.5 2
1.46
55 1
50 0
Source: Nirmal Bang Institutional equities, Crude data as on 20th Nov 2018, CPI inflation as on Oct 31, 2018.
3
Tax Collection & Ease Of Doing Business Rank Improves
Highest Collection in GST post Apr 2018 India has witnessed significant Jump in ease of doing
business index
980 965 80 77
956
960 944 90
940 940
940 100 100
920 110
900 120 132 132 130
130 134
880 130
140
Sep-18
Jul-18
Oct-18
Jun-18
Aug-18
Apr-18
May-18
150 142
Source: Internal, Monthly GST collection Data as on Oct 2018, Source of Ease of doing business ranking: “doing business ranking” 2018 report- 15th Edition. Past performance may or may not be sustained in the future.
4
Equities: An Attractive Investment Opportunity
170
90
Invest in Equities
70
Aggressively invest in Equities
50
Nov-05
Nov-06
Nov-07
Nov-11
Nov-08
Nov-09
Nov-10
Nov-12
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
Nov-18
Equity Valuation index is calculated by assigning equal weights to Price-to-Earnings (PE), Price-to-Book (PB), G-Sec*PE and Market Cap to GDP ratio. G-Sec – Government Securities.
GDP – Gross Domestic Product; Asset Allocation – Schemes that invest both in equity and fixed income. Source: internal. Index is as on Nov 30, 2018.
Source: Internal. Past performance may or may not be sustained in the future.
5
Challenges: Crisis Or Chance?
1 2 3
The portfolio of the scheme is subject to changes with in the provisions of the Scheme Information document of the scheme. Please refer to the SID for investment pattern, strategy and risk factors. The asset allocation and
investment strategy will be as per Scheme Information Document.
7
Situations That Can Be Turned Into Opportunities
The above list is illustrative and not exhaustive, there are several other opportunities that may give rise to special situations.
8
1(a)
SPECIAL SITUATIONS:
COMPANY SPECIFIC
9
Situations That May Arise From…
Regulatory Issues
Consolidation in Industry/
Increased competition
Companies into Established Businesses / Proven track
record of management / Brands which are
Special Situations household names
Management Change
Unfavourable Business
Cycle / Macros
The above list is illustrative and not exhaustive, there are several other opportunities that may give rise to special situations.
1
0
Past Instances: From Crisis To Opportunities
650
• Generally when there is a foreign partner (MNC) buying stake in a particular
company it can lead into a change in investor sentiments. 550
• Diageo – one of the world’s largest spirits company bought stake in Novem- 450
Rs.
350
• The same was well accepted by investment community and stock had moved 250
from Rs. 272 to around Rs. 772 from November 2012 to March 2015.
150
50
Jan-12
Jan-13
Jan-14
Jan-15
Sep-12
Sep-13
Sep-14
Sep-15
May-12
May-13
May-14
May-15
The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme.
The stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these stock(s). Source: Internal.
Past performance may or may not be sustained in the future. Returns are in absolute terms.
11
Past Instances: From Crisis To Opportunities
780
Infosys Ltd.
• Changes in management i.e, resignation of MD and CEO, led to a fall in the 730
• This created a negative atmosphere around the company, the fall in share 630
Rs.
price from levels of Rs 510 to Rs 438 was a well timed opportunity for investing. 580
• Since Aug 2017 to Sep 2018, the company had provided ~70% returns. 530
480
430
Oct/17
Sep/17
Mar/18
Jul/17
Sep/18
Aug/17
Jun/18
Jan/18
Dec/17
Nov/17
Jul/18
Aug/18
Feb/18
Apr/18
May/18
The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme.
The stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these stock(s). Source: Internal.
Past performance may or may not be sustained in the future. Returns are in absolute terms. Fund Manager will take position basis stock research.
12
Past Instances: From Crisis To Opportunities
4500
• In July 2012, Maruti Suzuki witnessed selling pressure due to the strike at their
3500
Manesar Plant and shut down of assembly lines.
