Académique Documents
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Contents
Key Highlights
Our View
Investment recommendations
Key Highlights
We maintain our bullish view on equities for long term and expect interest rates to come down further
by 75-100 bps in next 18-24 month. However, markets will remain range bound in the medium term
with yields to remain between 7.50 to 7.60% for next 3-6 month.
Our View
Strategy
Debt:
Equity:
Accrual through
Tax Free bonds/Preference shares
Liquidity Management Arbitrage Funds
Arbitrage / Enhanced
Investment Recommendations
Investment Recommendation
Asset Class
Period
Investment Options
Direct Equity: Top Picks - Multi cap focus, top down stock selection product with focus on
fundamentals and alpha generation
AIF: Forefront Equity AIF Large cap focused, with downside protection through dynamic
absolute return strategy
Structured Products: SP Ideas Participate through principal protected, high participation ideas
to gain from recent market correction
Equity
Long Term
PMS: Accura PMS Managed stock portfolio with bottom up approach & focus on alpha
generation
Asset allocation to allocate capital considering risk and return profile based on model portfolio
recommendation
Large Cap : Birla SL Frontline Equity Fund, Franklin India Prima Plus
Mid Cap Funds: HDFC Mid Cap Opportunities, Franklin India Prima
Sector Funds: Reliance Banking Fund, Franklin Build India Fund
Short Term
Fixed Income
Long Term
Duration: ICICI Pru Long Term Gilt Fund, IDFC Gsec Invest, Reliance Gilt Securities Fund
Perpetual Bonds, Preference Shares
Accrual: Edelweiss fixed return structures, Other high yielding corporate bonds/NCDs (in
corporate with no underlying commodity or metals sector exposure)
BALANCED
CONSERVATIVE
EQUITY
70%
EQUITY
50%
Large Cap
20%
Large Cap
15%
Mid Cap
30%
Mid Cap
Structured Product
10%
Thematic
10%
FIXED INCOME
EQUITY
10%
15%
Large Cap
3.5%
Structured Product
10%
Mid Cap
3.5%
Thematic
10%
20%
FIXED INCOME
40%
Accrual
0%
Accrual
10%
FIXED INCOME
90%
Duration
20%
Duration
30%
Accrual
40%
5%
5%
Cash
5%
Cash
5%
Duration
50%
AGGRESSIVE
Portfolio
Structured Product
BALANCED
Benchmark
Portfolio
3%
CONSERVATIVE
Benchmark
Portfolio
Benchmark
Returns*
ITD
Returns*
ITD
Returns*
ITD
Returns*
ITD
Returns*
ITD
Returns*
ITD
EQUITY
3.3%
30.2%
5.0%
11.1%
2.9%
26.7%
5.0%
11.1%
2.8%
41.9%
5.0%
11.1%
FIXED INCOME
1.5%
9.7%
1.6%
8.9%
1.4%
7.5%
1.6%
8.9%
1.3%
9.3%
1.6%
8.9%
OVERALL
2.6%
21.9%
4.1%
10.5%
2.1%
15.6%
3.3%
10.0%
1.4%
10.2%
1.6%
8.9%
*Returns are absolute & are for the period 24th Sep 2015 to 26th Oct 2015. ITD Inception to Date 11th Aug 2011 calculated on CAGR basis.
Benchmark: Aggressive 75% NIFTY & 25% Crisil Composite Index; Balanced - 50% NIFTY & 50% Crisil Composite Index; Conservative - 100% Crisil Composite Index
Equity
Average
India VIX
50
2.9
1.0
0.9
Oct-15
Apr-15
Cyclicals Average
11
Defensives Average
Oct-15
0
Oct-14
Jun'15
Apr'15
Feb'15
Dec'14
Oct'14
Aug'14
June'14
Apr' 14
Feb' 14
Dec'13
-2.6
Cyclicals
Average, 37.01
10
Oct-13
-2
-3
20
-0.9
Oct'15
-0.1
-1.0
Aug'15
0.0
-1
Oct-14
30
0.1
Oct-12
1.2
Defensives
Average, 36.89
40
Oct-11
1.0
1.41.7
Oct-10
0.4
2.4
Oct-09
1.1
2.8
1.81.9
1.2
1.1 1.3
Oct-08
2.5
Oct' 13
USD bn
3.7
2.9
Oct-07
Average
Oct-06
Apr-14
Oct-15
Oct-14
Oct-13
Oct-11
Oct-10
Oct-09
Oct-08
Oct-07
Oct-06
Oct-05
Oct-04
Oct-03
Oct-02
Oct-01
Oct-00
Oct-99
P/E
Oct-12
Average = 18.62
Oct-13
12
Apr-13
17
Average = 21.93
Oct-12
22
Current = 16.54
Apr-12
27
60
50
40
30
20
10
0
Oct-11
Current = 22.39
Apr-11
32
Oct-10
NIFTY P/E lower than earlier peaks, premium to long term average
Debt
Inflation continues downward spiral
13.0
11.0
9.0
7.0
5.0
3.0
1.0
-1.0
-3.0
-5.0
Sep-15,
4.4%
Sep-15
Jun-15
Mar-15
Dec-14
Sep-14
Jun-14
Mar-14
CPI
WPI
27-Oct-15
Spread
12
Average
Oct-15
Aug-15
Apr-15
Feb-15
Current = 47
Dec-14
Oct-14
Aug-14
Apr-14
Feb-14
Dec-13
Oct-13
Average= 48
Jun-15
200
150
100
50
0
-50
-100
1
2.5
4
5.5
7
8.5
10
11.5
13
14.5
16
17.5
19
20.5
22
23.5
25
26.5
28
29.5
8.00
7.80
7.60
7.40
7.20
7.00
6.80
6.60
Jun-14
24-Sep-15
Dec-13
Sep-13
Jun-13
Mar-13
Sep-15,
-4.5%
Dec-12
Oct'16
Aug'15
Jun'15
Apr'15
Feb'15
Dec'14
Oct'14
Aug'14
June'14
Apr' 14
Feb' 14
Dec'13
Oct' 13
5
3.7
3.4 3.8
4
2.7 2.8 2.8
2.7
2.5
2.2
3
2.0 1.6
1.7 1.8
2
1.00.5
0.9
0.7
0.3
1
0.0
0
-1
-0.1-0.1
-0.8
-2
-1.3
-1.8
-3 -2.1
Sep-12
CMP
(INR)
Mkt Cap
(INR Crs)
(INR)
(INR Crs)
FY16E
FY17E
FY16E
FY17E
FY16E
FY17E
5,162
27,933
22.2
17.2
NM
NM
20.0
18.7
P/E (X)
EV/EBITDA (X)
322
2,08,566
11.8
9.6
6.8
5.3
41.0
45.9
272
1,57,510
12.2
10.6
NM
NM
15.0
15.4
Infosys Ltd.
1,145
2,64,884
19.9
16.4
12.1
10.0
23.1
26.0
1,471
1,38,925
25.3
18.0
6.5
5.7
11.5
14.5
391
1,26,615
7.9
6.7
3.9
3.3
23.7
21.5
700
4,386
27.0
21.4
NM
NM
18.1
19.3
3,456
6,328
31.8
23.1
19.3
14.1
25.1
27.4
SRF Ltd.
1,359
7,796
15.4
11.6
9.5
8.0
17.0
19.0
10
1,299
7,759
32.0
21.2
20.1
14.0
13.8
13.2
11
879
2,16,958
36.8
23.7
19.3
15.6
21.3
25.6
14
ROE (%)
14
Oct-15
Sep-15
Jul-15
Aug-15
Jun-15
Apr-15
May-15
Jan-15
Feb-15
Mar-15
Dec-14
Oct-14
Nov-14
Sep-14
Jul-14
Aug-14
Jun-14
Apr-14
May-14
Jan-14
Feb-14
Mar-14
Dec-13
Oct-13
Nov-13
Sep-13
Jul-13
Aug-13
Jun-13
Apr-13
May-13
Jan-13
Feb-13
Mar-13
Dec-12
Oct-12
Nov-12
Sep-12
Jul-12
Aug-12
Jun-12
May-12
Apr-12
Feb-12
Mar-12
80
Edelweiss Top Picks have delivered a CAGR return of 35% since inception as against Nifty CAGR return of
13%, translating into an outperformance of 22% (p.a)
On an annualized basis (last 12 months), Top Picks have delivered a return of 27% per annum as against
Nifty return of -1.3%.
15
15
Stock Name
CMP
Mkt Cap
P/E
EV/EBITDA
ROE (%)
(INR)
(INR Crs.)
FY16E
FY17E
FY16E
FY17E
FY16E
FY17E
1.