3000
• This led to prices falling by ~ 10% which presented a buying opportunity in a
company facing critical but temporary problems. 2500
Rs.
• Within 3 years, the company has provided returns of ~286% 2000
1500
1000
Jul/12
Sep/12
Nov/12
Jan/13
May/13
Jul/13
Nov/13
Jan/14
May/14
Jul/14
Nov/14
Jan/15
May/15
Jul/15
Mar/13
Sep/13
Mar/14
Sep/14
Mar/15
The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme.
The stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these stock(s). Source: Internal. Past performance
may or may not be sustained in the future. Returns are in absolute terms. Fund Manager will take position basis stock research.
14
Past Instances: From Crisis To Opportunities
12500
Nestlé India Ltd.
11500
• In June 2015 Shares of Nestlé India Ltd. were hammered on news of excess 10500
lead content found in Maggi.
9500
• Stock prices dropped from levels of Rs. 7000 to Rs. 5000 in a few months. 8500
Rs.
• This panic selling and negative sentiments among investors could provide an 7500
• From June 2015 to Aug 2018, Nestlé's share price has appreciated by ~108% 5500
4500
Feb/17
Aug/17
Aug/15
Nov/17
Feb/16
Aug/16
Feb/18
Aug/18
Nov/15
Nov/16
May/15
May/18
May/17
May/16
The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme.
The stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these stock(s). Source: internal.
Past performance may or may not be sustained in the future. Returns are in absolute terms.
14
1(b)
SPECIAL SITUATIONS:
INDUSTRY SPECIFIC
15
Special Situations In Sectors
Sectors may undergo temporary stress due to various reasons such as:
The above list is illustrative and not exhaustive, there are several other opportunities that may give rise to special situations.
16
Past Instances: From Crisis To Opportunities
65
• The same can be seen in stock prices of IT companies. 15,000
14,000 63
Jan/18
Jan/18
Feb/18
Feb/18
Mar/18
Mar/18
Apr/18
Apr/18
May/18
May/18
Jun/18
Jun/18
Jul/18
Jul/18
Jul/18
Aug/18
Aug/18
Jan/18
The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme.
The sector(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sector(s). Source: NSE/BSE.
Past performance may or may not be sustained in the future. Returns are in absolute terms. Data as on Nov 27, 2018. IT index is S&P BSE Information technology TRI Index.
17
1(c)
SPECIAL SITUATIONS:
CHANGE IN ECONOMIC SCENARIO
18
Change In Economic Scenario
• Macroeconomic variables are the key proponents of the trends existing in the economy.
• Movements in these factors can create special situation opportunities in companies and sectors.
Exchange FX Reserves
Rates
The above list is illustrative and not exhaustive, there are several other opportunities that may give rise to special situations.
19
Past Instances: From Crisis To Opportunities
800
Performance of Paint Companies ~680%
700 Asian Paints Kansai Nerolac Berger Paints
• Crude prices fell from $ 118 in July 2011 to levels of around $ 52 in July 2017. 600
• Companies operating across various sectors have seen good improvement in 500 ~550%
100
Jul/11
Jan/17
Jan/15
Jan/12
Jan/13
Jul/17
Jan/16
Jul/15
Jul/12
Jul/13
Jan/14
Jul/16
Jul/14
The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme.
The stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these stock(s). Source: internal.
Past performance may or may not be sustained in the future. Returns are in absolute terms. Amounts rebased to 100.,
20
2.
SPECIAL SITUATIONS:
GOVERNMENT OR
REGULATORY ROADBLOCKS
21
Government Action Or Regulatory Roadblocks
It has been witnessed that a change in Government Regulation or introduction of reforms may lead to special situations in sectors/ compa-
nies. Some of them are:
Introduction of
Government
Policies and Reforms
Fiscal
reforms
Changes
in taxation
Amendment
in regulations
The above list is illustrative and not exhaustive, there are several other opportunities that may give rise to special situations.