Cholamandalam Finance
629
9,619
19.0
15.9
NM
NM
15.7
16.4
NIIT Ltd.
96
1,588
24.5
16.4
22.3
15.6
0.9%
8.4%
3.
939
3,752
13.3
9.9
8.1
6.0
49.6
42.8
4.
Natco Pharma
2,567
8,942
61.7
53.1
35.4
31
14.70%
14.90%
5.
Pokarna Ltd.
1,175
745
15.2
12.4
8.1
7.3
58.2
43.3
6.
636
3,004
13.8
11.2
6.9
5.7
20.8
21.5
Note: We have exited Suprajit Engineering Ltd. WEF 14th August 2015, we currently have 14.3% cash in the portfolio
Note: Market CAP (Mkt CAP) and Current Market Price (CMP) were last recorded on 29th October, 2015
16
Edelweiss Midcap Marvels have delivered a CAGR return of 69% since inception (4 June 2014) as
against CNX Midcap Index CAGR return of 17%, translating into an outperformance of 52%
17
17
Oct-15
Sep-15
Sep-15
Aug-15
Aug-15
Jul-15
Jul-15
Jun-15
Jun-15
Jun-15
May-15
May-15
Apr-15
Apr-15
Mar-15
Mar-15
Feb-15
Feb-15
Jan-15
Jan-15
Dec-14
Dec-14
Dec-14
Nov-14
Nov-14
Oct-14
Oct-14
Sep-14
Sep-14
Aug-14
Aug-14
Jul-14
Jul-14
Jul-14
Jun-14
Jun-14
18
Forefront
AIF
Nifty
BSL Frontline
Franklin India
Bluechip
HDFC Top
200
22.9%
-0.2%
9.1%
5.3%
10.3%
0.0%
Engineering
Major Holdings
Name
INFY
HDFCBANK
Weight(%)
6.43%
5.94%
Name
HINDUNILVR
HCLTECH
2%
Chemicals
Weight(%)
4.93%
4.91%
4%
Textiles
4%
Energy Products
4%
Energy
5%
Private Banks
6%
Others
BAJAJ-AUTO
5.39%
TORNTPHARM
4.61%
7%
NBFCs
8%
SUNPHARMA
5.12%
DRREDDY
4.52%
COALINDIA
4.99%
CASTROLIND
4.45%
8%
Consumer Staples
9%
Software
11%
Pharmaceuticals
14%
0%
19
5%
10%
15%
Capital
Guarantee
Participation
Tenor
24 months
Maturity
27 months
Entry Level
Trade date
Exit Level
Fixed Coupon
Max Coupon
Binary Level
Scenarios
Binary Coupon If Nifty is above the Binary level in the end then
the investor gets the Max Coupon.
Valid only for the month of Nov 2015. Minimum Investment : 1 Cr
20
Initial
level
Final
level
Nifty
Performance
Product
Return
Annualised
Return
8200
8200
8200
8200
8200
8200
8200
8200
8200
8200
0
6560
7380
8200
8201
9840
11480
13120
14760
16400
-100%
-20%
-10%
0%
0.01%
20%
40%
60%
80%
100%
19%
19%
19%
19%
24%
24%
24%
24%
24%
24%
8%
8%
8%
8%
10%
10%
10%
10%
10%
10%
Capital Guarantee
Participation Tenor
36 months
Maturity
42 months
Entry Level
Exit Level
Participation
120%
Coupon
Decay Range
Payoff
Scenarios
21
Initial
level
Final
level
Nifty
Performance
8200
8200
8200
8200
8200
8200
8200
8200
8200
8200
8200
0
6560
8200
8364
8528
8609
8610
9020
9840
12300
16400
-100%
-50%
-20%
0%
1%
10%
29.99%
30%
50%
80%
100%
Product
Return
Annualised
Return
Principal Protection
at maturity
0%
1.20%
12.00%
36.00%
65.00%
65.00%
65.00%
65.00%
0%
0.34%
3.29%
9.18%
15.38%
15.38%
15.38%
15.38%
Asset
Type
Listed Exchange
Rating
Tenor
ECLF/EFIL
NCD
BSE WDM
PP-MLD
AA by CARE
15 Months
Contingent Product
Annualized Yield
9.00% p.a.
24 Months
9.25% p.a.
40 Months
9.50% p.a.