22
Past Instances: From Crisis To Opportunities
40000
Bank Index
37500
• Demonetization had a negative impact on several sectors like Consumer Durables,
35000
Retails, Automobiles, Manufacturing, Aviation, etc. on account of limited liquidity made
32500
available in the hands on customers.
30000
• Some of the sectors benefiting out of demonetization were businesses operating under
27500
financial sectors like Insurance Companies, NBFC’s, Mutual Funds etc.
25000
22500
20000
Nov/16
Apr/17
May/17
Jun/17
Jul/17
Aug/17
Sep/17
Oct/17
Nov/17
Dec/17
Jan/18
Jan/17
Dec/16
Mar/17
Feb/17
Mar/18
Feb/18
The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme.
The sector(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these Sector(s). Source: internal.
Past performance may or may not be sustained in the future. Returns are in absolute terms. Source: MFI. Nifty Bank Index has been used for representation.
23
3.
SPECIAL SITUATIONS:
GLOBAL EVENTS/
UNCERTAINTIES
24
Global Events/Uncertainties
• India remains deeply entwined in the global economic landscape, any significant international event has a potential impact on India’s economic performance and position
• However, these problems are opportunities in disguise and can create special situations for investors
LTCM Crisis
25000
20000
Terrorist attack in the US
15000 GOP wins US
presidential
10000 elections
5000 Eurozone Debt
Crisis
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
The index mentioned is S&P BSE Sensex PRI. Source: BSE Ltd. Past performance may or may not be sustained in the future. The above list is illustrative and not exhaustive, there are several other opportunities that
may give rise to special situations. LTCM: Long term capital management. GOP: Grand Old Party (Republican). Data as on Nov 28, 2018. Source: MFI
25
Global Events/Uncertainties
• Investing in financially sound companies in the commodity space during this period 12000
7000
Oct/15
Dec/15
Feb/16
Apr/16
Jun/16
Oct/16
Dec/16
Feb/17
Apr/17
Jun/17
Oct/17
Dec/17
Feb/18
Apr/18
Jun/18
Oct/18
Aug/16
Aug/17
Aug/18
The above instances are for explaining the events occurred in the particular stocks/sectors. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme.
The stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these stock(s). Source: NSE/BSE. Past performance
may or may not be sustained in the future. Returns are in absolute terms. Metal index is S&P BSE Metal TRI index.
26
Special Situations: An Alpha Generation Strategy
“Establishing and maintaining an unconventional investment profile requires acceptance of uncomfortably idiosyncratic portfolios, which
frequently appear downright impudent in the eyes of conventional wisdom.“ - Howard Marks
The ability of a fund manager to reform the consensus by investing and moving away from the crowd by identifying opportunities early in stocks/sectors can assist in gener-
ating meaningful Alpha and in creating wealth for investors in long term.
Following the above thesis, ICICI Prudential India Opportunities Fund is a Scheme that aims to add alpha to the portfolio over the long-term through bottom up stock picking.
The portfolio of the scheme is subject to changes with in the provisions of the Scheme Information document of the scheme. Please refer to the SID for investment pattern, strategy and risk factors. The asset allocation
and investment strategy will be as per Scheme Information Document.
27
Opportunities In Current Market Scenario
• Stocks within the sector have witnessed meaningful correction on account of intense
competition and price wars.
• The sector is now seeing consolidation as the number of companies operating within
the sector have come down to merely three.
The above instances are event/ situation based. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme.
The sectors(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sectors(s).
Source: internal. Data is as on May 2017. Past performance may or may not be sustained in the future.
30
Opportunities In Current Market Scenario
• The growth slowdown in the non-banking financial companies (NBFC) space following
the liquidity crisis has been a blessing in disguise for Banks.
• With bad loan cycle now at the fag end Private banks could benefit from this changing
competitive environment.
The above instances are event/ situation based. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme.
The sectors(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sectors(s). Source: Nirmal Bang Equities.
Report Dated: Oct 2018. E: Estimates. Past performance may or may not be sustained in the future.
29
Opportunities In Current Market Scenario
India can be one of the beneficiaries of the trade war between US & China
• We believe, India is in an advantageous position as it can benefit from the Import ban/tariffs imposed
by US on China.