Scenario
High
Medium
Payoff
Contingent
Product
Annualized Yield
0.00%
Return
Risk
Low
Medium
High
Alternatives like FMP's have lock - in, where in Edelweiss NCD can
provide liquidity after 3 months
Yields at the time of early exit is dependent on the current lending
rate of Edelweiss
Please Note: Pre Tax Annualized Yield, does not include any costs involved.
22
Portfolio dominated by Low Beta and low volatility stocks thereby maximizing riskadjusted returns
Equal weight portfolio ensures there is never big exposure to any single business or
sector
23
Value
Growt
h
Absolute Returns
3 Months
6 Months
1 Year
2 Years
3 Years
6%
5%
24%
190%
190%
0%
-2%
0%
95%
52%
3 Months
6 Months
1 Year
2 Years
3 Years
0%
-1%
16%
80%
99%
-5%
-6%
1%
41%
42%
BSE Smallcap
BSE 100
Annualized Returns
BSE Smallcap
BSE 100
Performance Data as on 30th September , 2015
Inception Date: 10th Oct 2011 Pico Power;
19th Sep 2011 Alpha 10
1 Year
2 Years
3 Years
SI
24%
70%
43%
37%
0%
40%
15%
12%
1 Year
2 Years
3 Years
SI
16%
34%
26%
19%
1%
19%
12%
12%
24
Key Terms
Scheme
Custodian
Regulation
Investment
Tenure
Investment
Manager
Taxation
At Client Level
25
Option
Moderate
Aggressive
Objective
Exposure
Source
of Alpha
Primarily
from
fixed
income asset allocation
low
Equity beating
performance with lower
than equity drawdowns
High static exposure to
risky assets
Primarily from
allocations
between risky and non risky
assets
30%
20%
10%
5%
10%
10%
5%
10%
40%
20%
10%
5%
2.5%
5%
2.5%
15%
Static Allocations
Large Cap
Mid Cap
International Equity
Gold
Income
Accrual
Liquid
Alternatives *
10%
5%
5%
5%
15%
40%
20%
0%
*** Allocation to alternatives only above Rs. 5 crore. Allocations will be scaled accordingly.
26
Moderate
Aggressive
NIFTY
Gold
CRISIL Bond
CAGR (Return)
10.12%
11.52%
13.97%
5.77%
3.69%
8.70%
Standard Deviation
3.50%
5.95%
7.98%
17.08%
18.82%
3.26%
Sharpe Ratio
2.89
1.94
1.75
0.34
0.20
2.67
Moderate
Aggressive
NIFTY
CRISIL Bond
Gold
40%
30%
20%
10%
0%
-10%
-20%
-30%
2011
2012
2013
***Returns stated are provisional unaudited returns as of 30th September 2015 ( Calendar Year Returns). Official returns and
NAVs of the fund are issued as of month end. Past performance is not indicative of future performance. Forefront Alternative
Equity Scheme Returns are net of management fees and expenses and gross of performance fees and taxes
27
2014
2015
28
1M
Since Inception
0.5%
14.0%
Crisil Liquid
0.7%
6.1%
Structure
Opportunities
Return
Risk Profile
Tenure
29
Rating
Coupon
Maturity
AA+ Brickworks
11.00%
9.50%
8-Aug Annual
8-Aug-24 (Call)
AA- CRISIL
10.75%
10.40%
17-Oct Annual
17-Oct-24 (Call)
AA ICRA
9.55%
9.40%
5-Mar Annual
5-Mar-25 (Call)
**Charitable Trust and Provident Fund / Pension Fund / Retirement Funds can also invest in Bank Perpetual bonds
AA and above
Rating
Coupon
Selling Yield
Interest Payment
Maturity
AA+ CRISIL
8.15%
7.70%
15-Apr Annual
06-May-22
IL&FS Limited
AAA CARE
8.10%
7.80%
30-June Annual
29-June-22
8.33%
7.70%
Annual
30-Jun-19 (Call)
6.00%
9.45%
15-Apr Annual
05-Mar-22
AA CARE
30
Issue size
Rs. 6,000 crores with an option to retain oversubscription upto Rs. 6,000
crores aggregating to total of upto Rs. 12,000 crores
Allotment
Rating
Tenor
Expected Yield
31
Disclaimer
Vinay Khattar
Vinay.Khattar@edelweissfin.com
+91 (22) 4088 6023
Alok Saigal
Alok.Saigal@edelweissfin.com
+91 (22) 4088 5917
Tarun Jain
Tarun.Jain@edelweissfin.com
+91 (22) 4088 6229
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32