• China’s retaliatory move of imposing tariffs on US products also provides an opportunity to India.
• India may benefit with its increase in share of exports in sectors like metals, textiles etc.
The sectors(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sectors(s).
The above instances are event/ situation based. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID of the Scheme. Past performance may or may
not be sustained in the future.
30
Opportunities In Current Market Scenario
Auto Industry:
Reviving up for growth
• Some of the Auto Ancillary companies have seen market cap erosion on fear of introduc tion of Hybrid /
Electronic Vehicle (EV).
Growth in FY 18
• However we believe the acceptance & affordability of such Hybrid / EV has a long way to go. 24.2%
19.9%
• Despite disruption taking place in auto industry, the growth within the sector is still intact. The Indian 14.8%
11.90%
two-wheeler industry grew at ~15% while crossing the 2 crore unit milestone, for the first time ever, in 7.90%
FY18.
PV 2W CV 3W Total
• Exports increased at a healthy pace of 16.12% during FY 18. Two wheeler exports jumped
over 20%, India exported more than 28 lakh two-wheelers in FY 18.
The above instances are event/ situation based. The Scheme will invest as per the asset allocation and investment strategy mentioned in the SID
of the Scheme..
The sectors(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sectors(s). Source: Internal.
Report Automotive Mission Plan 2016-26. Report dated May 2018. Past performance may or may not be sustained in the future.
31
ICICI Prudential India Opportunities Fund
(An Open Ended Equity Scheme following Special Situation theme)
32
ICICI Prudential India Opportunities Fund
Investment Objective*:
To generate long-term capital appreciation by investing in opportunities presented by special situations such as corporate restructuring, Government policy and/or regula-
tory changes, companies going through temporary unique challenges and other similar instances.
Investment Style:
*However there can be no assurance or guarantee that the investment objective of the scheme would be achieved.
The portfolio of the scheme is subject to changes with in the provisions of the Scheme Information document of the scheme. Please refer to the SID for investment pattern, strategy and risk factors. The asset allocation and
investment strategy will be as per Scheme Information Document.
33
ICICI Prudential India Opportunities Fund
RTGS and transfer cheques Till end of business hours on January 09, 2019
Switches Switches from equity schemes and other schemes – January 09, 2019; Till cut off time (specified for switch outs in the source scheme)
34
Riskometer & Disclaimers
ICICI Prudential India Opportunities Fund (The scheme is suitable for investors who are seeking*)
Moderate
Investors understand
• Long term wealth creation that their principal will
• An equity scheme that invests in stocks based on special situations theme. be at high risk
LOW HIGH
*Investors should consult their financial advisors if in doubt about whether the product is suitable for them.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Disclaimer: All figures and data given in the document are dated unless stated otherwise. In the preparation of the material contained in this document, the AMC has used information that is publicly available, including information developed
in-house. Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been made available to the AMC and/or to its affiliates. Information gathered
and material used in this document is believed to be from reliable sources. The AMC however does not warrant the accuracy, reasonableness and / or completeness of any information. We have included statements / opinions /
recommendations in this document, which contain words, or phrases such as “will”, “expect”, “should”, “believe” and similar expressions or variations of such expressions, that are “forward looking statements”. Actual results may differ
materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and
other countries globally, which have an impact on our services and / or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other
rates or prices etc.
The AMC (including its affiliates), the Mutual Fund, the trust and any of its officers, directors, personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary,
consequential, as also any loss of profit in any way arising from the use of this material in any manner. The recipient alone shall be fully responsible/are liable for any decision taken on this material.
The sector(s)/stock(s) mentioned in this presentation do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in these sector(s)/stock(s). Past performance may or may
not be sustained in the future. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the scheme. Please refer to the SID for investment pattern, strategy and risk factors.
Investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other financial implication or consequence of subscribing to the units of ICICI Prudential Mutual Fund. The information contained
herein should not be construed as a forecast or promise nor should it be considered as an investment advice.
35